Wealth International, Limited (trustprofessionals.com) : Where There’s W.I.L., There’s A Way

W.I.L. Offshore News Digest :: October 2009, Part 2

This Week’s Entries :

FOLLOWING THAT CYBER DREAM

Simply put, if and when you make your move ... your life is likely to be just as full and far more enjoyable than it is wherever you are living at this very moment. And that is largely because of the Internet.

In his “Clews’ Views” column, Carter Clews regularly highlights locations in Latin America whose combination of quality of life and affordability makes them good relocation destination candidates. This month the the “location” is a state of mind: “With the advent of the Internet, the boundaries of time and space are about to be erased and the closest-knit communities will be based more on commonalities of interest than accidents of birth.”

Of previous recommendations Clews writes: “Each is a beautiful village, which many would consider well out in the middle of nowhere. Each is charming, pristine, and well-priced. But, to some, all are isolated, remote, and too far away from family and friends. ... Well, let me suggest that in today’s cyber world, there is no ‘middle of nowhere.’ There is no isolation. Remote is in the mind’s eye. And family and friends are as close as the keyboard.”

He was struck when attending a conference of Web enthusiasts that the mostly much younger co-attendees had loosened their mental moorings which had tethered them to the United States. “Yes, they were still in the United States, but they were no longer of the United States.” And whenever the conference speaks went ideological on them their attention would drift elsewhere. ... Maybe there is hope.

Conclusion? “In short, if you can muster the $1,500 a month it costs to live a life of luxury in Latin America, join the Cyberworld Revolution, forget about the artificial confines of time and space, and move offshore.”

When your heart gets restless, time to move along
When your heart gets weary, time to sing a song
~~ The King of R&R

This month, I want to make a slight departure from the usual Clews’ Views fare. Rather than take you to a spot on the map, I want to transport you to a state of mind. I want to take you on a quick journey through time and space to where I think you may end up tomorrow. And I want to encourage you to make your reservations today.

The critics tell us that the sign of a great novel is that the entire theme is summed up in the first sentence. Hence, Moby Dick, the story of a wandering sailor, begins, “Call me Ishmael.” And A Tale of Two Cities famously begins, “It was the best of times, it was the worst of times ... it was the spring of hope, it was the winter of despair ...”

So, let me begin this little treatise thusly: With the advent of the Internet, the boundaries of time and space are about to be erased and the closest-knit communities will be based more on commonalities of interest than accidents of birth.

Now, I know that is pretty ponderous – especially for a column that is supposed to focus on living the good life at a great price somewhere south of the Rio Grande. So, let me simply sum it up with a few choice words from The King of R&R: “You gotta follow that dream wherever that dream may lead you.”

And now, with the Internet – along with its companion piece cell phone – you can do it all at the push of a button and speed of light. In recent months, I have recommended to you such “faraway places with strange-sounding names as Castenango, Guatemala; Riohacha, Colombia; and, most recently, Mascahapa, Nicaragua.” Each is a beautiful village, which many would consider well out in the middle of nowhere. Each is charming, pristine, and well-priced. But, to some, all are isolated, remote, and too far away from family and friends.

Well, let me suggest that in today’s cyber world, there is no “middle of nowhere.” There is no isolation. Remote is in the mind’s eye. And family and friends are as close as the keyboard.

This first dawned on me a little over a year ago when I attended an Internet conference in New York City along with about 2,000 other Web enthusiasts (most of whom were about a third my age). The speakers addressed every aspect of the Internet experience, from the latest high-tech developments to hands-on applications. And most of it, frankly, went right over my head. (When I was a kid, the most popular thing on TV was the test pattern, so I make no pretense of understanding the inner workings of the World Wide Web).

What did capture my attention, however – and leave an indelible impression – was the unmistakable impression that the thousands of young co-attendees simply do not consider themselves earthbound Americans. Yes, they were still in the United States, but they were no longer of the United States.

In fact, when political speakers from either end of the ideological spectrum came to the podium to vent their spleens, the young cyber citizens would either (1) leave the auditorium, (2) turn their full attention to their ever-present laptop computers, or (3) post Twitter entries on the big screens the conference hosts had placed behind the podiums, Tweeting about everything under the sun – except the topic the speaker was discussing.

The point is – and it has direct ramifications for your future – the deeper one enters the world of the Web, the further one gets from world directly outside your door. Which, in turn, means that your door can now be pretty much wherever you want it – and you, and your world will revolve around your online community of family, friends, and like-minded confederates.

Now, let me reify that and tell you exactly what it can mean for you.

Simply put, if and when you make your move to Castenango, Riohacha, Mascahapa, Mercedes (Uruguay), Corozal (Belize), Roatan Island (Honduras) – or any of the other locales I have written, or will write, about – your life is likely to be just as full and far more enjoyable than it is wherever you are living at this very moment. And that is largely because of the Internet.

Think about it for a second: How often to you actually see your closest friends and family right now, up close and personal? How often do you actually go to the major sports events to watch your favorite team? How often do you thrill at the thought of climbing in the car and winding your way through backed-up traffic to go to work every morning?

If your answers to the above were “Occasionally,” “Rarely,” and “Never,” it may be well nigh time to move offshore.

With the Internet, you can communicate with your friends and family 24/7/365 instantaneously by email, IM, Twitter, your own blog, Facebook groups, and even YouTube. Throw in the cell phone, and you can not only talk to them live, you can send them photos of what you are doing “right now,” and you can text them every time you have a salient thought.

With the Internet, you can stay current on all of action from your favorite sports team. And very soon, you will be able to watch every play on your laptop computer. But, instead of sitting inside of your house gazing out the window at barren trees and icy sidewalks (all the while worrying about how you will pay your escalating heating costs), you will be in a tropical paradise enjoying the life of Riley with a twist of lime while your favorite team gets trounced by my Baltimore Ravens (sorry, couldn’t help myself).

As to work, more and more Americans are already replacing commuting with computing – and it does not really matter where you are computing from. According to a recent WorldatWork survey, more than 17 million employees performed work remotely at least one day per month in 2008. And according to FutureofWork.net, “That number is projected to increase to more than 25 million within five years.” In fact, FOW predicts that within 10 years, the footprint of centralized office space will be down by an astounding 75%.

So, my advice is to beat the crowd and, if you possibly can, do it out now. If major automobile manufacturers can build cars from computer terminals far removed from the factory floor, chances are that whatever you are doing can be done just as well (and far more enjoyably) from a beachfront condo at Belize’s Orchid Bay or Nicaragua’s Gran Pacifica.

But, the fact is, I know that a lot of readers of this column do not have to worry about work. You are either at retirement age, or very close to it. Right now in the United States, 78,000,000 Baby Boomers are retiring at a rate of 10,000 a day. According to a recent study by Ernst and Young, more than 50% of those retirees will not be able to afford to live on their retirement income. And that study came out before the government’s latest round of deficit spending sent the inflation rate spiraling to 7%.

So, what is a retiree to do? Well, let’s finish up where we started out: With the advent of the Internet, the boundaries of time and space are about to be erased and the closest-knit communities will be based more on commonalities of interest than accidents of birth.

In short, if you can muster the $1,500 a month it costs to live a life of luxury in Latin America, join the Cyberworld Revolution, forget about the artificial confines of time and space, and move offshore. Buy a place on the beach at beautiful Keyhole Bay on pristine Roatan Island, and, trust me, you won’t have to worry about missing your friends and family – they will be the ones knocking at your door, beach blankets and snorkeling gear in hand.

So when a dream is calling you
There’s just one thing that you can do
You gotta follow that dream wherever that dream may lead.
Believe me, as a World Wide “Webster,” you won’t miss a thing.

TALES OF A CARIBBEAN SAILS MAN (AND SALESMAN!)

Some people move to a new home after a long and involved mental uprooting process. Others know immediately. This writer visited the U.S. Virgin Islands while in high school and immediately knew he wanted to move to the Caribbean permanently. Figuring out the specifics took a little work.

All the islands he checked out had some deal-breaker. A lot of the time, it was simply the cost ... of real estate and living. “The taxes were often sky-high. Getting a permanent visa was not always so easy, and often getting a job as a foreigner was an even tougher prospect. Sadly, there were some islands where the locals made it obvious they were happy to take our tourist dollar, but they really did not like us being there. There was even one island I went to twice, and both times the wind was so strong all week long it gave me a headache. So I kept searching.”

