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

ROATAN: REAL PEOPLE, REAL LIVES

Earlier this year Janine Goben wrote a two-part article covering her “reinventing” her life in Roatan, posted in these pages here and here. The articles garnered enough favorable response that she was inspired to follow up with more tales from Roatan, this time focusing on other people’s stories.

If you are a regular reader of this magazine you probably read my 2-part article in the July and August editions about re-inventing myself on Roatan, if not (come on, Caribbean Property & Lifestyles Magazine has great stuff!) you can see them at these links ... [see links above].

We had a good response to these pieces, so I thought you would like to hear about other people who have made the decision to change their lives and move overseas. I talked with five people on Roatan who looked here, moved here and stayed here for different reasons. Here are their stories:

Wayne hails from Calgary, Canada where he was doing consulting work with a hotel. As chance would have it, he met one of the previous owners of the hotel, who told him about a project he was involved with on the Caribbean island of Roatan. He was looking for someone to oversee the project on the ground, and thought Wayne could be the right person. A glance outside at the Canadian winter was all it took for Wayne to agree to an exploratory trip to Roatan to see for himself!

And so Wayne came to visit the island; his first impressions were that the people of Roatan are friendly and welcoming. They take pride in their appearance, were well-groomed with clean and ironed clothes and seemed happy. In fact, on a taxi ride from the airport he found himself stuck on the road in the town of Las Fuertes because there was a parade blocking the road for a couple of hours, so he was invited to get out of the taxi and join in the parade and festivities!

The island is about 40 miles long and skinny, shaped rather like a finger pointing downwards, the spine of which is a mountain ... or if you are a mountain person, a high hill. The views on the east end of the island, where the road follows this spine, are staggering on both sides. The water is crystal clear and ranges from turquoise to deep blue as the reef surrounding the island suddenly drops off. To the south, 30 miles across the sea the (real) mountains of the mainland are visible, often shrouded in cloud and always spectacular.

The project Wayne came to look at is on the eastern third of the island, so he was subjected to these views all the way there! The 100 acre property covers a large bowl, starting at the road and ending several hundred feet below in a protected bight, or cove, with sailboats enjoying the calm waters before hoisting sail for their next adventure. In a week’s time, he inspected the project, examined the lifestyle, assessed his personal situation and quickly made the determination that this was just the challenge for him. The operation suited his background and the challenge would be to mold the raw materials into the dream of the architect. Daunting, but exciting. He made a 2-year commitment to the project.

Single with grown children, and wanting a place to relocate to, there were no impeding complications to moving right away, and so Roatan became Wayne’s new home in July, 2007.

As the original two year time frame approached, it became apparent to Wayne that he wanted to stay on Roatan, so he extended his 2-year commitment to the project until the end of phase one. And, so Wayne re-programmed himself to be here at least seven to 10 years, and immersed himself into his new game plan for life. After renting a condo for over a year, he realized he wanted permanence here, so he bought a condo, which is now his home and base.

During the spring of this year, several ominous events occurred in quick succession in Honduras. The global financial crisis which had not touched us too badly started to severely affect the number of people investing in second homes and rental properties. On May 28th we had a 7.3 [Richter scale] earthquake centered 40 miles off the north coast of Roatan (we do not experience big earthquakes – this was a first). Then on June 28th Honduras went through a constitutional change of power when the president refused to adhere to the Supreme Court and violated the constitution of Honduras resulting in his automatic removal from power.

The succession to presidency is the same as in the U.S., going first to the vice-president, and then to the leader of Congress. Since the Vice President had stepped down a few months before to pursue a bid for the presidency in the November elections, the head of Congress was immediately sworn into power and the now ex-president removed from the presidential palace. The final straw for tourism and development on Roatan was the immediate judgment from the U.S., then the world, that Honduras had been taken over by a military coup; which was completely inaccurate, but nonetheless a severe blow to this tiny country as travel warnings were issued.

The Perfect Storm

Along with several other developments, Wayne’s project was put on hold and all staff and workers were laid off.

So what to do now?

It was decision time for Wayne: Should he stay and see what happens, or should he take the less risky choice and return to Canada to reactivate his consulting business? A serious, life-changing decision, but he did not take long to decide that this is his home now, so of course he would stay. Not one to stay sedentary, he quickly realized that in fact he can have the best of both worlds, so he reactivated his consulting business from his home on Roatan, took a couple of months to update his presentations, create a web site and started marketing himself to groups in Canada. He already has two months of speaking engagements lined up and leaves for a grueling cross-Canada tour at the beginning of November. At the end of the tour, Wayne will be back in his home on Roatan, enjoying winter on the beach, swimming in warm, clear water with a marine kaleidoscope for company!

You can check out Wayne’s new world [here].

