W.I.L. Offshore News Digest :: March 2009, Part 3

BUYING A PROPERTY IN THE CARIBBEAN ONLINE

Buying an overseas property online -- or any property for that matter, even if you know the area well -- seems not a little insane. But the author of this piece did exactly that, contrary to all the usual advice one gets about the subject ... visit an area, look around, rent for a year, look at lots of properties, etc. He got wind of an area in the Dominican Republic that attracted him and bought a plot of land without ever having visited the area. At the very least it makes an interesting and instructive story.

That the whole idea actually works is not proven to us, as the author leaves us off where he has taken title to the property but not yet visited (!) it. As it was only a plot, and not a hugely expensive one at that, we suppose the risk is not excessive. We hope we hear a favorable followup down the line.

Sitting in my dining room with the first cup of coffee of the day I look at the pictures mounted on the wall by the table. Six shots of our vacation back in November 2006 to Loreto, Baja California, looking out over the Sea of Cortez. The fishing boat we took to our own little island with lunch caught fresh from the crystal clear waters, the tree lined streets, the palapa roofed beach hut, the golden red sunset. Now just distant memories but also a reminder during the dark, cold days of winter just what awaits my wife and me when we retire. A year round warm climate and spectacular scenery. It is just that it will not be to Loreto, Baja California that we will be moving to.

Yes, we had a fantastic vacation, great hospitality at the bed and breakfast we stayed at, lovely weather, awesome scenery and views. The thing that put us off was that we realized having viewed a number of plots of land in and around Loreto we felt that eventually it would become just another American "sub-division," albeit with a little more sunshine. Now let me explain something here. I am English, my wife is American, a native of Sherwood, North Little Rock, Arkansas. It was she who made the comment about the town of Loreto becoming a "sub division." This is what put us off buying in Loreto:

Opening 2010 The Villa Group Begins Construction on Villa del Palmar Loreto. Latest Project Encompasses Hotel, Timeshare, Fractional, Whole Ownership Real Estate. Owen Perry, a partner in the highly successful "Villa Group", has announced that it has broken ground for Villa del Palmar Loreto; the new 5 star resort is to be built as part of a spectacular 1800 acre resort development in Loreto, Baja Sur, Mexico... Villa del Palmar Loreto will feature 161 one-, two-, and three-bedroom villas, all with views of the Sea of Cortez and the five islands. The first phase is slated to open in January 2010, with a complete investment of $60,000,000.00. Each villa will be decorated with elegant furniture and will include a living room, dining room, full kitchen with granite countertops, modern appliances and electronic equipment, and a 10' wide spacious terrace in each Villa ... The Nature of the area will be the main feature designed into the property, complete with an activity center designed for the calm ocean of the Sea of Cortez, also low level lighting with Fire pits on the beach will provide for a spectacular evening .............. the master development eventually is projected to have 2200 rooms, divided into seven projects, with a variety of real estate products covering the spectrum of affordability and lifestyles. Included in the overall make-up are timesharing, fractional ownership, whole ownership, restaurants, recreational opportunities and commercial retail operations, including a wellness center. A high-end hotel to be named shortly is also on the books ... An 18-hole golf course, designed by Rees Jones, will be part of the development, scheduled to start construction in 2010. Guests and owners will have access to a wide selection of amenities, including a state of the art 40,000 sq ft spa and gym, activities onsite include various restaurants, bars, convenience stores, full-service water activities center, swimming pools, tennis courts, golf, breath taking hiking trails and horseback riding.

The information above can be found in full on the website LoretoMexico.com. Not something I would like to be near or overlooking, so where to after Loreto? That was the question on our lips having arrived back in to a cold, wet and dreary Ireland, our home for the past four years. By January 2007, Loreto was a fading memory, only jogged back to life when looking at the photos in the dining room.

One day I happened to have the TV on, I guess one of the many travel channels, when a comment by the presenter caught my attention. A "shack" with a little land around it could be yours for as little as £1,000/$3,000. I thought I had misheard at first, then a few weeks later I caught the same episode being repeated. I waited for the end of the program and saw that it had been made a few years before. Where had they been talking about, the Dominican Republic in the Caribbean. I mentioned what I had seen to my wife. Her reply was, "we need to Google that!" So, that is what we did.

I have to say right away that we did not find any plots of land quite so cheap although there were definitely some bargains to be had. How did we come to choose Sosua to be were we wanted to spend our retirement? Well, firstly, the plots of land for sale were within our price range. Secondly, the descriptions of Sosua on various websites and forums gave us the impression that it was a little smaller and more intimate than say Puerto Plata, along the coast. Yes, like most places in the Caribbean it has its fair share of "all-inclusive" gated resorts, but where these days does not? From reading through a number of internet forums, it appeared to have a good mix of expat nationalities, from Canadians, Americans, Germans and Brits. However, we are more concerned with integrating with the local population as much as possible, rather than just stay within the expat community, once we are there.

"The North Coast of the Dominican Republic is called the Amber Coast, because of its rich deposits of semi-precious amber. This is where Columbus landed on his first voyage of discovery. It is comprised of an assortment of beach towns, resorts and communities, nestled between the Atlantic and a chain of majestic coastal mountains. Puerto Plata is the largest city. About 25 km east of Puerto Plata is Sosua, which was originally settled by Jewish refugees in the early 1940's. Here you will find a number of types of accommodation, everything from a basic room to luxurious villas, to all-inclusive resorts, as well as many restaurants, bars and discos. One of the main attractions here is Sosua Beach, a 1/2 km of beach in a small cove with soft white sand and clear turquoise waters, surrounded by high coral cliffs. Many snorkeling and diving excursions take place in this area. There is also a large vendors market behind the beach where you can bargain for souvenirs."

One company that caught my eye was "West-Indies Real Estate," based in the town that we had been looking at, Sosua. On their website they had advertised plots of land up in the hills overlooking Sosua ranging in price from $6,000 up to hundreds of thousands. I found their website to be well written and very easy to navigate. The property listings are available to view in US$, £sterling and €Euros. Just go to the "listings" page, type in your "Property Search options," mine being land for sale in Sosua priced between $0-$100,000. The next page lists plots of land for sale, with good, clear photos, the price below and a link for more information.

Having read through the pages with details concerning relocation and residency to the Dominican Republic. I emailed the company explaining that I was enquiring about a piece of land they had advertised on their website. The plot was priced at $6,000 for a plot of 600 square meters. We left things for a few months and then in April 2008 I decided to email the real estate company and ask about the plot that was still advertised on their site for $6,000. Of course, I received an email back saying that the plot was not available, prices on a website as we all know are only there to entice you in! I then asked for details of similar sized plots and received an email back from the estate agent, explaining who she was and how long she had lived in Sosua. She was Dutch and had lived in Sosua for 12 years.

After a few more emails she sent me details of four plots of land that someone was selling. They were for 644 square meters, 506 square meters, 822 square meters and 2,710 square meters. The largest plot was out of my price range, however the plot of 822 square meters was a corner plot and nicely priced. I emailed the real estate agent back saying that I was interested and could she send me photos and a plan of the area. A few days later I was printing a plan of 24 plots of land with the plot I was interested in clearly marked with an "X", making it seem like I was on some exciting treasure hunt, and this being the Dominican Republic, who knows, as during the 17th and 18th century the North Coast was a hotbed of pirate activity. Also attached were six photos showing a swath of land covered in very long grass, bordered by shrubs, bushes and an assortment of trees. From the photos the land appeared to be relatively flat with a gentle slope up towards the back boundary.

I fired off an email saying that I would like to purchase the plot of land, No. 17, 822 square meters, asking what the next step was in the procedure. I heard back that the plot could be reserved for a few days. This was a little disturbing to me as at the time I was on vacation visiting my in-laws in Little Rock, Arkansas. A flurry of emails ensued over the next couple of days, with me explaining that I would not be back in Ireland until the 25th May, therefore I would not be able to send the deposit until then. Thankfully, the person selling the land, who happened to be from the UK, agreed to wait. Before I had even had time to unpack the suitcases I was at the bank transferring the deposit of $1,234.30. I then made a full and final payment of $11,108.70 bringing my purchase to a total of $12,343.00. I now had copies of the "Real Estate Sale" document detailing who was selling what and to whom. I also had a copy of the "Offer of Purchase." This was then signed by myself, the seller and the real estate agent. This was sent to me in both Spanish and English. I then sent the lawyer her fee which was $500.

Once the funds had cleared I then received an email on June 12th 2008 telling me: "Congratulations, the land is yours. We did the closing this morning. The Title stays with 'Lisa' (the lawyer), she will change it to your name, and this will take some time." Now, this was not a cause for celebration rather a sense of optimism that maybe things had gone smoothly and between them, the real estate agent and the lawyer were actually doing what I had paid them to do.