Eventually the author was made aware of Mexico’s Costa Maya, on the Caribbean just above the border with Belize. Not an island, to be sure, but this had its advantages, and the sun and sand was what mattered anyway. He visited the area, and the rest is history. Actually, history does not end with Costa Maya, as he eventually moved to another development on the coast of the Yucatan. But that is a tale for another day.

I originally wrote this article several years ago when I was still quite naïve. As with anything, things change greatly over time. I have long since left Costa Maya for the company’s latest development known as Sunset Shores. I personally prefer it for a number of reasons. Each person is unique in what they prefer (insert your own “one man’s trash is another man’s treasure,” phrase here). So, in another article, I will share my love for Sunset Shores.

Although I chose Sunset over Costa Maya, there are still plenty of explorers and investors out there who will prefer Costa Maya, and for many good reasons. Right now I would like to share my original article, which I have updated for this publication, inserting changes in syntax and accuracy updates.

Hmmm. Just exactly how did I come to be here, staring up at the Milky Way Galactic Disk in awe, seeing it for the first time in my life? Well, it is a long story. But first let me explain what the Galactic Disk is for anyone who has not seen it. On a clear night down here on the Costa Maya, looking up at the sky is even better than going to the planetarium back home. I had never seen so many stars in the sky before.

I understand it is due to two things – the lack of pollution and the lack of city lights. All the usual constellations are in evidence: Big Dipper, Little Dipper, Hercules, and Orion. Plus one thing I have never seen before, which a local pointed it out to me, known by the official name of the Milky Way Galactic Disk. They have some colorful names for it down here on the coast – like Sky Rainbow and something in Mayan that seems to translate roughly into “Ghost Riders of the Sky.”

How to describe this unique disk? When the Big Dipper is to the north, with the ladle pointing down into the Caribbean Sea, look just to the left. Starting at the horizon there is a band of pale light, like moonlight dancing off a rippling pond. It stretches from one horizon in the north to the other side of the world, like a rainbow. It is caused by trillions of stars in our galaxy amassed into a swirling disk, the light of each bending and intertwining as it travels across space and time and enters our atmosphere.

If you have a good eye and are far away from any light sources, you can pick it out in all types of situations. Being on a quiet beach makes it so much more easy and beautiful to locate and appreciate because the light from the disk bounces off the water. Now that I know what to look for, I have seen it from deserts and mountaintops as well.

Now allow me to digress. I have loved the water from an early age, and learned to swim when I was quite young. By the age of nine, I was swimming on the team at the local pool during summer vacation. I noticed the all-stars on the team where kids who swam on the all-year team at the YMCA, so I tried out for that team after my second summer season. I was doing pretty well, and I saw that a swimming scholarship might be a good way to pay for school, as swimming rivaled the other sports in popularity in our town. In seventh and eighth grades, I did two-a-day workouts in the summer, and in ninth grade went to Loyola in Baltimore on a swim scholarship. And that led to an international swimming meet during my sophomore year held in St. Croix, U.S. Virgin Islands.

When we touched down in the Caribbean, I was stunned. ... I knew then that i wanted to come back to the Caribbean permanently.

Before that, I had never been outside of the tri-state area of Maryland, Pennsylvania, and Virginia. The swim team flew out of BWI in a sleeting snow storm. Hours later, when we touched down in the Caribbean, I was stunned when I stepped out of that airplane.

The wonderful warm weather in the middle of winter, the palm trees softly swaying, the scent of the sea breeze when we got close to the ocean, and of course, the views; they were all just mesmerizing. I knew then that I wanted to come back to the Caribbean permanently. At the time it was a far-off dream, but I never forgot it; and as the years went by, every time I got the chance I checked out another island.

I loved most of the islands I visited, but there was always something that prevented me from settling on any one permanently. A lot of the time, it was simply the cost – the cost of real estate, the cost of living, the cost of building. The taxes were often sky-high. Getting a permanent visa was not always so easy, and often getting a job as a foreigner was an even tougher prospect. Sadly, there were some islands where the locals made it obvious they were happy to take our tourist dollar, but they really did not like us being there. There was even one island I went to twice, and both times the wind was so strong all week long it gave me a headache. So I kept searching.

Which leads up to how I arrived here. ... I had first heard of the Costa Maya about two years previously when I read about it in a international magazine that was promoting some properties there that they had some sort of interest in. Then I read about it again in the New York Times. That article described it as a new and upcoming tourist destination.

The Times was talking about it in a tourism sense, whereas the other magazine had focused on the emerging real estate market for foreign investors. Then I heard about it on a popular talk-radio show. The guest was a gentleman who had written a book about good places for Americans to retire and live well on their nest eggs.

He specifically named Costa Maya as a great place to snap up cheap coastal property and have a place built on the beach. He also mentioned neighboring Belize as a popular place to do crafty banking that was supposedly legal back then. It all sounded interesting, so I went back to the original article which specifically named Trans Caribbean Trust Company as the most reputable and knowledgeable people to do business with. After an hour-long phone conversation with the owner of the company, my partner and I were booking plane tickets to Cancun.

We were met at Cancun airport by Jim Gregory from TCT. It was a long way down the coast back then, about five hours. Now, almost 10 years later, the highways have been improved (or in the case of some stretches, built up out of the savannah where there was no road). Back then, the last 35 miles from Cafetal to Majahual were a pretty rough jeep trail. So we were a bit sore by the time we finally hit the coast.

But, holy guacamole, talk about virgin beaches! 52 miles of virgin beaches! You have to see this place for yourself to believe the beauty of it. Again, back then there were not many hotels, so we had to go about 20 miles south to find one. Nowadays, travelers to Costa Maya have plenty of options for all budgets. Also, we have a corporate plane to take our customers on showings, cutting the long drive down to a quick 55 minute flight. Costa Maya has a landing strip just north of Majahual and there is alsoa new cruise ship pier. This is south, over Majahual, towards Xcalak and Belize.

The next morning, we started looking at property. Within hours I knew that not only would I be buying land here, but I would be coming back to live here forever. I spent the summer between high school and college living in Ocean City, Maryland, and I was already getting back into the beach bum frame of mind. I knew this was going to be it, my Island paradise, except that this was not an island at all.

For several obvious reasons, it is actually better to be on the mainland anyway, so the fact that this was not an island did not bother me at all. I found out though, that I still had a lot to learn about what really makes the perfect beach lot. For instance, most of us picture the postcard frame of a Cancun beach as the perfect lot, with the clean white sand and the waves rolling into the beach. As it turns out, that is not really what to look for – because what to look for has a lot to do with the reef (or lack thereof).

If you build your house on an eroding beach, one day it will almost assuredly wind up in the Federal Zone. Or worse yet, your beautiful beach house could wind up in the Caribbean.

So began my lessons about the Great Mayan Barrier Reef and beach hydrology. You see, perhaps the most important factor to consider in looking at beach lots is erosion. This is especially true here in Mexico where we have what is known as the Federal Zone. This zone is 20 meters (66 feet) wide, starting at the high water line and extending inland, and it is considered Federal property.

The purpose behind this is to keep anyone from land-locking the beach, but what is really important here is you cannot build your house in the Federal Zone; and if you build your house on an eroding beach, one day it will almost assuredly wind up in the zone. Or worse yet, your beautiful beach house could wind up in the Caribbean. I have actually seen this happen in some places, particularly Playa del Carmen, where there is a huge break in the barrier reef. Luckily, the reef stretches up and down most of the 52 miles of the Costa Maya, but it does have breaks along the coast, and it is important to avoid these areas.

It is not too hard to know where the reef is strong. For one thing, in most places on the coast you can actually see the waves out there breaking on it. Even if the reef is submerged though, you can usually tell by the waves, or by how the vegetation is growing down toward the beach, or the grass growing in the water. Of course, we have flown over it many times at low altitude, and that is usually the best way to see it, other than snorkeling the reef itself.

There are other important factors, like the elevation of your building site, and where the road is located. In many places along the coast, the road runs in front of the lot, between you and the Caribbean because of the mangroves. Mangroves are another important thing, they are federally protected because they are an important part of the ecology – namely, they secrete a tannic acid that keeps the reef healthy.