The next Roatan character I sought out to interview is a 46-year old single Brit, Jas Abbott. Originally from Oxford, England, Jas knew he wanted to leave England a decade ago and did a lot of traveling in Europe, Central America and the Far East. A builder by trade, he is an expert in specialty concrete finishes for theme parks and looked seriously at Spain and Thailand for his destination, but the opportunities for work were dismal. Then he came to Roatan a few times, became a dive master and was offered a water sports job at a resort. Now the decision was easy, he loved the destination and had employment lined up, so 7 years ago, Jas moved to Roatan.

As it happened, the resort job did not suit Jas as well as he hoped, and he went into partnership in a dive shop in West End. That was fun, but not very lucrative and as his expertise is concrete work and building, he went back to what came naturally. He bought land, built a house, sold it, bought more land, built another spec house, sold it, and so on. Occasionally, his specialty expertise called and he accepted jobs temporarily in other locations at theme parks, but always returned to Roatan.

“It’s easy living here,” says Jas, “taxes are very low, almost non-existent compared to England.” He enjoys the laid-back lifestyle, freedom and lack of “ridiculous restrictions” that he wanted to get away from in England. Jas epitomizes the Caribbean lifestyle, as enjoyed by foreigners – he is easy-going and fits in beautifully.

His thoughts on the current political situation here are that it is a fiasco. The rest of the world appears ignorant of what happened in June, that Honduras and the Honduran people are the guiding light of democracy, not a threat to democracy. “The world fails to recognize who is the good guy and who is the bad guy – it’s unbelievable!” He is looking for the elections in November to calm the situation down so we can all move on and the Honduran people can have their future back.

The world is his oyster, but Roatan is home ... at least for now.

Robert and Ellen are a couple from the university town of Leiden in Holland. They started coming to Roatan 14 years ago, after friends visited, fell in love with the island and bought a home here. The first day of that visit in 1995 convinced them that their goal would be to move here and make a living. It took seven years to achieve that goal.

Meanwhile, they continued to visit and bought a home close to their friends in Sandy Bay, which was rented out while they were not here. Back in Holland, they sold a business, Ellen left her job with a large construction company and Robert sold his Harley ... the ultimate commitment!

So Robert, Ellen and their 3 1/2 year old daughter packed up and moved to Roatan to become property managers at the community they bought their home in. Ellen has a background in the tourism tour industry, so taking over a property management and rental business was an easy move for them. They learned about the people of Roatan, how to get repairs done, who to go to for each need and spent two years in this position. Then Ellen was offered a similar position at nearby Lawson Rock, a beautiful residential community. Robert by now had started learning about real estate on Roatan and become a realtor.

Two years after starting their new life on Roatan, life took a different turn again when Ellen became pregnant. Many women, I would venture to say, would return to their homeland at this point, and the security of family and familiar surroundings. Ellen is calm, common sense kind of person person, not one to freak out, and was quite comfortable having a baby in Honduras –but not on Roatan.

The options five years ago were not many for childbirth; a Canadian midwife or the local hospitals/clinics. So she knew she would have the baby on the mainland where the hospitals and doctors are very good. She found a doctor she was comfortable with, had ultrasounds and all the prenatal and follow up care she would have received in Holland. She had a healthy, easy pregnancy and birth. Today, there are pediatricians on the island and doctors of all specialties visit regularly.

Their daughter is now 10 years old, and their son is four years old. Their daughter went to a bi-lingual school for the first 5 years of schooling, when there weren’t many choices. Being in school with island children integrated her quickly and she is tri-lingual today; Dutch, English and Spanish. After 5 years there, an alternative school was developing and they decided to move their daughter to this school. They are very happy with the combination of early integration into the local bi-lingual school, and maturation into the alternative school.

Their son is in a pre-school with a Montessori teacher and they are currently deciding whether to have him go to the bilingual school first, or go straight to the alternative school. There are choices here! They would like their children to go to university in Honduras as well, but it is difficult to plan that far ahead.

Ellen’s view of living here is that it is a simpler life; her children are fortunate to live on this island as they are developing a more global view of life and the planet. She is happy to visit Holland, but two weeks is usually enough until she is ready to return. “It’s nice not having to check expiration dates on foods!” Like all parents, she is concerned for the safety of her children, but believes in using common sense and a degree of caution. They have no plans to leave, she says this is her home, but always remembers that we are guests in this country and changes happen all the time. In general, her concerns are global, not just Honduras. “It’s a good life; not easy right now, but we still like it.”

The Alternative School that Robert and Ellen’s child attends is run by an energetic, single 33-year old from Duluth, Minnesota. Miriam Hanson was working in a group home for mentally retarded and mentally ill adults, where she says she learned infinite patience. Passionate about education, she had been working toward her thesis, but without direction, when an opportunity presented itself to volunteer in a new NGO called Fundacion Adelante in the city of La Ceiba on the north coast of the Honduran mainland.