The lawyer's job was to make sure the all important "Title" was transferred to my name. I was assured this would take approximately four to six weeks. Then, and only then could I relax a little and know that I did indeed own my small piece of paradise. Further emails ensued, personnel at both the real estate and the lawyer's offices both changed so I was now on my second person at both. Finally on the 3rd February 2009 , somewhat longer than the four to six weeks I had been promised, I received an email from the new lawyer telling me the all important "Title" was in her office and I could come and pick it up anytime. ... A little difficult given that I am living in the Republic of Ireland and cannot just hop on a plane like hailing a cab. A final few emails between agent and lawyer and I received a scanned copy of the "Title" with my name clearly on the top of the document, and clearly signed by the Registrar.

Now, I may be the most gullible person on the planet, a complete fool and have been a victim of a scam, but my gut feeling is that maybe there are still some good people in this world, not everyone is a "Bernie Madoff" or an "Allen Stanford" and not everyone is out to rip you off! and just maybe I do actually own a plot of land in the Dominican Republic.

According to all the so-called experts on the property programs you are supposed to do ALL of the following: (1) Visit the area you are thinking of buying in. (2) Contact a number of real estate agents to show you the homes/plots available within your price range. (3) View a large number of properties. (4) Go home after having had a good week of sunshine and house viewing. (5) Go back a few months later, do just a little more house hunting then buy your dream home and live happily ever after.

That is maybe how most people would go about buying abroad. Not me, as I am not like most people. I like to gamble, take a risk, life is too short to just sit back and hope things will happen. Well, that is how I went ahead and bought a plot of land in the Dominican Republic relying on gut instinct and a whole bunch of emails between myself, the real estate agent and the lawyer. Now that the deal is complete I have still to see the plot of land in person. It was relatively painless, did not give me too many sleepless nights, and was kind of exciting, a nice little adventure. Yeah sure, if things had gone wrong, and believe me they could of gone very, very wrong, I would now be writing an article entitled, "How NOT to go about buying property abroad"! Maybe it could still be entitled that, according to the so-called "experts" I broke all the rules. I have to say that I did not do too badly, as I have read recently that a couple of people who presented programs on television about buying property both in the UK and abroad have recently filed for bankruptcy and have put their companies into administration. There is something to be said for the amateur property investor!

So, would you buy a piece of land on-line? Probably not, its risky yes, but hell, if I had just sat on my butt thinking about doing something like that I would not be writing this article now. So, if you want to own a piece of paradise anywhere in the Caribbean, I suggest you take a risk, it is your money, do with it what you want, not what others "advise" you to do, and finally go with your gut instinct. A little plot of land in paradise is now awaiting my arrival. Due to the "credit crunch" it may be some time before I get to see my purchase in person, although one day I will be able to start a new life in the sunshine of the Dominican Republic and not have to rely on a set of photos on my dining room wall for my sunshine "boost," I will be experiencing it for real every single day of my retirement.

The word "retirement" though is somewhat of a misnomer. Both myself and my wife do not have such a thing as a company pension. Nor do we have private pensions. Oh, maybe I had one when I first started working in the Lloyds of London Insurance market, but that was more than 20 years ago, and I have had a number of occupations since then. Although at the moment my wife does actually have a company pension, it will certainly not be enough to support our dogs, let alone anyone else. So, what will we being doing in our "retirement"? Like a large number of people these days we will continue to work, albeit for ourselves and doing something that we want to do, not working for others.

Our plans involve opening and running a bed & breakfast business on our plot of land. The idea is to build a "courtyard living space" with cob built buildings housing the bedrooms and bathrooms. There will be four of these buildings. We are also planning on using a freight container as a living area, converting it into a master bedroom. This will enable us to use the roof of the container for the solar panels to generate our electricity. Everything else will be outdoors, from the lounge areas to the kitchen and dining areas, covered by a "floating" roof structure. Also, we will have a cob built oven and a cooking pit. All this will be surrounded by a cob wall to enclose our land. From the details received about the plot of land, we will have access to a fresh water well that is shared with two other properties. The toilets will be compost and we will also have a tank to collect rainwater. We also plan to grow our own fruit and vegetables. We will use recycled and locally made furniture as much as possible. At the time of writing, no electricity is in place and the roads have only just started to be paved. To generate further income, my wife will be hosting baking courses for people staying at the bed and breakfast, and I will be transferring my online t-shirt printing business to our new home, with lots of new designs to sell as souvenirs to tourists.

My only fear is that there will more than likely be another devastating "hurricane season" such as 2008 when four hurricanes ripped through Haiti in the space of six weeks. According to most reports, the North coast of the Dominican Republic was spared the worst of the weather. Most of the time during the hurricane season they form down in the Caribbean on the south coast, the mountain ranges of the central area protecting the North coast most of the time, but hey we will be waking up every morning to glorious sunshine so I can live with the hurricane season.

The hope is, that by the time we move, the so-called "credit crunch" will be but a distant memory and people will once again be taking their vacations in far flung, exotic locations. We also hope to get involved with local charities helping the children of the local area whose parents do not have the finances nor the means to education for their children or the most basic school supplies for those that can afford to send their children to school. So, all in all, our "retirement" is looking rather busy.

So from start to finish the whole process of buying a plot of land in the Dominican Republic has taken 11 months from the initial contact with the real estate agent, to signing all the documentation, transferring funds and finally getting a copy of the "Title" in my name. Would it have been quicker had we been in Sosua in person. I am sure it would but I now own a piece of land in the Caribbean without ever having left the comfort of my own home. Ah, the power of the internet.

GETTING A MORTGAGE IN THE CARIBBEAN OR LATIN AMERICA

How to finance your dream house in some faraway land? As one might imagine the process is not quite so regimented and routine as in the U.S. If you cannot pay cash, here is an introduction to what one can expect when seeking a mortgage for a Latin American property. Readers are promised that this is the kickoff to a regular column on the subject, which holds the promise of being a very useful nuts and bolts series.

Welcome to my new monthly column! My goal each month is to introduce readers to the mysterious world of offshore mortgaging -- or to be exact, the offshore mortgage industry. In this case, we will be zeroing in on the Caribbean Basin and Mexico.

Most of you have probably already been to either the Caribbean, Mexico or Latin America and decided it would be great to buy a piece of heaven. The big question is -- What do you do next and how do I get the perfect place to use as an investment -- perhaps one that will become the spot where you will spend your golden years.

Like anything else, it takes a lot of time and groundwork to finally come up with the perfect place that will fill all of your needs as well as be affordable. With that in mind, there are several ways to purchase that dream.

1. Pay cash,
2. Combine cash and borrowed money from your stocks or retirement accounts (Roth or 401 K for U.S. buyers),
3. A combination of the above, PLUS ... get a mortgage. Yes, a mortgage.

Five years ago several lenders saw an opportunity to make loans on properties outside the U.S. and Canada. Since that time there have been some ups and downs in the offshore or cross border financing industries. Some banks and financial institutions have come and gone, but there is still money available if you know how and where to get it.

Borrowing money is the same outside the country as it is the USA, Canada or Europe. There are key questions to ask about your ability to obtain a mortgage:

1. What is your credit history?
2. Do you have the ability to pay for the loan?
3. Do you have the cash to make at least a 20-30% down payment?
4. Is the property good collateral?

These are the questions the lender or anybody lending money wants to know the answers to!

Now, here are the base parameters for getting your loan:

• First, and foremost is your credit -- are you a creditworthy person? Minimum credit score of at least 680 is necessary -- the better your score the lower the payment and the better the rate given to you as it lowers the risk of the lender. Any blemishes or late pays on your record and you should start looking for a hotel to stay in.

• Second, LIQUID cash of at least 25-35% of your purchase price. This will cover the down payment and some closing costs. For instance, in Mexico the closing costs are 8-10 % of sales price.

• Third, you MUST have a property that is acceptable to the lender. There are only certain cities and areas that most lenders consider lending on property. Property must have all utilities (water, sewer, and electric) and preferably be on a paved road or in a planned community.

• Fourth, the property must be completed and be able to get an appraisal for the purchase price and Title insurance. Some lenders will do Construction to Permanent loans, but be careful as there is no guarantee that if the developer takes your money that he is going to finish the building. This has happened a lot in Mexico -- part of why that "Buyer Beware" adage originated.

Let us talk rates ... they vary according to countries and lenders. In Mexico, expect to pay 7.5% to 8.75% depending on your down payment or term of your loan. There are various programs available and check with your lender to find the best program for you. Rates do not change in Mexico as they would in someplace like the States, so the rate they give you is going to be your rate. The down side is it takes a long time to get your loan closed -- somewhere between 90 and 120 days. So if you want to use your new place for Christmas you had better get started by Labor Day.

In order to prepare the loan the lender needs your help and cooperation in obtaining the paper work they need. Which brings us to the next point -- I would really recommend that you get pre-approved even before you decide to buy. Most lenders will be happy to do this for you. By doing a pre-approval you are not going in blind and know what you can afford. This also helps with your negotiations when purchasing as you can show them that you are pre-approved and able to finish the purchase.