So after considering all this for a few days, and picking out the most beautiful lot we could afford, we made our choice. Our plan had been to buy multiple lots and sell one a few years down the road, but we had waited too long. So, my only regret was that we had not acted earlier, when I had first heard about the Costa Maya. Of course, now, a year later, I have lost track of how many people have said to me, “I only wish we’d been here a year earlier”. And next year, the newly-arrived will be saying that to those who are saying it now ... and even to this day, the town of Majahual continues to grow, with an awesome new boardwalk being built extending from the cruise ship pier into town.

Over the next year I watched the government-funded infrastructure reach the Costa Maya from 60 kilometers away, then spread up and down an access road that runs the length of the 52 mile coast. The access road is set back from the beach road and ties into the beach road with lateral connecting roads. A gas station, a water pumping station, and a power station were all completed. The word got out, and more and more of the best beaches were bought up.

There was also the word-of-mouth publicity generated by the hundreds of thousands of people who were seeing Costa Maya for the first time when their cruise ships dock at the brand new Puerto Costa Maya. (Remember I mentioned flying above as we go into the Costa Maya to take customers property shopping.) Small communities made up of locals and expats from all over the world have sprung up, most notably in Xcalak and El Placer. Many of the new residents I call friends (Here’s lookin’ at you, El Placer Crew!).

Life here is good. We eat fresh lobster a couple times a week ... catch some rays ... go diving or fishing or boating ... stare up at that awesome sky and the Galactic Disk at night ... What are you waiting for? Come on down and see for yourself. And, keep an eye out for my article on Sunset Shores!

THE PANAMA CITY SALES AND RENTAL MARKEt

A chance to buy into Panama on a dip.

Kathleen Peddicord has never been coy about her enthusiasm for Panama as a retirement or business destination. The real estate market there bubbled up along with the rest of the world. With the slowdown following the bubble-burst, what is the situation right now?

“I do not mean to pretend that Panama has been completely unaffected by the global financial meltdown,” she writes, “but the effects have been marginal and, from where I sit, welcome. The Panama City market, especially, both for sales and rentals, was running on overdrive. It has settled down now, creating a window of opportunity for both the retiree and the investor.”

“I’m not ready to retire yet but plan to in five years. I’ve decided Panama is the place, and I’m considering buying something in Panama City that could generate rental income between now and when I take up residence myself.

“Do you think this is a good idea? Could there be a reasonable cash flow from the rental income to make this a viable investment?” ...

Yes ... and yes.

When we moved to Panama City 15 months ago, the sales market already had begun to cool, but the rentals market was bubbling over. Three apartments were spirited away from me by other renters quicker on the draw with their checkbooks before I learned to take the real estate agent’s advice about making a decision on the spot more seriously.

This market-at-a-boil cannot continue long, I reported at the time, and, indeed, the Panama City rentals market has settled in the year-plus since.

Settled but not crashed, as some have been predicting. And I do not believe it will. I am confidently bullish on this market long term.

Rental yields of 8%+ per year.

If you, like the reader whose question I share above, are planning to retire to this town sometime down the road, this is your chance to buy a retirement pad of your own on a dip. If you are an investor looking for a place to place some capital, I say again, this is a market with a bright future. Capital appreciation will not come at the rate Panama City apartment owners have enjoyed over the past half-dozen years, but it will come. And, meantime, you could enjoy rental yields of 8%+ per year. We have been yielding better than 12% net per year on the downtown apartment we bought three years ago and have just renewed our tenant’s lease for another 12 months.

Other former bubble markets worldwide have imploded. Why not the Panama City market?

Here’s why: I do not mean to pretend that Panama has been completely unaffected by the global financial meltdown, but the effects have been marginal and, from where I sit, welcome. The Panama City market, especially, both for sales and rentals, was running on overdrive. It has settled down now, creating a window of opportunity for both the retiree and the investor.

The better acquainted I become with this country, the more convinced I am that this is the place to be (as a retiree, an investor, and an entrepreneur) for the coming decade.

Here is your chance to buy your way in on the dip.

FIVE SECRETS TO MAKING MONEY FROM AN INTERNATIONAL RENTAL INVESTMENT

The real secret to success is the rental manager.

Kathleen Peddicord advises that one should not expect to get rich as an international landlord. Yet, it is her preferred investment vehicle right now because it is a way to generate sustainable, reliable yields. What are reasonable yield expectations? “Less than 5% a year, and you are doing something wrong ... More than 8%, and you are riding a wave. Enjoy it while it lasts.”

There are lots of factors to consider for a potential real estate investment, but “You can pay a below-market price for an ideal unit in a perfect location and still not net 5% a year. I speak from experience.” The biggest difference maker, she has found, is the rental manager. Some advice on finding a good property manager is offered.

Friends halfway around the world are facing a challenge. A year ago, they invested in an apartment in Panama City, which they intended to renovate, furnish, and then make available on the short-term rental market.

A simple plan that has been derailed by a series of setbacks. Today, more than 12 months later, their apartment is still not ready for tenants, and they are regrouping.

I am trying to lend a hand, as they are in Asia, and I am here in Panama. The experience is reminding me of the fundamentals of a rental investment.

First, what is a reasonable return? The truth is, you are not going to get rich as an international landlord. Why then is this my preferred investment vehicle right now? Because, in the current uncertain global climate, this is a way to generate sustainable, reliable yields. The rate of yield varies by market, of course, but 5% to 8% net per year should be your expectation. Less than 5% a year, and you are doing something wrong (more on this in a minute). More than 8%, and you are riding a wave. Enjoy it while it lasts.

Second, what is a reasonable purchase? It depends on the marketplace. What type of rental is likely to cast the biggest net for potential tenants over the long haul?

In most places, a one-bedroom makes most sense – though in Paris, for example, one-bedroom rentals are a glut on the market, but two-bedrooms can be in short supply ... meaning, if you can afford it, a two-bedroom can make more sense (and yield greater return).

In a beach market, a beachfront unit is key. People are coming for the sand and the sea. Front-line units will always enjoy better occupancy.

In a city high-rise market, you want a building with an elevator, a doorman, and parking that is within walking distance of day-to-day services and amenities (grocery store, newsstand, restaurants, dry cleaners, etc.)

In an emerging market (like the northeast coast of Brazil), you want new, if possible. In a more mature market (like Panama City), resale can make more sense, because the per-square-meter cost for new can be too high to allow for a decent rental yield.

Third, should you rent your place out short- or long-term? To make this decision, you must understand the current dynamics of the marketplace. Who comprises the biggest potential tenant population? Visiting businesspeople (short-term)? Business executives placed in the country on extended contracts (long-term)? Tourists (short-term)? Retirees (long-term)?

When making this determination, also consider the local tenant laws. In some jurisdictions, a long-term tenant can be all but impossible to displace if he decides he does not want to move on. In France, for example, you will not be able to evict a tenant (no matter how many months in arrears he is with the rent) in winter. Can’t put someone out on the cold street, say the French.

Fourth, should you furnish the place? If you intend to rent short-term, definitely. If you will be renting long-term, maybe, again depending on the marketplace.

When considering the to-furnish-or-not-to-furnish question, understand what “furnished” and “unfurnished” mean in the local context. In some markets, unfurnished requires blinds or drapes at the windows ... in others, it means you do not even have to spring for appliances or lighting fixtures.

Finally, what are the keys to success as an international landlord?

You want to buy right – the right kind of unit in the right location for the right price – of course. But, in my experience, having invested in rental properties in a half-dozen countries, these are not the real secrets to realizing a decent yield.

You can pay a below-market price for an ideal unit in a perfect location and still not net 5% a year. I speak from experience.

The real secret to success at this is the rental manager.

We're currently netting better than 8% per year from our apartment rental in Paris. Yet we've had other rental units in this city (also charming apartments in sought-after locations that we were offering for rental during much stronger market climates) that didn't manage to yield us even our minimum 5% a year.

The difference? The rental manager.

How do you find a good one? Ask for references from other landlords who have been invested in the market for some time. Interview at least two. Go with a professional.

In most markets, things like commission structure and percentage and what is included for that fee are standardized (though you want to confirm and clarify in every case). Therefore, you should choose your rental manager based on the duration and the particulars of his (or her) experience. A friend of a friend who has been managing his own apartment rental for a couple of years and who is now looking to expand to manage others’ investments is not the guy you want. (Again, I speak from experience.)