She spent six months there developing methodologies, constructing the web site, learning the history of Honduras and surveying the poor communities on the coast to see if there was feasibility for women to receive small loans to develop businesses, and if the men were receptive to micro-enterprise by their women.

Newly inspired, Miriam returned to the University of Minnesota and wrote her thesis on “Micro Finance as a Solution to World Poverty.” So, what next? Brazil beckoned and Miriam spent three weeks traveling in that country and decided she would like to live there, but first she needed to find out if teaching was a good idea for her, so she returned to Honduras and stayed in La Ceiba teaching a 4th grade class for a year. Toward the end of the year, she was contacted by some expats on Roatan to ask if she would come to Roatan and home school a small group of kids. The pay was good, the hours were shorter, there were fewer responsibilities and it is a tropical island!

In August of 2002 Miriam moved to Roatan to scuba dive in the mornings and to teach four kids in the afternoons. The “school” started in a not-quite-completed building in West End, but as word got around she found herself with more kids to teach so she moved them into her rented house on the beach in Sandy Bay.

This meant she had to live somewhere else, and, not being able to pay two rent payments, she lived in friends’ houses, slept on couches, whatever it took. By February of 2006 her enrollment had increased so much that she needed more space and the school moved into its current location. Today her enrollment stands at 62 students of all ages, and 17 staff. The school is completely self-supporting. Parent involvement makes a big difference. This summer they lost six families who left Roatan because of the earthquake, earlier strikes against the electric company, the political situation or running out of money with the economy suffering as it is.

Everyone else plans to stay. Current events, Miriam says, have made the school stronger, unified and more cohesive; the staff, kids and families are stronger. It is a huge testimonial to the success of the school when some businesses are closing down and the Minister of Education closed all Honduran schools a month early to save funding. Honduran schools have their long break during the holiday season; they close from the end of November to the end of January.

The Alternative School is specific to the Bay Islands, they have a maximum of 10 kids per teacher and the focus is on English, although Spanish is also taught. Each child has an Individual Education Plan, which Miriam says is the essentiality of their cohesiveness. The parents of the students come from all over the world: Honduras mainland, Bay Islands, Switzerland, Holland, America, Britain, Italy, Germany, Canada, Argentina, South Africa and Garifuna (native to northern Honduras and descendants of slaves from West Africa, they have their own culture). br />
Miriam’s plan for the future is to present the model of the Alternative School as a real, working, successful solution to the problems of education in the Bay Islands.

With such obvious dedication to the school and her students, I asked Miriam about the rest of her life here. Easy, she said, she swims, dives, does the annual triathlon, yoga and is totally in love with the sea! This is home. She keeps a wary eye on the political events as they unravel, but focusing on the kids all day long she becomes removed, so she does not focus on the politics, just follows what is happening.

You will find the Alternative School [here].

The 5th person I talked with is my husband, Ron. Now why, you might ask, would he be of more interest than what I had already written about in July and August? So here is the rest of the story ...

About 2 1/2 years ago, Ron’s mother, then 80 years old, was living back in Illinois in an assisted living apartment, taking care of herself, or so we thought. Ron spoke to her by phone at least once a week and became concerned about how she sounded on the phone, so he took a flight back to Illinois, fortunately. He found his mother dehydrated, disoriented, not eating and not taking her medications. He immediately called an ambulance and she spent some time in the hospital before returning to her apartment with Ron.

It was apparent that she could no longer take care of herself. So now we were faced with a decision many people face, what to do with Mom? Difficult enough if you are in the same country, not an easy decision when you are not even on the same continent. Ron agonized over what to do; our life is in Honduras and returning to the U.S. would not only be extremely difficult to start over at our ages, but not at all what we had planned on.

After many discussions with her doctor, with me and with his remaining family in Illinois, he decided to bring her to Honduras to live with us. Surprisingly, it did not take too much convincing for her to agree, although she clearly had no idea where Honduras is and had never traveled much further than St. Louis. We subsequently realized, after much agonizing over the decision that all she really wanted was to be with her son – location did not matter.

There were many concerns that Ron had, as you can imagine; the heat, medical care, our relationship, the environment outside the U.S., recognizable food availability and the different lifestyle most of all. And the biggest obstacle for Ron – Roatan is not suitable for a frail, elderly woman who has no concept of anything foreign.

But, there are solutions to every question, and his solution probably would not work if we were 30 years old, but we are not, and we live apart for now. I live in our home on Roatan and Ron and his mother live in a large apartment in La Ceiba. For many people, this concept would be unacceptable, unthinkable, but for us it works. I hop on the ferry about once a week and visit them, or occasionally Ron comes to Roatan if his Mom is up to an overnight absence.