This should save you money as well. Just like any other loan, you are going to need two years of tax returns, three months of bank statements, a copy of pay checks, proof of cash or investments, a clear copy of your passport and a bunch of other papers your lender will require of you in order to make the loan. The best advice during this hassle of paperwork is to be flexible and patient with the process -- the end will justify the means!

Now where do you go for these type of mortgages? I have listed some of the companies that I recommend:

1. A Division of Stewart Title called their Mortgage Alliance Program. They have offices all over Mexico, Latin America and the Caribbean.
2. Conficasa Mortgage located in Houston Texas, with several offices in Mexico.
3. Finance North America, San Diego, California.

I hope that you have enjoyed this inaugural column and if I do not see you in Paradise at the very least I hope you check back with me next month!

TWO NATIONS IN HARMONY: SAINT MARTIN AND SINT MAARTEN

Early this year we posted a favorable “review” of life on the Caribbean island of Saint Martin/Sint Maarten, and an article containing a “close but no cigar” summary of that writer’s experience. The focus in those two cases was on St. Martin/Maarten's virtues as a permanent destination -- a place to live. Here the focus is through the eyes of a tourist, which is a very different focus. During a short visit one can focus on the strong points, and issues such as government bureaucracy and hurricane's need not concern one.

The island does have the interesting characteristic that despite being only 37 square miles, it is divided politically between a Dutch and a French side. It is the smallest island in the world ever to have been partitioned between two different nations. And the two sides seem to get along just fine these days.

Considering that not much is in harmony in today's world, it is a delight to visit a tiny island that is shared in such harmony by two nations -- in this case Sint Maarten, the Dutch side and Saint Martin, the French side. It is only 37 square miles, but two nations and over 80 nationalities happily get along in peace and harmony.

The smallest island in the world ever to have been partitioned between two different nations, Saint Martin and Sint Maarten, has been shared by the French and the Dutch in a spirit of neighborly cooperation and mutual friendship for almost 350 years.

The border is almost imperceptible and people cross back and forth without ever realizing they are entering a new country. There are four boundaries -- Belle Vue / Cole Bay, French Quarter / Dutch Quarter, Low Lands / Copecoy and Oyster Pond, testifying to centuries of peaceful cohabitation and the treaty that made the arrangement possible.

All the same, each side has managed to retain much of the distinctiveness of its own national culture. The French tend to emphasize comfort and elegance. The beaches are secluded, the luxury resorts provide lavish accommodations, and the restaurants offer the finest dining experiences anywhere in the Caribbean. The latest French fashions can be found in many of the shops, and the smell of fresh croissants and pastries mixes everywhere with the spicy aromas of West Indian cooking. Small cafés and charming bistros add a decidedly Gaelic and cosmopolitan flair to the place. On the whole the atmosphere remains very relaxed.

On the other hand, St. Maarten with its busy cruise port and bustling commercial district has long been an active center for trade and tourism. More developed and at the same time more informal, it is very Dutch in flavor and still has strong ties with fellow compatriots in the other Netherlands Antilles. Between the two different cultures in St. Martin and St. Maarten, vacationers will be able to find just about every kind of activity they might want for a perfect holiday in the sun.

Located midway through the chain of islands in the Caribbean, just as the Antilles begin to curve to the south, St. Martin is sunny and warm year-round, averaging 82 degrees Fahrenheit in summer and just 2 degrees cooler in winter. The island is buffeted by cooling trade winds that keep things temperate all year long. Average annual rainfall comes to about 45 inches, most of which occurs around late summer and early fall.

Sint Maarten is part of the Netherlands Antilles and encompasses the southern half of the island. Its population is approximately 30,000 and the official language is Dutch although Papiamento and English are widely spoken. Sint Maarten is an "island area" or a component of the Netherlands Antilles -- the status would be comparable to a municipality.

The Netherlands Antilles are part of the Kingdom of the Netherlands, however it is not in the European Union. Its currency is the Antillean guilder (however, the U.S. dollar is widely accepted). A planned restructuring of the Netherlands Antilles will see Sint Maarten become a separate country within the Kingdom of the Netherlands (like Aruba and the Netherlands Antilles are now). This dissolution is still planned, but has been postponed to an indefinite future date. The island area is 13 square miles. Sint Maarten is ruled by an island council, an executive council, and an administrator appointed by the Dutch Crown. Its capital is Philipsburg.

Sint Maarten borders the French overseas collective or territory of Saint Martin, which occupies the northern half of the island. The capital of French Saint Martin is Marigot. Today, St. Martin is a commune of Guadeloupe which is an overseas department of France. Islanders are entitled to vote in French elections.

St. Maarten, like many other Caribbean islands, was spotted by Christopher Columbus in 1493. But the island's real history began with French and Dutch settlers who divided the island in 1648. They have lived side by side ever since. St. Maarten gained partial independence from the Netherlands in 1954.

The dual identity of this island causes confusion about the correct spelling of the name: The Dutch side as part of the Netherlands Antilles is correctly called "Sint Maarten", the French side "Saint Martin". But there are all imaginable misspellings around; even Air France flies to Sint Marteen. Also popular (leaving out the repetitive acronym for Saint) is Maartens, Maartin, Marten, Marteens, Martins and Martens, or the very creative Martaan, Martan. Some folks like to ccombine the names into StMaarten/StMartin.

The cultural diversity of St. Maarten springs from its historical role as a crossroads for visitors to the New World. Dutch, French and British traders brought European traditions, while Afro-Caribbean people brought the language and culture of West Africa. Today the range of influences is reflected in the number of languages spoken. Dutch is the official language, but English is taught in schools and spoken everywhere, while other common languages are Spanish and Papiamento, the dialect of the Netherlands Antilles. St. Maarten's premier cultural event is its annual Carnival, which includes parades, calypso competitions, reggae shows, and an endless array of stands serving traditional island food.

The story of St. Maarten begins far to the south, in a region of the Amazon jungle known as the Orinoco river basin. Before Columbus arrived here during his second voyage in 1493, the island had already been inhabited for some one thousand years. The first people to settle here were a tribe of Arawak Indians who left their homeland in the Orinoco basin of South America and kept migrating upwards along the chain of islands in the Caribbean. They gave it the name "Sualouiga" meaning "Land of Salt" for the salt-pans and the brackish water they found here in great abundance.

The few fresh water springs around Paradise Peak, Mount William, Billy Folly, and in the Lowlands could only support a small population, and this is where they mainly tended to congregate. A number of artifacts from this period are to be found preserved in the St. Martin Museum: On the Trail of the Arawaks. ...

The tranquility of the Arawaks would not last for long. They were followed by another Amazonian group, the Caribs. A warrior people, the Caribs steadily pushed the Arawaks off St. Maarten and took the island for themselves -- only to lose it in turn to the Europeans.

Christopher Columbus sighted the island on November 11, 1493, the holy day of St. Martin of Tours. He claimed it for Spain the same day, and it is from this day that the island bears its name. Columbus never actually set foot on the island, but rather claimed it for Spain as he was passing by. Aside from asserting title to the place, the Spanish never took much interest in St. Martin, due to their obsession with the greater conquests of Mexico and South America.

It was virtually forgotten by Europeans until the 1620s, when Dutch settlers began extracting salt from St. Maarten's ponds and exporting it back to the Netherlands, so the Dutch, seeking an outpost halfway between their colonies in Brazil and Nieue Amsterdam (now New York), occupied the island in 1631.

The Dutch West India Company installed Jan Claeszen van Campen as governor, erected their first fort on the site of Fort Amsterdam, and began to mine salt. Known as the Old Spanish Fort, this bastion still stands at Point Blanche.

Before long, however, the Spanish, who wished to maintain their state monopoly in this essential preservative and who also became more aware of the island's commercial possibilities, drove off the Dutch in 1633 and erected a fort to assert their authority. The Dutch then moved on to occupy Curaçao.

In 1644, a Dutch fleet under the command of Peter Stuyvesant attempted unsuccessfully to retake the island. Stuyvesant, who later became governor of New Amsterdam (present-day New York), lost a leg to a Spanish cannonball during the fighting. Although Stuyvesant was buried in New York, his leg rests in a cemetery in Curaçao. Over the next 15 years, a number of abortive attempts were made by the Dutch to reclaim their lost possession.

The Spanish Commander, who was regularly besieged during this period, asked permission after his last victory to abandon the island, and in 1647 this right was finally conceded to him by the King of Spain. Laborers were brought in from Puerto Rico to dismantle the fortress, and the Spanish set sail, leaving behind, according to legend, a small contingent of French and Dutch who hid on the island and then sent out to neighboring colonies for reinforcements.