You want someone with an established infrastructure (for advertising, taking reservations if you are renting short-term, negotiating contracts if you are renting long-term, reporting, etc.); existing support (for meeting tenants upon arrival with the keys, responding to tenants’ cries for help turning up the heat in the middle of the night, and managing things like inventory in the case of a furnished rental); and a proven track record (for bringing in renters, keeping track of cash flow, and making sure the local tax and utility bills are paid on time).

HOW TO SAVE THE AMAZON? BOMB THE ROADS

Building a road into a wilderness area, whether the nominal purpose be recreational, “management,” or overtly developmental, is a pretty sure way to destroy the area’s pristine state. Just observe the land holdings “managed” by the Bureau of Land Management in the U.S. For the most part the whole operation is a subsidy to the logging industry. How shocking ... not.

Constructing roads is particularly harmful to tropical rainforests. A leading American biologist, Thomas Lovejoy, says: “Roads are the seeds of tropical forest destruction.” Road expansion has led to tropical forests around the world “vanishing at a rate of 50 football fields a minute.” Now Brazil has built a 1200 kilometer highway into the heart of the Amazon and is planning on building another 900 kilometer road into the Amazon.

For all the many intiatives throughout the world to save the rainforests, restricting the construction of new roads is by far the most cost-effective approach to conservation. This means getting governments to stop doing what they do naturally – blow money in a perversely destructive manner.

“The best thing you could do for the Amazon is to bomb all the roads.” That might sound like an eco-terrorist’s threat, but they are actually the words of Eneas Salati, one of Brazil’s most respected scientists. Thomas Lovejoy, a leading American biologist, is equally emphatic: “Roads are the seeds of tropical forest destruction.”

They are quite right. Roads are rainforest killers. Without rampant road expansion, tropical forests around the world would not be vanishing at a rate of 50 football fields a minute, an assault that imperils myriad species and spews billions of tons of greenhouse gases into the atmosphere each year. We will never devise effective strategies to slow rainforest destruction unless we confront this reality.

In our increasingly globalised world, roads are running riot. Brazil has just punched a 1200-kilometre highway (the BR-163) into the heart of the Amazon and is in the process of building another 900-kilometre road (the BR-319) through largely pristine forest. Three new highways are slicing across the Andes, from the Amazon to the Pacific. Road networks in Sumatra are opening up some of the island’s last forests to loggers and hunters. A study published in Science found that 52,000 kilometers of logging roads had appeared in the Congo basin between 1976 and 2003 (vol. 316, p. 1451).

As my colleagues and I reveal in a forthcoming article in Trends in Ecology and Evolution, these are just a small sample of the many new road projects slicing through tropical frontiers.

Why are roads so bad for rainforests? Tropical forests have a uniquely complex structure and humid, dark microclimate that sustain a huge number of endemic species. Many of these avoid altered habitats near roads and cannot traverse even narrow road clearings. Others run the risk of being hit by vehicles or killed by people hunting near roads. This can result in diminished or fragmented wildlife populations, and can lead to local extinctions.

In remote frontier areas, where law enforcement is often weak, new roads can open a Pandora’s Box of other problems, such as illegal logging, colonization and land speculation. In Brazilian Amazonia, 95% of deforestation and fires occur within 50 kilometres of roads. In Suriname, most illegal gold mines are located near roads. In tropical Africa, hunting is significantly more intensive near roads.

Environmental disasters often begin as a narrow slice into the forest. Rainforests are found mostly in developing nations where there are strong economic incentives to provide access to logging, oil and mineral operations and agribusiness. Once the way is open, waves of legal and illegal road expansion follow. For instance, the Belém-Brasília highway, completed in the 1970s, has developed into a 400-kilometer-wide swath of forest destruction across the eastern Amazon.

Beyond the forest itself, frontier roads imperil many indigenous peoples, especially those trying to live with limited contact with outsiders. As I write, indigenous groups in the Peruvian Amazon are stridently protesting the proliferation of new oil, gas and logging roads into their traditional territories. The roads bring loggers, gold miners and ranchers who often subjugate the indigenous people. Even worse, the invaders can bring in deadly new diseases.

Throughout the tropics, infections such as malaria, dengue fever, enteric pathogens and HIV have all been shown to rise sharply after new roads are built. Some indigenous groups, such as the Surui tribe of Brazilian Amazonia, have been driven to the edge of extinction by roads and the invading loggers, colonists and diseases they bring.

What can we do to slow the onslaught? First, we must vastly improve environmental impact assessments for planned roads. In many developing nations, EIAs focus solely on the roads themselves, completely ignoring the knock-on effects. In Brazil, for instance, EIAs for Amazonian highways focus only on a narrow swathe along the route, often recommending only paltry mitigation measures, such as helping animals to relocate before building begins.

EIAs for certain mines, hydroelectric dams and other large developments focus only on the project itself while ignoring the impact of the roads it will invariably spawn. New roads will continue to drive rainforest destruction so long as the EIA process is so fundamentally flawed.

The second thing we have to do is fight to keep the most destructive roads from being built – the ones that penetrate pristine frontier areas. There is no shortage of battles to wage. A proposed highway between Colombia and Panama, for example, would expose one of the world’s most biologically important areas, the Chocó-Darién wilderness, to rampant destruction. Likewise, Brazil’s BR-319 highway is threatening to open up the central Amazon like a zipper.

Finally, we need to pressure those promoting these frontier roads. These include timber corporations like Asia Pulp & Paper and Rimbunan Hijau, international lenders such as the Asian, African and Inter-American Development Banks, and massive infrastructure schemes such as Brazil’s Programme to Accelerate Growth. In their scramble for tropical timber, minerals, oil and agricultural products, China and its corporations have become perhaps the biggest drivers of destructive road expansion.

Restricting frontier roads is by far the most realistic and cost-effective approach to conserving rainforests and their amazing biodiversity and climate-stabilizing capacity. As Pandora quickly learned, it is far harder to thrust the evils of the world back into the box than to simply keep it closed in the first place.

HEALTH CARE FOR EXPAT RETIREES IN MEXICO

A quarter to a half of what you pay in the States, with no loss of quality.

Foreign medical care can be had in Mexico and many other countries for so cheap that one can actually save money getting care there compared with getting equivalent care at home, even with the cost of transportation plus a recuperative vacation thrown in. And healthcare cost and quality for expats, especially older retirees, is of course going to be an issue for anyone thinking in that direction. Much more coverage on the subject is forthcoming on these pages. For now, here is a quick menu of medical costs in Mexico courtesy of Live and Invest Overseas. Americans be prepared for reverse-sticker shock.

“Anyone worried about rising health-care costs in the United States can potentially save a bundle just by going south of the border,” writes new Mexico Correspondent Therese Lewis. “Health care in Mexico costs a quarter to a half what you pay in the States. And those savings are across the board – including doctors’ and dentists’ visits, lab tests, surgeries, even medical devices and prosthetics.”

You do not have to cut back on quality to get these savings, either. Mexican health care is good, often excellent. Medical schools in cities like Guadalajara are comparable to any in the United States – in fact, many Americans study medicine in Guadalajara. In addition, many Mexican doctors do post-graduate work in the United States or in Europe.

Medical and dental costs in Mexico are low enough that many expats choose to pay out-of-pocket, even when they have health insurance – it is less bother than submitting claims. Here are the kinds of savings we are talking about: With these prices, it is no surprise that medical tourism is booming in Mexico. Many Mexican cities along the U.S./Mexico border actively promote medical and dental tourism, with ads, websites, and plenty of English-speaking staff. Tijuana, just south of San Diego, is one of these. Others include Los Algodones, near Yuma, Arizona; Nogales, due south of Tucson; and Reynosa and Matamoros along the Texas/Mexico border.

But you do not have to stick near the border to get excellent, inexpensive medical care. You can find it throughout the country. Most medium-sized and large cities in Mexico have modern hospital facilities (often several hospitals), clinics, high-tech lab facilities, and well-trained medical staff. Even small towns have medical clinics with nurse practitioners and visiting doctors.

If you need an English-speaking doctor, you are more likely to find one in private practice or on staff at a large private hospital. (Mexico, like many countries, has a national health system with its own medical staff, hospitals, and clinics. Doctors on staff at these nationalized hospitals are less likely to speak English well.)

The smaller the town, the harder it will be to find English-speaking doctors – unless it is a beach town that attracts tourists, in which case no place is too small. You may have to rely on Spanish, however, with nurses, lab technicians, and other hospital staff.