She seems to handle one night very well. The apartment is on the ground level so Mom can sit outside where there is a garden to look at and a swimming pool, although she does not use the pool! Ron parks the car right beside the front door so she has no need to climb any steps or walk any distance.

Medical care in La Ceiba is very good, with modern facilities as well as older hospitals. Ron found an English-speaking doctor for his Mom and she likes him a lot. When she needs to see the doctor, he gets up from behind his desk and sits toe to toe with her, looking her in the eye and speaking softly and slowly. He takes as much time as they need and walks her to the door.

Unlike Roatan, La Ceiba has lots of fast food places which are familiar to Mom and they have satellite television so she sees the U.S. networks and news, all the shows that are familiar to her. She even watches the Cubs baseball games!

If there is an emergency and she needed to get back to Illinois, access to an international flight is easier on the mainland, although she shrugs off that possibility.

Once a year they both travel back to Illinois and have annual check ups; Ron at the V.A. hospital and Mom with her doctor there. He prescribes medications for her and arranges to send them down to us every couple of months.

Surprisingly, or perhaps not, her health has improved, she is happy and can do more. She washes dishes, hangs clothes out to dry, dusts the apartment and has a dog that idolizes her. She has no desire to move back to Illinois and surprisingly again, she loves the heat; it turns out that she cannot tolerate cold.

Ron has a Vonage phone and she talks to family whenever she wants to, which is more than she used to when she lived there. She is happier, content and life is more suitable for her – that was a big surprise to us. One more surprise; although she does not meet a lot of people and speaks NO Spanish, she likes the Honduran people. When Ron takes her to a restaurant, they treat her like the most important person in the restaurant, and always remember her the next time.

Ron and I talk about the political situation in Honduras, especially since he is living on the mainland – I feel perfectly safe on Roatan and most likely they would not be affected in La Ceiba either, but we have an emergency plan if they need to leave the country. We do not for a minute think we will need it, nothing much is happening outside the capitol, but it makes sense to be prepared.

So Mom is happy, but we know there will be another hurdle to face not too much into the future, one we all reach with our aging parents. For now, life is good. And what more could we ask for?

10 REASONS WHY ECUADOR IS OUR BEST BEACHFRONT BUY FOR 2010

Reason #1: It’s Dirt Cheap!

In previous postings we have heard that Ecuador has just about the cheapest property values in Latin America. Here we find out that part of that is due to the local banks not having lent profligately against property values, ergo no credit-fueled real estate bubble. Other nice attributes of the country offered are a currency tied to the U.S. dollar, great natural beauty, nice people and a commitment to keeping environmentally precious areas that way, even if it pisses off the multinational resource pillagers. (As detailed by John Perkins in The Secret History of the American Empire: The Truth About Economic Hit Men, Jackals, and How to Change the World, Ecuador has been the target of CIA, World Bank et al intrigue, including the assassination of a president who refused to cut a sweet deal with Big Oil. U.S. troops have been kicked out of the country, as Simon Black mentions in passing below.)

Downsides not mentioned here? As Kathleen Peddicord seldom hestitates to inform us: Ecuador is a third world country. Those seeking the comforts of the first world homeland need not apply.

1. It’s Cheap! We are talking dirt cheap. We are talking about large beachfront lots for $30,000, a 250 acre beachfront farm for $200,000 ... a slice of ocean view property for $5,000, and a beachfront condo for $45,000.

2. No Debt Fueled Speculation. Ecuador did not participate in the real estate speculation boom that occurred throughout most of the world. Banks were not dishing out easy credit loans and pre-construction speculation was very limited. While real estate prices in many well known destinations are currently declining, property in Ecuador still represents exceptional value when compared with almost any other tropical coastline in the world.

3. U.S. Dollar Currency. Why is this a benefit? Given the recent decline of the U.S. Dollar against most other world currencies, beach property in Ecuador has become even cheaper than ever in global terms. Another benefit is that if you ever sell your property, you will be receiving dollars, not pesos or some useless currency. And even if the U.S. dollar tanks ... at least you will have a piece of nice tropical real estate to escape to!

4. Accessibility. You do not need a helicopter to get here. Ecuador is reached by taking a direct 4-hour flight from Miami or a 90 minute flight from Panama City, Panama. Ecuador is expanding an existing coastal highway that interconnects the rapidly growing economies of Colombia and Peru. Local airlines service three domestic airports along the coastline of Ecuador, and there is an international airport at Guayaquil which is only one hour from the nearest resort beaches.

5. Natural Beauty. These are truly some of the most stunning beaches in the world. The photos speak for themselves. The climate and vegetation varies from the south, which is drier and more arid relative to the North which is more lush.