Events in Europe soon affected the island's destiny. With the end of the 80 Years' War between Spain and the Netherlands, the Spanish no longer needed a base in the Caribbean. They left St. Maarten, and the island was soon claimed by both the French (who sailed over from St. Kitts) and the Dutch (from St. Eustatius). After some skirmishes, the two powers signed a treaty in 1648 which divided the island between them.

How the Dutch and French finally partitioned the island makes for a great story. Supposedly, the two groups held a contest. Starting at Oyster Pond on the east coast, they would walk westwards -- the French along the northern edge, the Dutch along the southern -- and where they met they would draw a dividing line across the island. The French set off, having fortified themselves with wine, the Dutch with gin. The ill effects of the gin, however, caused the Dutchmen to stop along the way to sleep off their drunk; consequently, the French were able to cover a much greater distance.

In truth, though, the French had a large navy just offshore at the time the treaty was being negotiated, and they were able to win concessions by threat of force. The treaty was signed on top of Mount Concordia in 1648, but despite the reputation for peaceful cohabitation, the border was to change another 16 times until 1815 when the Treaty of Paris fixed the boundaries for good.

The cultivation of sugar cane introduced slavery onto the island, and hundreds of African men, women, and children were imported for this purpose. The French finally abolished slavery on July 12, 1848 -- a date now celebrated as Schoelcher Day. The Dutch slaves were emancipated 15 years later. Following the end of slavery, the island entered a serious depression that lasted until 1939.

The situation began to change in 1939, when all import and export taxes were rescinded and the island became a free port. Princess Juliana International Airport opened in 1943, and four years later the island's first hotel, the Sea View, welcomed its first guests. In the next few decades, St. Maarten boomed as an international trading and tourism center. Today, Dutch St. Maarten has nearly 3,000 hotel rooms and is visited by hundreds of thousands of people each year.

The Dutch began developing a tourist industry in the 1950s, but the French did not take advantage of this opportunity until the 1970s. St. Martin continued its large-scale construction projects throughout the 1980s, but now most of the development has been completed, and great care has been taken to preserve the island's natural resources.

And why do people flock to this happy dual nation island in the sun? Well it is for the sun, the fun, the beaches and more ...

1. Friendly and Safe. No reason to be trapped in the resort – this island is to be enjoyed and explored. Rental car is a must to experience St. Maarten/St. Martin and its friendly people.
2. European/Caribbean Culture with American Comforts – foreign enough to be exotic, but English is the most common language and the U.S. dollar the usual currency.
3. Best Port for Yachts – Most marinas, boat yards and supply stores – all duty free prices, often cheaper than in the States. Start your cruise or charter here!
4. Great Investment Opportunities – The island is open for business with an investor friendly legislation. Real estate is booming, time to buy your dream vacation home, before prices go through the roof.
5. Most Cosmopolitan Island on Earth – Only 37 square miles, but 2 nations and over 80 nationalities. Showing the world that we all can get along ...
6. Instant Island Addiction – Most visitors come back every year, many own a piece of paradise in one of St. Maarten's world class vacation ownership resorts.
7. Best Caribbean Shopping – Duty free bargains everywhere; look for jewelry, perfumes, liquors, tobacco products and much more.
8. Best Nightlife – Clubs for every taste, 12 casinos. Nonstop action for the party crowd. Drinking age 18.
9. Best Dining – Known as the Caribbean gourmet island, St. Maarten/St. Martin might be a culinary world leader with its restaurant selection.
10. Great Beaches – Saving the best for last is beaches, from an active beach scene to remote stretches of sand, the island has it all, plus year around sunshine.

Maybe the rest of the world should study this small island and it is two nations as an example of countries can co-exist in harmony which in turns adds to the economic strength of each nation.

An accompanying article, "Active Sint Maarten, Dynamic Saint Martin," covers the island's natural, cultural, and entertainment and other tourist offerings in some detail.

BANANA REPUBLIC, U.S.A.

Barack Obama is already making the Clinton and Bush years seem like the good old days.

Tom Woods, author of books such as The Politically Incorrect Guide to American History and Who Killed the Constitution?: The Fate of American Liberty from World War I to George W. Bush, has just had a new one published which has become a bestseller: Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse. A free chapter is available on the form at the bottom of this page.

Those who are familiar with Tom's previous work will expect trenchant exposition and devastating barbs aimed at the state's actors and court scribes. This article serves as a preview of what should expect in the latest book. Woods is clearly hoping to wake up a few people who have been asleep but are not irredeemable.

Close to a trillion dollars are being tossed around in a "stimulus" package that no one in his right mind -- and I do not here include the mainstream of the economics profession, which has disgraced itself in this crisis -- expects to bring about recovery. Economist Robert Wenzel rightly describes the stimulus as "just the insiders raiding the till while there is still money in it." Trillions of dollars are likewise being thrown at financial institutions that (if we actually believe in the free market) richly deserve to go bankrupt. Nationalization of the banks is being openly discussed -- an outcome our rulers assure us they would undertake only as a last resort, deploring every minute of it, and only for our own good.

We are learning what it is like to live in an Orwell novel. Our television screens are filled with people offering choices between idiotic and suicidal option A and idiotic and suicidal option B. We are being told that we must at least partially nationalize our banks, prop up zombie companies, lower interest rates to zero, and pass stimulus packages in order to escape the fate of Japan -- which, um, partially nationalized its banks, propped up zombie companies, lowered interest rates to zero, and passed eight stimulus packages. We have a president who tells us we cannot rely on the free market to get us out of this mess because the free market is what got us here, as if the Federal Reserve and its bubble-inducing monetary policy never existed.

F. A. Hayek won the Nobel Prize in 1974 for showing how central bank manipulation of interest rates gives rise to the kind of boom-bust cycle we are experiencing now, and that such phenomena are not caused by the unhampered market. If by some miracle you manage to hear this point of view on television, it will be sandwiched between hours and hours of Keynesian droning.

Of course, the rationale we are being given for the insanity is that these are crisis times, and the usual rules go out the window. That is what Paul Krugman means when he speaks of "depression economics" -- a special set of economic principles come into play in times like this that differ radically from those we would abide by under normal conditions. And so we see once again why Keynesian economics swept the board so successfully: It tells the regime just what it wants to hear. It provides intellectual cover for the expansion of government power and the seizure of private property that state officials want to engage in anyway.

"Never allow a crisis to go to waste," said chief of staff and former Freddie Mac board member Rahm Emmanuel. He need not worry. The Keynesian economists who suddenly dominate public life in America, years after everyone else assumed Keynes and his fallacies were long dead and buried, will weave every apologia under the sun for whatever activity Emmanuel and the president he serves choose to undertake. The all-purpose pretext is ready at hand: Why, we have got to do something about this terrible crisis.

Indeed we should do something -- but, as usual, it is exactly the opposite of what the federal government intends to do. We should cut the government's budget as drastically as possible, thereby releasing resources for use by the productive sector. (That worked pretty well in stopping the terrible depression of 1920–21.) We should stop the Fed from interfering in the recovery process. We should let the private economy sort out which activities undertaken during the artificial Greenspan boom are genuine wealth-generating activities and which are wealth-destroying bubble activities. The latter should be promptly liquidated so their resources can be better employed by the former.

Meanwhile, we still have some conservatives, frozen in the 1980s, calling for reductions in marginal income tax rates, among other feckless suggestions. Tax reductions are desirable, to be sure, but the crisis we are facing is a systemic one that is not going to be fixed by marginal changes here and there. We need to start talking big changes. We need to open up questions the regime has long since considered closed. We need to talk about the monetary system, the Fed, entitlements, and much else.

In other words, if the Left can advocate $1 trillion-plus annual deficits as far as the eye can see, why cannot supporters of the free market be equally bold in the opposite direction?

Conservatives' rediscovery of government frugality has been a refreshing thing to behold. The important thing now is for conservative intellectuals to be sure they know sound economics. For instance, the problem with the stimulus package is not the "pork," however evil, stupid, and counterproductive it surely is. The problem is the Keynesian nonsense on which the very idea of "fiscal stimulus" is based. The problem is the mistaken view that "spending" is what the economy needs now, and that all our efforts must be expended on ways to revive consumer spending and borrowing. (I have discussed all this in detail elsewhere.)

The president has unveiled a program to help troubled homeowners make their mortgage payments and stay in their homes. He is going to encounter the same problem Charles Murray identified in the mid-1980s in his book Losing Ground: American Social Policy 1950–1980. There Murray famously argued that poverty persisted in the United States not in spite of anti-poverty programs, but because of them. Before evaluating the empirical evidence, though, Murray first explained why, from a theoretical point of view, we should in fact expect this perhaps counterintuitive result.