But you will likely find that their caring attitude makes up for any lack of English. Again and again, expats comment that, in Mexico, they receive a level of warm, personalized medical care that they no longer find at home.

Personalized care and lower prices? Now that’s really a bargain.

Live and Invest Overseas sells a “kit” they call the “Top Health Insurance Options for the Retiree Abroad Kit” – “the most comprehensive resource available on this important topic.” It can be purchased here.

GUNS AND FORTUNE COOKIES

Beijing sends a message to the rest of the world: We are to be taken seriously.

China’s recent display of military might was exceedingly impressive, but do not let that fool you says Simon Black. The Chinese have built up their defense capabilities for ... national defense – really. Their military is to let war-mongering politicians in other countries know they are will not be pushed around. But China’s rulers realize that ultimate dominance will come from economic might, not military might alone. The U.S. only became a military superpower and empire after becoming an economic superpower.

The sight of nuclear missiles being paraded down the street in a perfectly crisp formation is simultaneously revolting and awe-inspiring. Yet the Chinese government knew exactly what it was doing when it orchestrated its most prominent display of military hardware in the middle kingdom’s history.

This week is China’s biggest holiday week of the year, celebrating “National-day,” when Mao’s communist revolutionaries took control of the country. The government kicked off festivities earlier this week with a military parade that was so intricate and precise it made their 2008 Olympic opening ceremony appear utterly amateurish.

Tanks, armored personnel carriers, and yes, nuclear missiles, were all on the march down Beijing’s main drag; overhead were squadrons of fighter jets and attack helicopters. They all moved in perfect symmetry like a team of gold medalist synchronized swimmers (who just happen to have nuclear annihilation capabilities).

China has been beefing up its military for years, and this week was show time. Sure there were hundreds of thousands of adoring locals beaming with pride, but Beijing was really sending a message to the rest of the world: We are to be taken seriously.

The thing that most westerners do not realize is that China’s military is largely home grown. While U.S. and European defense contractors peddle their wares in this part of the world (Raytheon and General Dynamics do big business in Taiwan and South Korea), Soviet-era weaponry still dominates the inventory in this part of the world.

In fact, U.S. intelligence analysts still cut their teeth on Soviet weapons and tactics due to wide scale use in the developing world. Not the case in China.

The Chinese have their own advanced military weaponry, including 55 publicly traded defense contractors that are just as big and profitable as Lockheed. If you think that China is ever going to invade Taiwan, these would be a good bet (Xi’an Aircraft International Corporation, Jiangxi Hongdu Aviation Industry Co.).

Personally, though, I do not think that is going to happen.

For all of its military posturing of late, which includes recent joint military exercises with the Russians, the Chinese have built up their defense capabilities for, err ... national defense.

(Conversely, notwithstanding the misguided Bush doctrine, I have long argued that the U.S. should rename its own bureaucracy the Department of Offense, which is indicative of both its true military posture as well as moral aggression.)

Three key factors will likely prevent China from entering an armed conflict:

(1) Its military is completely untested; despite China’s shiny new advanced weaponry, its armed forces have not participated in a single combat campaign, so there is no institutional knowledge that will improve combat effectiveness.

(2) Children rule family life in Chinese society. Parents invest heavily in their “little emperors” because children are widely viewed as the older generation’s retirement plan. Who needs social security when you have junior’s spare bedroom?

This is a direct consequence of China’s long held “one chil”q policy, and no Chinese parent wants to see his investment crushed by unnecessary foreign folly.

To be clear, this is not to say that the U.S. enjoys sending its children into combat; rather, armed conflict is something that American society has unfortunately become accustomed to over the years. The United States broke the seal a long time ago.

(3) China’s policymakers realize that their most effective foreign policy tool is economics, not bullets. Their beefy military is around simply to make war-mongering politicians think twice before rattling any sabers.

Consequently, I would bet on huge profits in Chinese tourism and agriculture before I would even think about positioning my investments for war with Taiwan (or anyone else for that matter).

INTERVIEW: SIMON BLACK, THE FREEST MAN IN THE WORLD

The mysterious traveler who writes for “Sovereign Man” shares his philosophy on traveling, thinking outside the system, and what true freedom really means.

We picked up on the Sovereign Man website recently (in just came online in June) and, finding him a man after our own heart and impressed with his experience and knowledge, have been regularly posting articles we found there. This interview with the Sovereign Man publisher, who goes under the nom de guerre “Simon Black” – “I go by an alias because I value privacy and discretion ... there is not enough left of it in the world today” – was actually published in early 2010. We decided to retroactively insert it here.

The interview appears on a website called “Brave New Traveler”: “We publish thoughtful and entertaining articles exploring travel in the 21st century. ... BNT avoids ‘destination-specific’ narratives and instead focuses on topics like philosophy, health, politics and culture. ... [W]e write about stuff that matters: how to travel the world, respect other cultures, and discover the many paths to being a global citizen.”

Interesting interview, to say the least – as one might expect. Black’s website aims to “provide concise, actionable information” to help open people’s eyes. It certainly does that.

What do you get when you cross Jason Bourne with Donald Trump? Likely the enigmatic figure of Simon Black.

Simon writes dispatches to his website Sovereign Man, including his newsletter “Notes from the Field,” sharing in his own words “shockingly candid information about the markets, my travels around the world, and surprising secrets we discover along the way.”

I spoke via Skype with Simon to uncover his philosophy on traveling, thinking outside the system, and what true freedom really means.

Brave New Traveler: On your site, you reveal Simon Black is not your real name. You say “I go by an alias because I value privacy and discretion – there is not enough left of it in the world today.” Is there anything more you can tell us about your background?

Simon Black: I used to be in the military, and did that desert “stuff” for a while. But then I became disillusioned with the direction the country was headed. I spent so much time in the military overseas, that I did not feel comfortable in the U.S. anymore.

The first place I went afterward was Panama. Someone that I had been stationed with was down in Panama back when the U.S. forces were still here, back in the ‘80s. And this guy just could not stop talking about how great Panama was and how I had to check it out, so I did and it was fantastic.

I have always had a real estate background, so that is the financial end of how I view the world. I started doing some real estate investment down here in Panama, and it just led to more and more things, and next thing I knew I was traveling all over the world, and here I am.

What motivated you to start up your site Sovereign Man as opposed to keeping your knowledge to yourself?

I think that travel is the best teacher. You can go to school for years, and you are not going to learn the kind of things that you learn when you are running around Africa, and Latin America, and Asia.

When you spend so much time with different cultures, and you actually put your feet on the ground somewhere and you meet the locals, and you get to know prominent and influential people in different countries, you really learn how the world works. You do not learn that in school, there is no textbook for that.

I realized that a lot people were recognizing where the world was headed, and they were uncomfortable where the world is headed.

And so over the years I built up some level of knowledge particularly in certain industries, whether it is international finance or offershoring. I realized that a lot people were recognizing where the world was headed, and they were uncomfortable where the world is headed.

What direction do you feel the world is headed?

Well, a lot of people looking for answers right now. They do not like the way that Western society, and the United States, Western Europe, seem to be turning increasingly socialist – they don’t like what is happening with the present administration. They don’t like what happened in the previous administration.

They are looking for solutions. And these are exactly the kinds of solutions I have come across over years of traveling.

They don’t like war, they don’t like death, the don’t like deficits, they don’t like socialized bank bailouts, they don’t like excessive regulation, they don’t like high taxes, and they are looking for solutions. And these are exactly the kinds of solutions I have come across over years of traveling.

When you grow up in the U.S., you grow up thinking America, USA, #1, and maybe that was true in 1986. You get indoctrinated from very early age into this system, and it is that system now that says America is #1.

Religious people seem to think that God and Jesus Christ are Americans. And America is the first among equals in the world. And anything outside the U.S., whether it is medical care, whether it is a government system, whether it is corporations, technology is somehow inferior – and the fact of the matter is that it’s not.

People are surprised go overseas to places and they find the quality of everything they can get is phenomenal.

I think the illusion that you can have some grassroots campaign and change the system and fight the man is frankly bullshit.

For some people disillusioned with the current system, their reaction is to get angry, particularly at the government. Yet you believe people need to eliminate the mindset that “you are subject to a corrupt government that is bent on degrading your personal liberty.”