6. Development Has Begun. For better or for worse, developers have already begun to sniff opportunity and the early signs of a boom could not get any more obvious. The large resort chain “Decameron” is building the first world class beach resort in Ecuador and additional international investors are flooding in. Ecuador already has a significant tourist industry which promotes world class destinations like the Galapagos Islands, the Amazon Rainforest, the Otavalo Artisan market and the UNESCO World Heritage site in the city of Cuenca. Tourism is established and it is growing fast, but Ecuador’s mainland beaches are still virgin. The government has made tourism a priority going forward and big time developers are already taking notice.

7. Good People. Have you ever been to a beach where people are trying to rip you off, sell you stuff you do not want, or just annoy the heck out of you? Not so in Ecuador. The people here are helpful, friendly and when we left our cell phone in our hotel room by accident, the hotel staff recovered it and even shipped it our office. At the end of the day, it is the people that make the place, and the people who make the experience a good one. We’ve met great people here, and you will too.

8. Natural Resource Based Economy. Oil is the biggest contributor to Ecuador’s economy. The advantage of investing in an economy based in oil is that the nation as a stable supply of revenue, with more money to invest in infrastructure, and to develop the other industries it deems a priority such as tourism. While controversy exists about the extraction of oil from environmentally sensitive areas, the government has been working hard to prevent unnecessary pollution from oil extraction. Would you rather be invested in an oil country, or a country based on debt, leveraged finance, and lots of freshly printed money such as the U.S.? The results of oil windfalls are apparent in Ecuador where several highways are being expanded (coastal and highland), new airports are under construction (Quito), new bridges are being built (Bahia), and a mega port is being planned to increase international trade (Manta).

9. China Has Taken Interest In Ecuador. A lot of Americans are afraid to invest anywhere under China’s influence. The rest of us realize that China is the new emerging economic giant and you either jump on board or get left in the dust. Anyone who does not respect and follow China’s moves is putting themselves at a serious disadvantage heading into the 21st century. China is interested in securing natural resources from Ecuador and Ecuador is the closest point to China from the continent of South America. In today’s investment world, you want to be on the front end of whatever China is doing.

10. Tropical Location. Think of real estate prices in Florida, Mexico, the Caribbean or Hawaii ... they all started out as backwater, hard to reach places where nobody went. Then, over time, they became “discovered” and real estate values went through the roof. More recently, this phenomena has happened in other tropical places like Nicaragua and Panama where only 10 years ago, you could buy beachfront for $500 per acre. Now it is Ecuador with beachfront land at $500/acre (not a typo – that is five hundred dollars an acre).

Important Notes About Ecuador

• You can get your permanent residency in Ecuador with a real estate investment of only $25,000. Pensioners can get their residency visa with an $800 per month pension or $900 monthly per couple.
• With regard to political stability, Ecuador gets a bad rap from the mainstream press because of Ecuador’s de facto alliance with Hugo Chavez of Venezuela but the reality is Ecuador is anything but communist. Small private businesses are the mainstay of the Ecuadorian populous. Ecuador treats foreign visitors like gold and the locals are always eager to chat with foreigners of all kinds. Ecuador does not have a history of civil war and has remained peaceful even despite some turbulent economic and political moments in the past.
• Property rights are guaranteed in the constitution and apply equally to foreigners and Ecuadorians alike. Even during multiple sets of new presidents being elected and then thrown out, expropriate rarely occurred in Ecuador. Ecuador’s current president, Rafael Correa, has just been elected for a second 5-year term which demonstrates a degree of political stability Ecuador has not seen for decades.
• Ecuador is the first nation on Earth to endow Mother Nature with constitutional rights. While the media and multinational interests have complained about this type of “left wing” policy, the inhabitants of Ecuador care about their environment and are aware of the inherent wealth it brings to their citizens. “Let the oil companies whine and complain and let the citizens establish natur’qs rights,” say the Ecuadorian people and their policy makers. This is the type of social awareness is a pleasure to live and breathe.
• Ecuador received over 1 Million tourists in 2008 and remains one of the leading countries in South America for tourism. Why property prices are still so low is a mystery, but we believe the main reason for low and stable property prices is the lack of greedy banks force feeding people into cheap loans as has happened through much of the developed world. Most Ecuadorian property is purchased with cash which gives property here real value – value that is not tied to ever lower interest rates. Ecuadorians themselves buy and hold property as a form of savings account, rather than place money in a bank which is perceived as a riskier place to hold savings.
• Ecuador is one of few countries on earth with access to the Amazon Rainforest, Andean mountain peaks exceeding 10,000 feet, AND tropical sandy beaches with warm water year round (not to mention the Galapagos Islands!). The biodiversity in Ecuador is simply amazing and the result is a very exciting and appealing country to live and invest.