Murray challenged his readers to devise a social program that would not cause net harm. He gave the example of a government program aimed at discouraging smoking. I cannot reproduce his whole argument here, which is quite lengthy, but his point is that the reward the government offers for people who quit has to be substantial enough to persuade them to go to the trouble of quitting, but not so substantial as to encourage nonsmokers to start smoking. Just as Murray says, this task turns out to be borderline impossible. It is especially difficult when the program in question makes it more desirable to be out of work. Given man's inclination to acquire wealth with the least possible exertion, such programs threaten to drag additional people into a cycle of dependency that mankind's inclination to sloth will only reinforce over time.

For similar reasons, every attempt to solve the problems caused by a housing bubble that the Fed should not have blown up in the first place, such as the proposed measures for mortgage relief, will exacerbate the problems, thereby leading to still more government intervention, in the very pattern Ludwig von Mises identified in his famous essay "Middle-of-the-Road Policy Leads to Socialism." That is the fallacy in the usual statement that "it would cost only $X billion to give every American who needs it" this or that benefit. Once people realize the government is giving out a benefit for free, more and more people will place themselves in the condition that entitles them to the benefit, thereby making the program ever more expensive.

The best outcome I can see is that under Obama the United States will experience the kind of economic stagnation that is now routine in Western Europe, with high unemployment and sluggish (if any) growth, and people standing around pretending not to know what could be causing it. A smaller and smaller core of productive firms and individuals will be expected to support a larger and larger demand for bailouts and other corporate and individual welfare. Who is John Galt, indeed.

The worst outcome, which we cannot dismiss out of hand, is a hyperinflationary destruction of the currency or, barring that, the reduction of America to banana-republic conditions.

Regardless of which of these outcomes actually occurs, the Obama administration will have moved the country farther away from a market economy than it has ever been in peacetime (barring perhaps the early years of the New Deal and its outright cartelization of industry), accelerating trends already at work under the Bush administration. If you want to succeed in the so-called private sector, you had better have some friends in Washington, because that's where credit and capital will be allocated from.

The dollar’s bust has to come. If this crisis does not do it, the looming entitlement disaster will finish it off.

And if you want to hold on to your wealth, assume the dollar is going to collapse. The euro is under terrific strain right now, and so the dollar may continue its artificial rally in the near term, but in light of the accelerating demands of the predatory sector (that is, the government) on the shrinking productive sector, the dollar's bust has to come. The printing press will be the regime's only way out. If this crisis does not do it, the looming entitlement disaster will finish off the dollar. How else are $70 trillion in entitlement liabilities going to be paid for? Floating a few more bonds?

Things could get very bad indeed. If we are to have any chance of beating back these unprecedented incursions of the state, supporters of the free market need to know their position cold. Here are two reading lists I have assembled for that purpose (1, 2). I wrote my just-released book Meltdown for the same reason: to educate Americans about the causes of the crisis, to be sure, but also to give supporters of the free market the ammunition they need to make their case effectively.

Even that may prove not to be enough. We may have to be consoled with the knowledge that at least we fought with all our strength. And fight we must, as Ludwig von Mises urged: "No one can find a safe way out for himself if society is sweeping toward destruction. Therefore, everyone, in his own interests, must thrust himself vigorously into the intellectual battle. None can stand aside with unconcern; the interest of everyone hangs on the result."

Meltdown Blames Feds for the Crash

CBS News reviewer gives Tom Woods’s new book a thumbs-up.

A review of Tom Woods's new book Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse appeared on CBSNews.com -- not where one usually goes for alternative thinking to the simpleton mainstream media chatter. However, Delcan McCullagh gives a fair-minded review that will usefully introduce newcomers to ideas like the Austrian School of Economics' theory of the business cycle and how the Fed and government policy create and exacerbate problems rather than solve them. Pretty impressive.

Not only is our current recession unusually deep and severe, but it is about to become the longest since the Great Depression. Housing prices are crashing, stocks have fallen into a deep bear market, and the only things up besides unemployment are the sale of ammunition and AR-15 rifles.

Figuring out how we have reached this point is not easy. One choice is to blame laissez-faire policies, an argument that has been invoked by everyone from notoriously pessimistic economist Nouriel Roubini and reporters at the New York Times to French President Nicolas Sarkozy.

On the other hand, the number of pages of federal regulations has swelled, not shrunk, over the last decade. The number of employees at the relevant agencies (SEC, FDIC, FINRA, OCC, NCUA, FFIEC, OTS, FHRA, and the FRB) has continued to grow. It was regulatory failure, not market failure, that gave us the spectacles of Darrel Dochow, Bernie Madoff, and taxpayer-funded bonuses at AIG.

Another explanation is that unfettered greed, especially on the part of Wall Street and mortgage lenders, is the culprit. But human greed and avarice are not unique to the last decade, when housing prices skyrocketed beyond what fundamentals permit, making that explanation less satisfying than it should be.

A new book by Thomas Woods called Meltdown (Regnery Publishing, 2009) provides a more fulfilling account of what went wrong, why it happened, and who is to blame. Woods holds a doctorate in history from Columbia University and is the author of the bestselling, iconoclastic The Politically Incorrect Guide to American History.

Woods's latest book makes a strong argument for laying the blame squarely on the shoulders of Washington politicians and regulators. One chapter is titled "How Government Created the Housing Bubble," and points to special privileges granted to Fannie Mae and Freddie Mac, a federal law allowing tax-free capital gains, and the Community Reinvestment Act's incentives for banks to make bad loans.

The ultimate culprit, in Woods's view, is the Federal Reserve. In 2001, he writes, "Fed chairman Alan Greenspan sought to reignite the economy through a series of rate cuts. ... the new money and credit overwhelmingly found its way into the housing market, where artificially lax lending standards made excessive home purchases and speculation in homes seem to many Americans like good financial moves."

This is not a unique criticism. Many economists, including Stanford University's John Taylor, have charged that the Federal Reserve kept interest rates artificially low and that the housing boom and bust could have been avoided with more prudent government policies. At a congressional hearing last fall, some Democratic politicians made similar allegations.

(For his part, former Fed Chairman Alan Greenspan responded in a Wall Street Journal op-ed article last week titled "The Fed Didn’t Cause the Housing Bubble.")

Woods is a senior fellow at the Mises Institute in Auburn, Alabama, a non-profit group devoted to libertarian scholarship and championing what is known as Austrian business cycle theory. The idea is that a central bank's low interest rates expand the money supply, therefore creating malinvestments (because, say, real estate or dot-com entrepreneurs believe there is immense demand for what they have to offer), an unsustainable boom, and an eventual correction. Nobel laureate F.A. Hayek, a leading proponent of that theory, was a founding board member of the institute.

The Austrian explanation remains a minority one among economists -- Times columnist Paul Krugman likened it to the "phlogiston theory of fire," and the late Milton Friedman claimed it has done "a great deal of harm." Woods's solutions to today's economic woes are the opposite of the U.S. government's (or Krugman's) approach: He would let firms go bankrupt, ditch Fannie and Freddie, halt bailouts, and question whether the Federal Reserve even needs to exist.

Woods says Austrian theory is worth studying because it correctly predicted what is happening today. "It is about time we listened instead to people who have a coherent theory to explain why these crises occur, saw this crisis coming, and have something to suggest other than juvenile fantasies about spending and inflating our way to prosperity," he writes, perhaps a little too optimistically given the current political climate in Washington.

Woods's work -- the complete title is Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse -- is in the vanguard of the first wave of books dissecting the Crash of 2008. (Rep. Ron Paul, the Texas Republican and former presidential candidate, said in a foreword that "there is no better book to read on the present crisis than this one.")

Other volumes include Taylor's Getting Off Track, Richard Posner's forthcoming A Failure of Capitalism, NYU's forthcoming Restoring Financial Stability, and William Cohan's House of Cards.

Meltdown will not be the last word on the slow-motion crash we have been waking up to every morning. But it has the virtue of being published early enough, and written accessibly enough, to make a difference. Assuming, that is, anyone in Washington besides Ron Paul reads it.

Seeking aggravation, we checked out the Amazon link to Richard Posner's forthcoming book, mentioned above. He does cite reckless Federal Reserve policy, but concludes (according to the summary) that more regulation is needed. At one level, we suppose. At another .... sigh.

WHEN CAPITAL FINDS NO PLACE TO HIDE

The Obama Administration is fighting a war on capital. Rich people are going to be punished.

Now that the greed party has been succeeded by the envy party in Washington, and egged on by plunging tax revenues, overt and rabid class warfare is back on the agenda. But it is not just the U.S. The world in general is becoming a less safe place for capital. Marxism/Leninism is back in style, and it is not pretty.

As Forbes asks: Where is a poor billionaire to go? There are not that many billionaires in the world so the issue might not seem that pressing. But we are reminded of the famous pastor Martin Niemöller poem "First They Came ...", where he describes the successive Nazi sweeps of communists, social democrats, trade unionists, Jews and finally Niemöller. He did not speak up against the earlier Nazi persecutions because he was not a member of the targeted groups. But by the time the Nazis came for him there was no one left to speak up.