I think the illusion that you can have some grassroots campaign and change the system and fight the man is frankly bullshit. I just do not see it being possible. It really is counterproductive and at the end of the day, you have yourself and your family to worry about.

And there is literally an entire world of opportunity out there – whatever the problems you might have, there are limitless options and solutions out there to improve your life, whether it be a personal situation or a professional situation.

People get so focused on their country, they became a slave to their geography, and it is just completely senseless.

One of the things we do is get people to think globally. People in the United States, they are out of a job, they cannot find work – well, where are you looking? Are you trying to find work in Fort Myers, Florida, the epicenter of the real estate collapse? Probably not a good idea. You have better chances of finding a job in different places in the world.

People get so focused on their country, they became a slave to their geography, and it is just completely senseless.

How can people think outside their geography?

People have a box that they live in, whether it be their country or their neighborhood, and with that worldview, they end up fighting for turf in this little box, fighting over changes that they don’t like.

And in truth, that is a pretty enslaving battle. If you are going to fight that battle, you are going to lose, because things are going to change, there is no way to prevent it. If they are not changing in your favor, then that is just the way it is.

I don’t want to start quoting the Matrix, but seriously, a lot of things that western society deems important – our FICO scores, whether we own or rent, our position in the rat race, etc. are complete nonsense.

I am trying to get people to realize that this box, the system everyone believes in, is a complete fallacy. I don’t want to start quoting the Matrix, but seriously, a lot of things that western society deems important – our FICO scores, whether we own or rent, our position in the rat race, etc. are complete nonsense.

Extensive travel is one of the ways to step outside of the box and see all of that garbage for what it really is.

You see just as soon as you go somewhere, the way you previously viewed an area, the way you viewed the people, they way you viewed your own opportunities, probably came from people who had no first-hand experience and it was all hearsay. You suddenly find lots of opportunity there because you would free yourself from this artificial mental construct that kept you confined to a singular geography.

Our goal is open people’s eyes a little bit.

Your site newsletter aims to “provide concise, actionable information each day to help achieve those ends.” Can you eleborate?

For those that are ready for it, we offer slaving away in a cubicle and worrying about your credit score, or whether you are still going to have a job tomorrow. Human beings are not meant to exist in that way.

What does true freedom mean to you?

I think true freedom is being able to make your own choices, without having the influence of other entities you have not invited into your life. I am a permanent traveler, I do not have a home anymore. That usually blows peoples’ minds. They say, where do you live? And I say, I don’t live anywhere. Where do you get your mail? I say I don’t get mail, I don’t have a postal address. When I tell this to attorneys they say, where do you get served? I don’t get sued either.

Freedom is being able to have complete control of my time and make choices, and choices are based on what I want, and not being told by someone or something else.

In 2009 for example, I spent a month in Dubai, month in Argentina, month in Panama, couple months traveling around Europe, several months in Asia. I spent some time in New Zealand, Croatia, Colombia, Chile ... all over the place. I just go from place to place, I generally have a reason to go, either personal or professional opportunity.

Freedom is being able to have complete control of my time and make choices, and choices are based on what I want, and not being told by someone or something else.

We are not promising anybody a magic pill here. We are not saying if you hate your situation, all you have to do is take this pill, call this lawyer, buy this piece of property and you will be good to go. Everybody is completely different in the things that make them happy.

I think everyone wants more freedom in their life, whether it is freedom from their asshole boss, or being able to have more time, or not having to worry about money, or their bills, all these types of things that people tend to worry about. You know everybody has issues and challenges, and it is about the ability to build away from that.

That is really what I am providing on my site. Actionable advice to achieve more freedom, that allows you to live a happier, richer and fuller life.

For more, visit Sovereign Man, and sign up for Simon Black’s newsletter “Notes from the Field.”

DUBAI IS STRUGGLING, BUT RISING (A BIT)

For the right expat, it is a worthy location ... as long as you do not mind abiding by a few cultural guidelines.

As Simon Black characterizes the United Arab Emirates, Abu Dhabi has been patiently saving its money and waiting. Dubai tried to leverage its relatively meager natural resource wealth into “sustainable industries in technology, finance, media, health care, education, and just about everything else you can think of.” Dubai had ambitions of becoming “the Hong Kong of the Middle East,” in the process acquired poster boy status for excess during the worldwide financial bubble.

Come the bust it was clear Dubai’s reach had exceeded its grasp. “Needless to say, with a relatively small capital base to start with and an enormous outlay of cash to make the infrastructure investments, Dubai has become cash poor and its bills are piling up.”

With some help from big brother Abu Dhabi and slightly looser credit markets Dubai has some room now to resurrect itself. But its ambitions to be the region’s “undisputed financial and cultural champion” are likely to fail, thinks Black. Resource rich Abu Dhabi and Qatar have lots of dry powder, and now see what not to do. “In the end ... I think financial constraints prevent Dubai from winning.”

Dubai is looking something like Rocky Balboa late in his first fight with Apollo ... bruised, battered, struggling to his feet – but still fighting. Of course, if you remember the movie, Rocky did not win that fight. He was all heart, no belt. I think the analogy fits.

To be clear, I think Dubai is great. ... I have done a lot of business there and I enjoy it; it is fun, safe, diverse, historic, and cosmopolitan. For the right expat, namely internationalists and expeditioners, it is a worthy location ... as long as you do not mind abiding by a few cultural guidelines.

Dubai is one of seven emirates that collectively make up the United Arab Emirates. Each is semi-autonomous – the UAE federal government handles things like the postal system, air traffic control, national immigration issues, foreign affairs, national defense, etc.

All other powers not expressly granted to the federal government are reserved for the individual emirates. At least someone is getting some use from that clause.

All other powers not expressly granted to the federal government are reserved for the individual emirates. Come to think of it, I think I read a similar clause to this once in the U.S. Constitution. Oh well, at least someone is getting some use from it.

Out of the seven emirates, the two that count are Dubai, for its glitzy showmanship, and Abu Dhabi for being the money man.

As for the other ones ... well, Sharjah is a fairly important port location, Ajman is where they tried to sell overpriced real estate using Stephen Baldwin as their celebrity poster boy, and the other three emirates do not even try to get noticed.

The reason for the inequality is a matter of resource rights; Abu Dhabi has the most productive real estate, therefore it gets the majority of the resource wealth. And for most of the last several decades, Abu Dhabi has been patiently saving its money and waiting.

Dubai, on the other hand, took the relative chump change from its own resource wealth and began investing heavily around the turn of the century. The goal was to attract foreign businesses and professionals to create sustainable industries in technology, finance, media, health care, education, and just about everything else you can think of.

Each of these industries became subsidized by the government in some capacity in order to provide foreign companies with a strong incentive. Zero taxes and lax labor laws certainly helped.

Then the government, through quasi-state owned construction companies, started “master planning” by building huge, self-contained mini-cities specifically for each industry – “Internet City”, “Media City”, “Academic City.” Each was designed to have a full suite of commercial, residential, retail, and recreational space.

When the bubble burst, much of Dubai’s financial industry dried up instantly, as did trade. The city turned into a ghost town.

Initial demand was strong, and for the first few years it looked like the plan was working. By 2006, Dubai was the it place, and people from all over the world were flocking there to live, work, and invest. It was during this time that the world bubble economy was starting to peak, and Dubai would not be immune.

When the bubble burst, much of Dubai’s financial industry dried up instantly, as did trade. Real estate and retail buckled shortly after. The city turned into a ghost town – even Sheikh Zayed Road, the main “thoroughfare” that was typically a parking lot in the middle of the day looked more like a lonely rural highway.

In a crunch, many of the companies under direct or indirect control of the ruling family had to go to the main office with hat in hand looking for funds.

Needless to say, with a relatively small capital base to start with and an enormous outlay of cash to make the infrastructure investments, Dubai has become cash poor and its bills are piling up. The emirate is now planning on selling 5-year bonds as part of a plan to raise $6.5 billion in order to repay outstanding debt obligations.

Ironically, the bonds are being priced to yield the same as other bonds just a cut above junk status, according to a Bloomberg report. The bond yield’s premium over the mid-swap rate is seven times greater than before the slump, no doubt indicative of the market’s risk appetite, investors’ available cash, and Dubai’s desperation to get the deal done.

Between this successful bond sale and the backing of big brother Abu Dhabi, Dubai’s cash flow issues should be solved for the next five years. ... Plenty of time for it to get back on its feet again.