PRICES IN ASIA “SURPRISE AND DELIGHT”

A solidly middle-class lifestyle for a fraction the cost of a comparable standard of living in North America or Europe.

“In all the time we have spent now in this part of the world, we still have not gotten accustomed to the reverse sticker shock,” writes Live and Invest Overseas Asia Correspondent Wendy Justice. Asia gets less attention as a retirement destination from U.S. expat-wannabes due to distance. But once you get away from notoriously expensive locations like Hong Kong, Beijing and Singapore things can be extraordinarily inexpensive. You have to read the details to believe it.

“I understand that it can sound too good to be true, like it’s just so much hype,” writes Asia Correspondent Wendy Justice, “but prices in this part of the world have never failed to surprise and delight us. My husband and I live on a budget, but here that doesn’t mean going without. Here, it’s possible to enjoy a solidly middle-class lifestyle for a fraction the cost of a comparable standard of living in North America or Europe.”

Whenever someone doubts just how inexpensive living in Asia can be, I think about the first time that my husband and I visited. We traveled from the States for a three-week trip, starting in Bangkok. Thailand’s capital qualifies as one of the more expensive destinations in the region, yet, even here, we could no get over how inexpensive things were. Then we traveled to Chiang Mai, in northern Thailand, and discovered that prices were even lower. From Thailand, we moved on to Cambodia, where we visited ancient Khmer ruins and the city of Phnom Penh, and found that prices were lower still!

Here in Southeast Asia, we realized, we could actually afford to stop working.

It was such an eye-opening experience that it started us thinking about early retirement. Here in Southeast Asia, we realized, we could actually afford to stop working. Two years later, we flew to Hong Kong and spent the next five years in the region, living in Hanoi, Chiang Mai, and Kuala Lumpur.

In that time, we stayed in US$4-a-night guesthouses in Laos, had a mountain of laundry hand-washed, pressed, and folded for less than 25 cents in western China, and enjoyed delicious, just prepared meals for less than 50 cents in Thailand.

We have stayed at a large and spotlessly clean room in Hue, Vietnam, for US$8 a night, including a giant 5-course breakfast, and we have flown from Kuala Lumpur to Bali, Indonesia, for less than US$50.

A month in Hanoi, paying US$10 a night for a hotel room and full board for the two of us.

We spent a month in Hanoi, paying US$10 a night for a hotel room and full board for the two of us.

We stayed at an historic and beautifully restored guesthouse in the ancient town of Pingyao, China, for less than US$20 a night and paid even less than that for our room in gorgeous Lijiang. You can easily find a decent guesthouse in Kunming or Chengdu, in western China, for well under US$20 a night. Travel farther west, and prices drop more. We stayed at a spotlessly clean and spacious hotel in Litang, a beautiful town at the edge of the Tibetan plateau, for example, for US$8 a night. Dinner for two was US$5.

In Cambodia, we hired a young man to drive us up one of the steepest roads I have ever traveled to the top of Bokor Mountain, where he spent the entire day showing us the sites. His fee was US$20.

We tried to give a taxi driver a tip in Chengdu, China, only to have him refuse and apologize for getting lost. Never mind that it had taken him an hour to find our hotel and the fare, which had been quoted to us in advance, was less than a dollar.

Certainly, some areas are more expensive than others. It is possible to spend as much or more in Beijing or Singapore for an international-standard hotel room or fine dining than you would spend on comparable services in the United States. Dinner at 5-star Lafites, in Kuala Lumpur, can cost more than US$100 for two, not including drinks. A single-family house in Singapore will cost at least as much as a single-family home in most American cities.

So do not go to Beijing or Singapore if you are traveling or looking to retire on a budget.

A truly 5-star dining experience in Pakse, Laos for less than US$10, including a very generous tip.

One of my favorite you-won’t-believe-how-cheap-it-was-when-I-tell-you experiences was having dinner at an upscale restaurant in Pakse, Laos. We enjoyed a truly 5-star dining experience, attended by a waiter in a suit who addressed us as “mother” and “father.” The total cost was less than US$10, including my very generous tip.

In Kuala Lumpur, the delicious char kway teow (a hearty noodle dish popular in Malaysia and Singapore) that I bought at the local market for about 90 cents was more than I could generally eat at one sitting. A fried chicken meal, served with rice, green beans, peanuts, a fried egg, and soup, cost less than US$1.25 at the market.

In all the time we have spent now in this part of the world, we still have not gotten accustomed to the reverse sticker shock. Our luxury, furnished condo in K.L., where we lived until recently, cost less than US$600 a month in rent. I could see a competent, English-speaking doctor for US$5 or engage an electrician to come to fix the air conditioner for US$6.

In Malaysia, about the only thing that is not ridiculously inexpensive is beer. Taxes bring the price up to US$3 to US$4 a can. Not so, though, wine and liquor, which are readily available and a far better value.