Capital provides a source of sustenance and -- ultimately -- power independent of the state, so the state regards the rich as both a goose to pluck and a threat. Now the statists are coming for the billionaires, and really already the millionaires as well. Eventually what is left of the middle class will be plundered as well.

The crowds are milling outside the gates and the tax collector is sharpening his knives. Where is a poor billionaire to go?

There was a brief period, beginning in the Reagan Administration, when the U.S. was something of a tax haven. It got its taxes low enough that a prosperous entrepreneur who had other reasons for coming might voluntarily subject himself to the jurisdiction of the IRS. Rupert Murdoch comes to mind.

That era is over. The Obama Administration is fighting a war on capital. Rich people are going to be punished. The migration out will begin with New York and California, fiscal hellholes that will be pilfering the bank accounts of any wealthy person foolish enough to stick around.

Switzerland used to attract flight capital. No more. Its banks, now on the ropes, are squealing to tax inspectors. The next oligarch that gets on Putin's bad side probably will not head to Zug.

Ireland was for a while a growth tiger on the strength of low income tax rates and a willingness to take in tax exiles from other lands. It picked up some wealthy Americans, notably including a Campbell's Soup heir. But it would be a bad choice for relocation now. Its economy is tanking. Down the line, that means a tax grab on anybody who is still solvent.

Maybe island nations are due for a resurgence as havens for capital. Cyprus has attracted some capitalists from high-tax jurisdictions in Europe, but it has also attracted some shady characters. Ex-billie Robert Allen Stanford has given the Caribbean a bad name.

Check out Fiji. It is not the most politically stable of jurisdictions, but nowadays the coups are friendly, with executions kept to a minimum. The billionaire who founded Red Bull has an island there (the one that once belonged to Malcolm Forbes). The actor Mel Gibson has some acreage on Fiji, too. It might be a safe haven someday when California starts looking like the set of a MadMax movie. A U.S. expat now living in Fiji tells me that the citizens there do not mind interlopers, so long as they bring jobs.

You do not have to lose sleep over the world's dwindling population of billionaires. ... But their migrations are a harbinger of bigger capital movements. If billionaires are on the run now, millionaires will be tomorrow.

In our next issue we will publish Jack Anderson's annual scorecard of tax burdens around the globe. The U.S. remains a lot more hospitable to capital and work effort than most of Europe. But it is less inviting than Hong Kong or Singapore. Will the U.S. be able to attract, retain or create its share of smaller capitalists? Prospects do not look very good at the moment.

THESE DAYS HEDGE FUND MANAGERS ARE GETTING HIT WITH MORE THAN JUST REDEMPTIONS

If you need any more evidence that the hedge fund business is out of control, consider the goings-on at the NIR Group in Roslyn, New York.

On the morning of November 4 two burly men arrived at the office of NIR, headed by 38-year-old Corey Ribotsky. According to assertions in legal papers filed later, the two, an active Florida state trooper and a martial arts trainer, said they were the "silent partners" of Gerald Tucci and his son Michael, who had both invested in a Ribotsky hedge fund. They were there to redeem the Tuccis' $1.5 million investment. They demanded the money in a briefcase, or if that did not work, he could wire it overseas. They ominously noted they knew where Ribotsky's family lived. As they described their work, "We are involved when things need to be taken care of quietly."

Rough talk aside, they left without their money that day, and Ribotsky hired himself some bodyguards. But 10 days later Gerald Tucci, who runs an electromechanical components business in Hicksville, New York, decided the courts were a good place to settle this and sued Ribotsky in New York State Court in Manhattan for fraud, questioning the accuracy of Ribotsky's returns.

The redemption request was far from the only one to hit Ribotsky's $770 million family of hedge funds, which invest in trashy penny stocks. Ribotsky had suspended withdrawals in October and offered to move investors to a new fund with lockups of up to three years. The $7 billion of collateralized debt obligations that NIR was managing, sold by Merrill Lynch only two years earlier, had crashed.

For years Ribotsky had thrived by making private investments in public companies, most of them with very thinly traded stocks and starved for financing. In such deals Ribotsky would get discounted shares, and the company's stock would often plummet in value as Ribotsky sold them. On average a Ribotsky investment has resulted in a 53% drop in the price of a stock in the first year, says PlacementTracker.

The strategy, however, seemed to work for Ribotsky, even though he claims to never short stocks. He told investors that one of his main funds was up 8.27% in the first nine months of 2008. In a note to investors Ribotsky says his NIR Group funds had experienced "little volatility and have had positive returns in 114 out of 117 months." In an interview Ribotsky refuses to disclose his returns since October, saying only that January may have been down or flat.

Francis Tucci, another of Gerald's sons and a UBS investment banker, said in a legal filing that Ribotsky's positive return performance "simply makes no sense given how the underlying stocks have traded, the number that have stopped operating." Francis investigated 31 companies Ribotsky had invested in since 2006 and put together a spreadsheet that showed most of the stocks had little revenue and traded for less than a penny. The Tuccis deny any knowledge of the contretemps on November 4.

Ribotsky calls Francis's allegations "baseless" and says his valuations are sound. He refuses to talk about specific investments. "Our valuations are independently valued ... we have our independent third-party auditor," says Ribotsky. He and the Tuccis settled their legal dispute in early March. Ribotsky no longer uses the bodyguards.

IRS SEEKS TO RECOVER $227 MILLION IN UNPAID TAXES FROM ALLEN STANFORD

Details and claimants continue to issue from the R. Allen Stanford affair. The original accusation was that Stanford's banking operations were really a huge, $8 billion, Ponzi scheme. To the criminal charges and the claims against whatever assets are left of Stanford's operation by investors add a claim of over $225 million for back taxes by the IRS.

The IRS claims go back a decade now; penalties and interest assessed by the IRS have mounted since then. Stanford moved to the Caribbean in what looks like an effort to reduce his tax bill, by taking advantage of a U.S. Virgin Islands economic development program as well as the lower tax rates there compared to the states. It is unknown whether Stanford filed his required tax returns with the territorial Virgin Islands Internal Revenue Bureau.

Stanford's abrupt departure from the scene has left a lot of displaced development projects and families. He spread the disruption around.

Investors in R. Allen Stanford's Antiguan bank may have to get in line behind the IRS as they seek to recover money from the alleged swindler. The IRS asked a judge to let it continue to seek at least $226.6 million in back taxes from Stanford, the Texas financier accused of running an $8 billion Ponzi scheme.

The motion was filed on March 13 in the U.S. District Court in Dallas, where a court-appointed receiver is sorting out claims for more than $1 billion in assets frozen in customer accounts and in gold coins and bullion seized last month.

"The IRS shall file a fairly significant claim against R. Allen Stanford," agency lawyer Manuel Lena Jr. wrote in the so-called motion to intervene in the case brought against Stanford by the Securities and Exchange Commission.

Stanford's federal tax bill has swelled to twice the amount previously reported as penalties and interest piled up, and it may grow further because Stanford has not filed his 2007 tax return, Lena said in the court filing.

Ralph Janvey, the court-appointed receiver, will file his response in court today, answering more than 45 groups of investors that have requested permission to join the SEC's case against Stanford and his companies.

Janvey has already released $4.1 billion in frozen Stanford investor accounts. Only accounts linked to certain executives and employees, the bullion division, and accounts containing investments at Antiguan-based Stanford International Bank remain under the court-ordered freeze.

A federal judge in Dallas has frozen Stanford's assets and placed his U.S. operations into receivership. Chuck Meadows, an attorney who said he was representing the banker in the asset freeze, told the judge March 2 that the banker denied the Ponzi scheme allegations. Stanford invoked his right against self-incrimination under the Fifth Amendment of the U.S. Constitution, according to papers filed in the court March 11.

Lena's motion was filed a day before federal authorities moved a 120-foot yacht, the Sea Eagle, said to belong to Stanford from St. Croix's Gallows Bay to St. Thomas, both in the U.S. Virgin Islands.

Stanford has claimed residence in the U.S. Virgin Islands since 2006. By law he is required to file his tax returns with the territorial Virgin Islands Internal Revenue Bureau, not with the IRS, which has the right to audit the returns. It is not known whether Stanford filed returns with the territorial tax collector.

The Sea Eagle departed Gallows Bay March 14 with a U.S. marshal aboard. The yacht, which people close to the situation identified as belonging to Stanford, is being moved to St. Thomas's Yacht Haven Grande, where it can blend in better with large vessels docked there, said Ronnie Schang, an aide to U.S. Virgin Islands Governor John de Jongh. ...

Stanford's exit is bittersweet for St. Croix, said de Jongh and others who dealt with the man, who only months ago was promising to invest billions on an island where 30% of the people live in poverty and per capita income is $13,139.

Now, dozens of Stanford's workers are unemployed, including some who relocated to the island from the mainland. Construction of offices and a mansion on one of St. Croix's highest peaks overlooking the Caribbean Sea has stopped.