The price they are paying is great, but between this successful bond sale and the backing of big brother Abu Dhabi, Dubai’s cash flow issues should be solved for the next five years. This is plenty of time for it to get back on its feet again.

I do not expect Dubai to rise back to its former, short-lived greatness as the region’s undisputed financial and cultural champion. ... Abu Dhabi and Doha, Qatar, having both taken copious notes of all the mistakes to avoid, are executing their own ambitious growth plans which trump Dubai.

The three of them will duke it out for regional supremacy, like Hong Kong and Singapore. In the end, though, I think financial constraints prevent Dubai from winning – bruised and battered, it will not make the final cut ... always a contender, never again a champion.

HOW TO HAVE AN ANONYMOUS PHONE CONVERSATION

Cost is $0.99/minute in the United States, so use sparingly. And you have to go to Panama to get the needed chip and phone.

This solution from Simon Black for achieving complete anonymity during a cellphone conversation is more clever than useful to most people. And at a buck a minute you have to really value your privacy to want to use the service much. We also think he underestimates the privacy possibilities of buying a prepaid cellphone service in the U.S. Last we checked, you can buy a T-Mobile phone or replacement chip without having to give much away at all. Virgin, OTOH, was a different story. If you walk in prepared to give a fake name/address and a disposable email address you should come out OK – for now.

Do you think your government does not have the means to listen to your phone calls?

Think again.

Governments from around the world, not just exclusive to North America, have technologically advanced eavesdropping programs which can capture mobile phone conversations without anyone ever knowing. And just in case the government is not so technologically advanced, they coerce wireless carriers into coughing up encryption schemes (cough, cough, Russia) ...

Unless you have your own two-way encryption or intricate scrambling mechanism, there is no way for you to prevent this eavesdropping. What you can do, though, is make sure the government does not know who is on the line.

Right now, there are two key data points which identify callers to snooping federal agents:

First, the wireless signal from your conversation transmits unique identification codes that link back directly to your specific wireless account ... and your wireless account contains a host of personal information – name, address, social security number, and naturally, phone number.

Second, most legitimate mobile phone handsets and data devices have a special serial called an IMEI number. IMEI stands for “International Mobile Equipment Identity,” and it serves to uniquely identify a piece of wireless equipment.

In theory, the IMEI number is only associated with the equipment; in practice, though, wireless companies monitor and track who is using a particular piece of equipment ... their systems are constantly matching a handset’s IMEI number to the subscriber data found on the SIM chip.

You can see your own IMEI number by pressing “*#06#” (as in star-pound-zero-six-pound) on your mobile phone. The number indicated on your screen is absolutely positively linked to your wireless account.

Just like unencrypted email communication, mobile phone conversations are about as private as shouting something across a crowded subway station.

In other words, when you use your handset, the wireless company knows it is you, and so does the government. Just like unencrypted email communication, mobile phone conversations are about as private as shouting something across a crowded subway station.

Personally, this bothers me on a philosophical level ... not to mention that there are times when I just want to have a private conversation with somebody without having to worry about which federal agency is taking notes to put in my file.

As you could imagine, I have a solution.

Do you remember when you first signed up for your mobile phone service? In many places you have to give the company all sorts of information and identification – even for prepaid service. It is actually quite revolting.

There are some countries, though, where buying prepaid mobile phone service does not require three forms of ID, a stool sample, and a reference letter from your priest ... you just walk up to the counter, give them the money, and they give you a SIM chip. Simple.

While there are several countries where you can do this (Uruguay, China, etc.), I believe that Panama poses the best solution. Here is what you do:

The next time you find yourself in Panama, go to any shopping mall or electronics store and buy a prepaid mobile phone SIM chip – the one you want to buy is called “Mas Movil Roaming Prepago,” and it should cost you about $5.00.

Mas Movil Roaming Prepago is a prepaid mobile phone service that was specifically designed for use outside of Panama – it works very well in the United States, South America, Spain, France, Belgium, Ukraine, and Russia. Sorry Canadians, no service there to the best of my knowledge, eh.

Your shiny new MasMovil SIM chip will have a unique Panamanian phone number that is NOT tied to your name. The next thing you need to do is purchase a new mobile phone – there are plenty of cheap phones in Panama to choose from, many ranging from $10 to $20.

Again, this new phone will NOT be tied to your name personally. It is important that you ONLY use this phone for your Mas Movil Roaming Prepago chip, otherwise it could compromise the anonymity of your new phone’s IMEI number.

Lastly, since Mas Movil Roaming Prepago is a prepaid service, you will need to buy several top-up cards to charge the balance on your account; these top-up cards come in a variety of denominations – I would suggest an initial balance of at least $20 and recommend that you buy a few spare top-up cards to recharge your account once you have left Panama.

Naturally, it would behoove you to pay cash.

Now, for the price of less than $50, you have a new phone, phone number, and charged-up SIM chip, none of which are tied to your name. When you return to your home country, you will be able to call anyone you wish knowing that you are completely anonymous.

Call rates are $0.99/minute in the United States, so use sparingly.

P2P – IT IS MORE THAN JUST SHARING SONGS

Peer-to-Peer Concept Applies to Lending as well as “Sharing”

The idea of lenders connecting directly to borrowers via an efficient internet-based facilitator makes a lot of sense in theory. Given the huge spreads between what banks pay depositors and charge borrowers there has to be room for a successful business in there.

How well does it work in practice? There has always been a huge direct lending market when the size of the loans are large. Now a couple of businesses, Proper and Lending Club are trying to make it work for much smaller amounts of money – microfinance for the average borrower/lender as it were. Social networking tools like Facebook are used to directly facilitate lenders and borrowers connecting.

And what about the lack of liquidity for the lenders’ loan portfolios? Both lenders are trying the idea of packaging loan portfolios as notes and developing an aftermarket for those notes. The only thing left is to divide the notes into tranches, create some derivatives on the tranches ... Hmmmm. Sounds familiar. Didn’t come to a good end, right?

Seriously, this makes sense during credit crunches when the bankers are sitting on their hands. When credit markets loosen up, spreads start to compress, and the lenders are competing aggressively for Prosper’s and Credit Club’s customers, just let them have the business. We will then have entered “reaching for yield” time. Make sure you do not overstay your welcome with the concept.

You know that house down the street that is for sale? The gigantic castle of a house, with an uncut lawn, a few weeks away from foreclosure? That is your fault. After all, it was you who loaned the former owners the money for the house they could never afford.

No way, you say? You would never have loaned any money to that irresponsible hack. But of course you did lend it to him ... just not directly. That is what banks are for – lending your money to other people, often people just like the owner of that house.

Forgetting for the moment how modern finance found a way to twist and pervert the banking system to its breaking point, for hundreds of years the foundation has been one of shared benefit and distributed risk. You keep some portion of your savings in a bank, and in exchange they share back a percentage of the proceeds from lending your money to others (including Mr. Irresponsible), keeping a cut for themselves.

That has been the only option. Until now ...

If the Internet is good at one thing, it is connecting large numbers of people to each other. Thus it seems only logical that the Web would be a more efficient way of matching lenders to buyers than any one local or even national bank. Electronic systems can connect people at scale, automating an otherwise manual process and eliminating scores of middlemen from the process. And that is exactly what a handful of new lending institutions on the Web – such as Prosper and Lending Club – are starting to do.

They call it “peer-to-peer (or P2P) lending,” and the premise is simple: I have money I am willing to lend; you would like to borrow some; these companies bring us together and facilitate the loan. Because their systems are automated and connect lenders and borrowers more directly, the companies can afford to take much smaller commissions on the loan than a traditional bank.

As a result, you enjoy a much higher yield than on your savings account, and they attract borrowers by undercutting bank rates. Prosper’s returns for lenders average 7.02% for the highest three credit grades (the only data they make available). Lending Club averages 9.62% across all loans for investors. And credit is available to borrowers as low as 7.89%, much cheaper than most banks.

An investor can diversify by bidding to fund portions of many loans, in increments as low as $25 each. A $5,000 loan might be spread across as many as 200 individual lenders, each choosing to purchase a $25 note. The process is largely invisible to the borrowers, as they receive just one payment and pay just one bill. The companies collect and distribute the payments to each lender, proportionally to the amount each funded.