FIVE REASONS YOU SHOULD CONSIDER CHINA AS A PLACE TO LIVE AND DO BUSINESS

The country should be on everybody’s radar, even if just for a brief visit.

Simon Black lays out his reasons that “for a foreigner,” China’s “advantages far outweigh the inconveniences.” Most of them derive directly from the dynamic possibilities inherent in a rapidly-growing economy. Unique is the opportunity to take advantage of the Chinese ruling class’s mercantilist economic policies. The artificially maintained low renminbi vs. US dollar exchange rate benefits the Chinese export industries at the expense of the rest of the population. This means Chinese goods, labor, etc. are artificially cheap for outsiders like the rest of us ... for now.

I spend a great deal of my time on the road, traveling around the world in search of opportunity. I put boots on the ground while I am on the hunt and end up screening a tremendous amount of both business and investment ideas.

Some of these ideas make the cut, and we take the concept further. Others don’t.

Regardless, the time that I spend on the ground getting to know the cityscape and the local players becomes quite valuable to me personally ... and over time, I have assembled a list of what I consider to be the finest places in the world to reside based on what I have seen with my own eyes.

I will be sharing that list with you soon, but in the meantime, I thought I would focus my attention briefly on China. Having spent the majority of the last two months here, I can honestly say that it is worthy of everyone’s consideration.

Sure everyone knows the mainstream story – full of opportunity, the fastest growing number of millionaires, and a varied, beautiful landscape ... but you can find beauty and opportunity in a lot of places. There are five key reasons that set China apart:

1) It’s cheap – for now. The Chinese government keeps the value of its currency, the renminbi, artificially low ... so China is very cheap to dollar and non-dollar spenders alike.

World class hotels (I am talking about the Shangri-La) are $125/night, hiring a car **with driver** runs as little as $500/month, and going out on the town is a fraction of what you would pay in the west.

In terms of the world’s nice “cheap” countries, China is definitely one of the nicest ... and the best part about it is that nearly everything is brand new, from the hotels to the airports to the gyms to the restaurants, right down to the park benches.

This “newness” is a result of China only recently having become wealthy. The country is now on a feverish spending spree, investing heavily in its domestic economy – and that means a lot of construction, a lot of development, and a lot of shiny new stuff.

The low prices in China will NOT last forever. You can be sure that the Chinese will eventually let the renminbi appreciate. I would not be surprised if the currency rose from 6.8/$ to 6.2/$ by the end of 2010. Needless to say, this will make everything in China much more expensive.

If you are interested in speculating on the currency appreciation, you can even come to China and open a renminbi bank account; any foreigner can open an account here ... it takes about five minutes and only about $50 to start.

2) In China, you can cut in line without having to “put your time in.” For example, rather than spend the first several years of their careers getting someone coffee, many recent college graduates took a leap and moved to China seeking fortune and adventure.

They found out very quickly that there are several areas of critical need, including finance, marketing, management, and customer service, and that anyone with competency in these areas can rise quickly.

As a local official from China’s southern city of Kunming recently said in an interview with the Straits Times, “we lack experts in many top positions who can take our industries and companies to the next level, to go international.”

The financial industry here has even more telling statistics – a recent survey of fund managers in China showed that, of the 376 respondents, 22% had less than one year of work experience, and only three have worked in the industry for over 10-years.

3) Yes, the economy in China is booming. I do not necessarily buy the government’s official statistics, but things here are definitely buzzing. If you are looking for a job, chances are you will find something in China.

More importantly, though, if you are not looking for a job and just want to get away from the doom and gloom of negative news on mainstream media (war, unemployment, deficits, etc.), China will feel like a beacon of optimism.

Frankly, it’s much less depressing to be here than in a lot of places in the west.

4) ANYTHING you want can happen in China. Chinese people are an industrious lot, and they respond very favorably to money.

There is no order that is too tall or too complex – do you want someone to deliver your groceries? Build you a rocket ship? Customize a special casing for your laptop? Reproduce an out-of-print book? Design official-looking novelty documents?

It can all happen in China; the only limitation is creativity.

5) Living in China is a differentiator ... it sets you apart from others. For years, people will gather around to hear you tell stories about the curious things you saw in China, from the Shaolin Temple in Henan Province to the bustling business in Shanghai’s Pudong financial district.

This distinction that you draw between yourself and others can be critical to expanding your personal network. As we discussed in our free Network Infiltration report, differentiation is a core element to getting noticed and being accepted into powerful, exclusive networks.

Spending a lot of time overseas in a place like China certainly qualifies.

Overall, I firmly believe that China should be on everybody’s radar, even if just for a brief visit. To be clear, the country is far from perfect. But in my opinion, for a foreigner, the advantages far outweigh the inconveniences.