"I am disappointed," de Jongh said in an interview at Government House in Christiansted, St. Croix's largest town. "Clearly he was a large player within the Caribbean, but also I am very disappointed from the standpoint of the number of Virgin Islands families that are affected."

The Sea Eagle, registered in the Marshall Islands but flying a tiny Virgin Islands flag from its mast, is the largest private boat in the St. Croix marina, said Virginia Angus, vice president of the St. Croix Marine. At $12.50 per foot, its docking charges total about $1,500 per day, plus the cost of electricity, she said.

"We didn't get paid yet," said Angus, who is seeking reimbursement from the court-appointed receiver. She declined to say how much the marina is owed.

The gleaming white yacht, which is also equipped for deep-sea fishing, has been under 24-hour watch by St. Croix police since a contractor boarded it in search of valuables to settle an unpaid bill, soon after the U.S. government accused Stanford of running a Ponzi scheme.

It was among the most visible signs of Stanford's presence in the U.S. Virgin Islands, where he was trying to replicate an empire he built in the Caribbean nation of Antigua for the past two years. That project also imploded since the U.S. accused him of running a "massive ongoing fraud." He has not been charged with a crime.

On February 27, the parliament of Antigua and Barbuda voted in an emergency session to seize 254 acres of Stanford's land, according to Wendy Gordon, a spokeswoman for Prime Minister Winston Baldwin Spencer. The move was intended to preserve 800 jobs, the government said in a news release. Financial authorities also took over the Stanford-owned Bank of Antigua and Stanford International.

Stanford was attracted to St. Croix by an economic development program that would have allowed him to reduce his personal federal tax liability by 90% once he invested enough money and met other qualifications. He was approved for the benefits but was never issued a certificate required to actually claim them. De Jongh said Stanford asked the government to change its rules to qualify more of his income for the benefits once he received them, a request that was denied.

Stanford arrived in the Virgin Islands months after suing the IRS in February 2006 to contest a tax bill for 1999-2003 that had grown to $104.2 million by August 2008, according to liens on his properties in Florida and Texas. Lena said in court papers the IRS had also placed liens on his assets in St. Croix.

De Jongh and others said that while Stanford made his corporate presence known on the island, the man himself was less visible. "He didn't seem to immerse himself much in the community," de Jongh said.

OECD NAMES 46 INSUFFICIENTLY COOPERATIVE JURISDICTIONS

The OECD has deemed 46 jurisdictions insufficiently obsequious in meeting standards on tax cooperation and banking secrecy. The list includes almost all of the usual suspect offshore havens as well as many which have never been considered such.

The OECD has branded 46 countries and territories for "insufficient progress" in meeting standards on tax cooperation and banking secrecy, a Swiss newspaper reported on Monday (March 16). Swiss daily Tages Anzeiger reported that in a letter dated March 5 to British Chancellor Alistair Darling, OECD chief Angel Gurria had provided a list including Switzerland and Singapore, as well as territories such as the Cayman Islands, Andorra and Montserrat.

The list also included Costa Rica, Chile, Grenada, Guatemala, Hong Kong, Liberia, Panama, the Philippines, San Marino and Uruguay, as well as Gibraltar, Guernsey and Jersey and a host of Pacific and Caribbean islands.

France and Germany have been leading the charge to clamp down on tax havens, calling for an international "sanctions mechanism" to be imposed on territories that are on a list due to be prepared for a full G20 summit on April 2.

Swiss Finance Minister Hans-Rudolf Merz said last week that the OECD list was drawn up at the request of the G20.

Amid the pressure, Switzerland, Luxembourg, Austria, Monaco, Belgium, Andorra and Liechtenstein -- all of which are on the March 5 list -- said late last week that they would relax their bank secrecy laws to provide more cooperation against tax cheats.

Swiss Foreign Minister Micheline Calmy-Rey also criticized the OECD for providing a blacklist, in remarks published on Sunday.

"It is unacceptable that the OECD secretariat acts secretly on the orders of single member states. We have protested against this course of action. Such an error should not be repeated," she told newspaper NZZ am Sonntag.

SWITZERLAND BREAKS WITH TRADITION ON TAX EVASION

Switzerland gives some on banking secrecy, but by exactly how much?

Switzerland announced it would cooperate with other countries on tax evasion, but only case by case, as opposed to with "fishing expeditions" where governments ask for wholesale batches of data hoping to net some tax evaders. This is clearly a concession to outside pressure; how much of one it is in practice will be worked out over time. The Swiss are not succumbing to pressure easily.

The Swiss make a distinction between "tax fraud," which they consider a serious crime, and "tax evasion," which they consider a misdemeanor-type offense. It appears they intend to use this distinction in deciding which cases they cooperate on. In some previous Swiss cases the fraud criterion has been fairly obvious, such as where forged papers were used to create legal structures under whose name a financial account was opened. In less obvious cases the rest of the world often does not seem to understand the difference very well, nor might they want to. Most governments do not consider tax evasion just a minor crime.

The Swiss government said Friday (March 13) it would cooperate on cases of international tax evasion, breaking with a long-standing tradition of protecting wealthy foreigners accused of hiding billions of dollars in the Alpine nation.

The government insisted it would hold onto its cherished banking secrecy rules, but said other countries could now expect Swiss cooperation in cases where they provide compelling evidence of tax evasion.

"We want assistance to be restricted to individual cases to prevent fishing expeditions," President Hans-Rudolf Merz told a news conference, referring to the practice of seeking information about many individuals in the hope of discovering a few tax evaders.

Switzerland is hoping to avoid being blacklisted by world powers when they meet in April to discuss stepping up their fight against tax cheats. It is also embroiled in a dispute with the United States over wealthy Americans that have stashed money in its biggest bank, UBS AG.

Swiss authorities have provided the U.S. with the bank details of up to 300 wealthy Americans suspected of tax fraud, but refuse to identify about 50,000 more U.S. account holders Washington wants.

The bank, and the government, have said further cooperation would violate Swiss law, which makes an unclear distinction between the serious crime of tax fraud and the minor offense of tax evasion.

Merz said the country will now adopt standards set by the Paris-based Organization for Economic Cooperation and Development for countries working together against tax evasion. Switzerland had refused to commit to the standards since they were written in 2000 for fear of compromising banking secrecy rules.

"Banking secrecy does not protect tax crimes," Merz said. The change, he added, "will increase the acceptance of the (Swiss) financial center and give customers greater confidence" and safeguard jobs in a sector that employs tens of thousands of people in Switzerland.

He said, however, that Switzerland will maintain banking confidentiality for clients unless foreign governments produce concrete evidence of tax evasion. Switzerland's new cooperation will come into force after agreements with other governments that provide Swiss banks with new financial opportunities, he added.

Merz's announcement came a day after Switzerland's tiny neighbor Liechtenstein bowed to outside pressure by adopting the standards in a similar attempt to shed its label as a tax haven where foreigners can safely hide their money. Several others tax havens -- including Andorra, Bermuda and the islands of Jersey and Guernsey in the English Channel -- also have signaled over the past month that they would open their books to foreign tax inspectors.

Switzerland has been struggling to come up with a strategy for preserving banking secrecy while satisfying the demands of the United States, France, Germany and other foreign governments looking to crack down on tax evaders. The confidentiality of bank accounts is a sacred cow in the country, comparable to its long-standing neutrality, and has helped the country become one of the world's richest. Swiss bank vaults hold an estimated $2 trillion of foreign money.

The Swiss Bankers Association said it supported the decision, but now wants "an end to all improper international criticism of Switzerland and its legal system, and also an end to threats to put Switzerland on a so-called ‘black list.’"

The industry group said it expects all agreements to refrain from retroactively punishing banks or clients for old infractions. ...

The Swiss government also said Friday it would take part in a U.S. civil case against UBS, which is being accused of facilitating massive tax evasion by wealthy Americans. The Swiss will protect their "sovereign interests," according to a statement.

The UBS case represents the most serious crisis in the Swiss banking community since the uproar in the 1990s over Jewish accounts left unclaimed after World War II. After reacting slowly, Swiss banks eventually agreed on a $1.25 billion out-of-court settlement with the descendants of Holocaust survivors.

Switzerland passed its banking secrecy laws in 1934 during a worldwide depression and under the threat of espionage by France and Nazi Germany, which aggressively courted Swiss bank employees to divulge the names and data of customers. Strict penalties were imposed for violating bank confidentiality.

Still, secrecy rules have eroded. Swiss officials have retooled the rules over the past two decades to allow cooperation with governments trying to reclaim assets stashed in Switzerland by despots before they were deposed.

Julius Baer Chairman Says Swiss Offshore Banking Still Strong

“The core of banking secrecy, the protection of privacy, is kept.”

Swiss banks should still be able to attract foreign clients currently unnerved by changes to country's rules on banking secrecy, Julius Baer chairman Raymond Baer said in a newspaper interview.