One of the more interesting, and unconventional, aspects of the sites is the way they use social networking tools to provide lenders and borrowers with a way to connect more directly. On each site, borrowers are required to provide not only credit history and similar information, but a brief personal statement on why they want the loan, and anything else they think is relevant. Lenders can browse the loans and pick specific people and specific requests they want to fund. Prosper.com takes this farther than LendingClub.com, allowing borrowers to add photos and encouraging more dialogue – on Lending Club, the descriptions are often just simple half-liners like “Buying a used Acura RSX.”

Browsing the loan requests provides a fascinating peek into what people borrow money for (weddings, used cars, debt consolidation, and home repairs look to be the most common, in no specific order), not to mention their credit histories, borrowing habits, and even spelling and grammar ...

This technique of hand picking loans only scales so far, especially when lending $25 at a time. So both lenders also offer automated matching of loans to your criteria (loan amount, credit score, etc.). Prosper.com’s system is more automated and much simpler to use, but both are adequate for the job.

Of course, you also lose the liquidity that comes with indirect vehicles like bank accounts. But both lenders try to address this issue by packaging your loans as notes and allowing you to trade the notes in a market provided by FOLIOfn. ...

If you are looking for a way to diversify some of your investment activity beyond traditional stocks, bonds, futures, and the like, P2P loans could make for an interesting choice. Or if you just want to try the next new thing, they make for an entertaining way to play banker for a day (or 36 months, the length of the loan terms on both sites).

SHORT TAKES

Frogs Disappearing from Central America Rainforest Due to Fungus

Like neighborhood coffee shops and independent movie theaters around the United States, unusual varieties of frogs are rapidly disappearing from rainforests in Central America.

A fungal infection seems to be hitting those rare species of frogs harder than common ones, found a new study, leading to local extinctions and a homogenized version of nature where everything is more similar than it used to be. The result is both a less interesting world aesthetically and a less resilient one biologically. The decline in diversity could end up harming larger ecosystems since frogs are an important part of the food web – other creatures eat them and their eggs. It could also impact the tourist industry since the amphibians’ variety of shapes and colors has been a tourist draw to Central America.

Finally, a decline in species could even limit medical possibilities since scientists have found potential cancer therapies in amphibian skin. “Everyone knew that amphibian declines were really bad,” said ecologist Kevin Smith, of Washington University in St. Louis. “But it looks like it’s worse than we actually thought.” Smith and colleagues looked for patterns of extinction in frogs from eight rainforest sites around Costa Rica and Panama. The researchers compiled several years worth of data from previous studies, in which scientists had painstakingly surveyed frog diversity both before and after the arrival of a fungus called Batrachochytrium dendrobatidis (Bd).

Bd has swept through amphibians around the world in the last decade, often decimating populations. In Central America, Smith said, infections can wipe out half of the species at a given site. Evidence has been growing, however, that some species are more vulnerable to the fungus than others, and Smith wondered which ones were most at risk. His results, published in the journal Ecology Letters, showed that in Central America at least, the fungus seems to target the rarest of species, which often exist only in one or two sites across the region. It is not yet clear why rare frogs are succumbing most frequently to the Bd fungus. But as they disappear, so often do the roles they fill in the ecosystem.

“If you knock out a very rare species from the only place it exists, of course that is going to be an extinction,” Smith said. “In terms of conservation, that is the opposite of what we want.” The new findings add another disheartening dimension to the biodiversity crisis, said Tom Rooney, an ecologist at Wright State University in Dayton, Ohio. The loss of variety, he said, makes it increasingly hard for the species that are left behind to deal with further environmental change.

On a more positive note, documenting which species are most vulnerable to infections and other threats might help scientists predict which creatures are most at risk now, allowing them to focus future conservation efforts on the most vulnerable ones. “If you are thinking globally, studies like this are telling us that losing rare species is not a local phenomenon,” Rooney said. “If they are disappearing locally, there is a good chance they are disappearing regionally, and local efforts can be even more important.”

In the meantime, the study points out how similar the natural world is to the more cultural parts of our lives – particularly in the way that people value diversity and mourn the loss of it.

“We no longer have all the little hardware stores, little coffee shops, and little bars where everyone knows your name,” Smith said. “What we see across the world is that it is decreasingly the case where you see different things in different places.”

Nicaragua: One of the Most Beautiful Countries in the Americas ... and One of the Most Affordable

Real estate prices have dropped by as much as 40% in the past 12 months.

“I’m about to wrap up my quick trip to Nicaragua,” writes resident [Live and Invest Overseas] Editor Rebecca Tyre. “I’ve been very impressed with what I’ve seen.”

I have strolled down the interlocking brick streets of downtown Granada ... enjoyed a leisurely drive through the forest-covered mountains ... and a pleasant day on the country’s beautiful Pacific coast. My conclusion? Nicaragua is one of the most beautiful countries in the Americas ... and one of the most affordable.

It is also a market that has been impacted dramatically by the current global recession. North American expats I have spoken with this week report that real estate prices have dropped by as much as 40% in the past 12 months. For the first time in years, it is possible again to buy a small house in Granada for US$40,000 to US$60,000.

More interested in sand and surf than colonial charm? It is also possible in Nicaragua right now to purchase a casita in one of the country’s premier private, gated oceanfront communities (boasting one of the two golf courses in the country) for US$100,000.

A meal in a downtown Granada restaurant can cost as little as US$3 ... or as much as US$40 if you decide to splurge at one of the up-market bistros that line the central square. A taxi across town costs about 50 cents, and a locally brewed beer is just US$1.

Gas and electricity are two of the biggest expenses in Nicaragua, with a gallon of regular gasoline costing more than US$3. Expats report that you should count on US$50 a month for electricity, even if you do not use air conditioning.

The lowlands of Nicaragua are steamy. This is the rainy season, but the country is experiencing a drought. Fields that should be a lush green this time of year are golden brown. Farmers are losing their crops.

Between the weather and the Sandinistas, the average Nicaraguan is struggling. The Nicaraguans I spoke with told me the poor have gotten much poorer since the Sandinistas returned to power in the form of current President Daniel Ortega. Europe and the United States have stopped sending money; foreign investors have been scared off.

There is even talk that the Ortega clan may try to change the law so that he can serve another term as president.

The foreign residents living in Nicaragua, though, tell me they are not impacted by these things. Crime is low in this Central American country, and the police are effective. Expats living in the towns I visited are happy and relaxed. Most say they have no intention ever to leave.

Having spent time here now myself, I understand. I don’t want to leave either.

Medical Tourism at Panama Hospital Increases 1,000% in 2009

Medical tourism in Panama has increased 1,000% in the last six months, according to Hospital Punta Pacífica, the leading player in this emerging Panamanian industry.

Andrés Caballero, manager of the hospital, reports that, six months ago, the hospital was attending three medical tourism patients each month. Now they are seeing 30 per month.

It is easy to understand why. The hospital, affiliated with Johns Hopkins International in the United States, is state-of-the-art and staffed by English-speaking, often U.S.-trained doctors. Yet costs are 40% to 60% lower than for the same procedures Stateside.

U.S. Housing Market Bubble Burst Sends $3.4 Trillion to Money Heaven

Average value of residential real estate fell 10%. Outside U.S. decline was 4%.

According to a report by McKinsey Quarterly, when the U.S. housing market bubble burst in 2008, the average value of residential real estate fell 10%.

This drop amounts to $3.4 trillion dollars in homeowner wealth that simply evaporated into thin air when the housing market bubble popped. And because housing prices are slow to correct, the bottom of the market may still be far off.

The global housing market bubble popped as well, but outside the U.S. the average decline in value was only 4%. And according to the report, emerging markets are weathering the storm fairly well because their growth fundamentals remain strong. This will probably lead to increased global influence and larger shares of world capital for emerging markets where the current crisis is just a temporary interruption of development.

“Brazil is the best example of this ‘emerging market’ effect that I can think of,” says Ronan McMahon of Pathfinder Real Estate, a global property research and marketing firm. “Brazil is now mentioned in the same breath as China, India, and Russia as new global financial powers. Brazil has immense natural resources, a progressive government, and relatively few ties to U.S. financial entanglements to drag it down.

“That is one reason I have been so bullish on Brazilian real estate for the past few years,” says McMahon. “It is a prime example of a market that has everything going for it to maintain and increase value even the face of the global downturn.”