"International clients will continue to appreciate the financial privacy traditionally anchored in Switzerland," the chairman of Switzerland's biggest dedicated wealth manager said in an interview for ... Finanz und Wirtschaft.

Switzerland last week offered to relax strict bank secrecy in some tax evasion cases in a response to a global crackdown on tax havens that has been rattling the offshore banking industry.

Baer said the government had been right to compromise on banking secrecy given prevailing political conditions, adding that 2009 would be an unpredictable year. "Decisive is that the core of banking secrecy, the protection of privacy, is kept and that it does not come to an automatic exchange of information," he said.

The company comprises private bank Julius Baer, hedge fund arm GAM and U.S. asset management unit Artio, which is slated for an initial public offering once market conditions allow.

"The proceeds will either be used for share buybacks or the acquisition of a private bank," Baer said. Buying opportunities could present themselves from some small private banks being forced to sell or foreign banks choosing to get rid of their Swiss private banking operations.

Baer said risk management functioned well at GAM, which did not invest in Madoff or Stanford products. "We are convinced that we can win further mandates, particularly from institutional investors," he added.

German Finance Minister Says Swiss Announcement on Bank Secrecy Not Enough

We will be watching what they do, not what they say, he says.

German Finance Minister Peer Steinbrueck says pledges to cooperate by Switzerland need to followed up with action. We get that. Here is the truly rich part of his pronouncment: He claims that Germany's "sovereignty" is infringed upon when other governments aid German tax evaders. Give him credit for original rhetoric, however overblown.

Somewhat more substantive is his demand that Switzerland disclose names of account holders and account information in "normal tax cases, even when there is no concrete suspicion of tax evasion." What he means by "normal" is not clarified. The lack of need for concrete suspicion is clear, and it sounds like a rich source of future disputes.

German Finance Minister Peer Steinbrueck said pledges by countries including Switzerland to expand cooperation in tax cases are not enough and must be followed by action.

"There is still a difference between announcements, concrete agreements and measures backed by legal action," Steinbrueck told reporters after a meeting of finance ministers and central bank governors from the Group of 20 in Horsham outside London yesterday. "I think we are on the right track if these announcements are followed up by concrete measures."

Steinbrueck said it is "unacceptable" for Germany and infringes its sovereignty that some European governments are welcoming tax evaders, resulting in a contraction of the country's tax base.

The G-20 ministers and governors said they will place states that do not cooperate on a list of uncooperative tax havens that has been compiled by the Paris-based OECD. G-20 leaders will ratify the plan in London on April 2.

The threat to put Switzerland on the OECD list of non-cooperative countries "is like having the Seventh Cavalry in Fort Yuma that can be ordered to ride out but does not have to," Steinbrueck said. "The important thing is that the Indians know it exists." Switzerland is currently not on the OECD's list, he said.

Give the guy still more credit for drawing on American myths for his metaphors.

Countries like Switzerland must unveil the names of account holders and provide "access to information in normal tax cases, even when there is no concrete suspicion of tax evasion," Steinbrueck told Der Spiegel magazine in an advance copy of an article to be published tomorrow.

STOP THE PRESSES: JOHN DVORAK LIKES LINUX

Almost all the newest hardware coming out has Linux support. The critical mass has been reached, and it is time everyone tried Ubuntu.

John Dvorak is one of the better know technology writers of our day. His position on Linux has heretofore been that he would like to like it, but it has not been there yet for the average everyday user. Needless to say this has not endeared him to the rabid pro-Linux crowd, but it has probably saved some users from becoming prematurely discouraged with Linux as well.

Now Dvorak has had his Road to Damascus conversion experience. He tried the latest version of Ubuntu, found that it did an adequate job of detecting his hardware, and ... "It is so good that I am a little annoyed with myself for not getting to it sooner." The user experience is good, and you get the lack of bloat and fewer security issues (for now) to boot. What a deal.

Every so often I take a stab at Linux, to see exactly what I like and do not like about the OS. Many of its problems, for me, stem from its inability to run on my overloaded hardware, or the occasional driver that makes the OS impossible to use without hand-tweaking something or other. That said, I seriously like the Ubuntu 8.10 implementation and will now install it permanently on my latest machines. It is a winner.

This OS has a lot of nice features, and it is quick. It is freely downloadable all over the net as a ISO disk image, too. Go to the official Web site for a download link. Ubuntu is particularly cool because the install version is also a "live" version, meaning that you can boot it and run it from a CD without installing the OS at all. More important, it is a fully functional live CD, meaning that it can save and load files from drive C: or a NAS.

When I encountered a glitch, I changed to a safe graphics mode that limited my screen to 1,280-by-1,024 rather than 1,600-by-1,200 -- but this was no big deal.

While your PC is running Ubuntu as a live install, the CD is doing all the work for the OS, and even so, it is at least as snappy as Windows. Install it onto the hard disk as the OS for the system and the thing really flies. I am not sure how many legacy old clunkers can run this operating system, but it is the perfect reinstall for older machines that bog down under Windows. The live feature is what it makes it so cool; no need to install the OS before thoroughly testing it.

For lightweight work, the install disk comes with Firefox for Linux and AbiWord, a credible open-source substitute for MS Word. In fact, there is probably a Linux program that will substitute for just about any Windows programs with as much or more functionality -- with the exception of Adobe Photoshop. That said, there are plenty of photo editors for Linux. The popular GIMP app comes to mind.

While the various Linux desktops generally are not as polished as Vista, they are functional and easily as slick as Windows 2000, the OS most observers think was the best Microsoft ever did. In many instances the complexity of Linux turns out to be smoothed over by the Ubuntu architecture. It is so good that I am a little annoyed with myself for not getting to it sooner. And I sure do not want to hear "I told you so!" from all the Linux mavens.

I am in the process of putting together a new Atom-based mini-ITX machine (with an Intel D945GCLF2 motherboard) for use as a Web browser in the kitchen. This OS would be ideal if for no other reason than the fact that I will not have to worry about anyone in the family fooling around online and getting the little machine clogged with viruses and Trojan horses.

I seriously appreciate the fact that Linux is mostly immune from malware, in much the same way as the Macintosh. I had a small machine in the kitchen running Windows, and every time I ran a scan on the thing I kept discovering too many problems. I know that if Linux becomes too popular, the malware will come. But for now it is rare -- a good thing as far as I am concerned.

I am tired of dealing with Windows malware, patch Tuesday, and the never-ending deterioration of the OS as it clogs up like a drain in a greasy-spoon restaurant. I cannot take it anymore.

And there is something else that always bugs me about Windows. I have an iMac that I use at the office, and a few times every month Apple has some patch that it sends out. With few exceptions, each time a patch is installed with the Mac OS, the performance of the machine improves. With Windows, the performance always declines.

I do not think Microsoft has ever sent out a patch that improved the performance of the machine. Ever.

And of course, the biggest differences between Ubuntu and Windows are the cost and the subsequent headaches, because Microsoft is constantly fretting over bootleg copies. The company monitors machines to make sure they are running legal copies of software. There have already been instances of computers shut down by Microsoft HQ because of some glitch in the cloud. This is simply unacceptable. I do not want to rely on a system like that.

I cannot wean myself off Windows altogether because, well, I write about Windows. But for ancillary machines that I put together where I need reliability and low price, I am always going to see whether Ubuntu works. And if it does, that is what gets installed.

If I had a small or mid-size company, I would probably use only Linux and open-source software, just to stay out of the way of the software police and their onerous "audits" -- another abhorrent situation that, to me, is intolerable.

You should also note that almost all of the newest hardware coming out has Linux support. The critical mass has been reached. Go download Ubuntu 8.10 and see for yourself what the fuss is about. You won’t regret it.

SHORT TAKES

3 of the Top 5 Medical Tourism Destinations Are in the Caribbean

For the past few years THE trend in tourism has been medical tourism—traveling to foreign countries for lower cost medical care. Medical tourism destinations have emerged all over the globe, from Thailand to South Africa, and even European countries such as Hungary. The industry anticipates a great deal of growth in the coming years, from a 2004 estimate of $40 billion to $100 billion by 2012, according to statistics produced by McKinsey & Company and the Confederation of India.

Experts believe that medical tourism will have a positive impact on the economies of destination countries and benefit skilled and unskilled trades alike. ...

Currently, 3 of the Top 5 Medical Tourism Destinations in the world are in the Caribbean Basin. These destinations are deemed to offer the attractive opportunities for medical tourists and foreign investors alike. The destinations were selected based on quality and affordability of care, as well as receptiveness to foreign investment.

Another real plus is that the medical staffs in the Top 5 are largely English-speaking, which eliminates a serious obstacle for the majority of foreign patients. In order, the Top 5 are:

1. Panama
2. Brazil
3. Malaysia
4. Costa Rica
5. India

Let us see what our three Caribbean destinations have to offer ... [See source for detail.]

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