THE CARIBBEAN’S CHINA CONNECTION

Hope for lower prices for Caribbean consumers?

Consumer prices for imported products in the Caribbean tend to be noticeably higher than on the mainland. The small individual island markets and high transportation costs make it hard to serve the area efficiently by taking advantage of volume discounts and low container-load shipping pricing. Redistributors based out of Puerto Rico and Panama serve the Caribbean, but, according to this article, this typically involves a 50-80% markup.

Now a company in Grenada “headed by a Dutch national with 36 years experience in international business and expert in doing business with China” entered into a purchasing partnership with a Chinese company located near the port in Ningbo. The partner’s job is to vet the manufacturers for quality control. Containers are then consolidated in Tianjin. The product line “ranges from chain link fencing, steel construction materials, windows and doors to consumer items such as garden and power tools, soap, shampoo, laundry and washing detergent as well as more specialized items like car parts. While there is no limit to the number of products, they must be easily sellable within the whole Caribbean. As a guideline, the company aims at consumer savings of 40%.”

The Grenada company’s policy is to deal with exclusive retail distribution partners for each product line in each island. It is scheduled to have St. Vincent, St. Lucia, Barbados and Dominica lined up before the end of the second quarter of 2010, with the other islands to follow soon thereafter. The final goal is two containers per island per month. Deliveries can start when one container can be filled with mixed products.

If the business plan works we would expect it to be replicated by others in time. Caribbean consumers will certainly be grateful.

During the past decades China has grown from a relatively undeveloped country into the world’s largest production country. Consumers all over the world benefit from low prices for virtually all products. Small markets that did not benefit as much as Chinese suppliers are used to, work with the “one container – one product line” concept.

For small Caribbean islands this is simply too much and consequently most of the products manufactured in China reach the Caribbean primarily via middlemen in the U.S., Puerto Rico and Panama. Because of high margins and transport cost, the prices with this distribution concept are usually 50-80% compared to factory direct. A company in Grenada found the solution to let Caribbean consumers benefit from Chinese factory direct prices: The China Connection to the Caribbean.

China Background

During the ‘70s and ‘80s Hong Kong and Taiwan became synonymous for cheap consumer items, usually designed by Western companies and produced to their specifications. Later these countries took over most of the R&D which left the Western customers only with project supervision. This also led to an explosion in salaries in Hong Kong and Taiwan, while production real estate became more expensive. Ironically enough, cash-rich Taiwan – considered a rebellious province by the People’s Republic of China – took the lead in investing in mainland China.

Joint ventures with many famous internationals were formed in addition to substantial indigenous growth. In some cases, the final assembly or packaging is done in other countries. Consequently, you may see a product marked “Made in Japan” while a more accurate statement would have been: “Made in China, packaged in Japan.” The next phase was that China became more independent by gradually performing their own R & D. Chinese universities deliver huge numbers of engineers and the quality of education is very high.

What makes China so superior is not only the low labor cost (less than $400 per month for production workers) but the staff devotion to their company. When necessary, they do not hesitate to work during the evening or even night to keep the committed delivery time. It is a rare exception when professional Chinese companies, who mostly have Quality Assurance systems such as ISO 9001 in place, do not meet the agreed lead time.

However, like everywhere else in the world, there are also companies who do not work professionally and have no good control over quality and lead time. Experience has shown that it requires local presence to select good partners. Besides, Chinese companies put high importance in knowing who they deal with and spend considerable time to get to know their counterparts. The traditional Chinese business style is heavily based upon trust and mutual respect.

Chinese businessmen and women want to take their time to understand you as a person and your company’s values. This takes a lot of time and is only worthwhile when the business volume is significant enough. This almost automatically means you must think big and long term if you want to do direct business with China.

Serious Chinese companies want long term business. They may do business with companies they do not know well, but certainly will not show the “back of their tongue,” concluding, if you don’t have the time or the financing to go to China, evaluate the potential business partners and build up a serious, long term relationship, you better not “go direct.“

Combined purchase volumes allow for mixed containers which are especially important for customers in small or niche markets.

An alternative approach is to use consolidators, usually Western businessmen, who know the Chinese business culture and pitfalls very well and have built up excellent relationships with suitable factories and negotiated conditions that individuals would not easily get. They can identify the right companies, the right products and the best conditions and help reduce financial risks to the minimum. In many cases their combined purchase volumes allow for mixed containers which are especially important for customers in small or niche markets.

However, in the case of the Caribbean, many agents/consolidators apply high margins, and combined with the significant additional logistic costs: land transport to the consolidator’s warehouse and to the port that leads to the Caribbean plus LCL (less than container load; easily 3 times the price per volume/weight) ocean freight to the Caribbean island. And as (the high) duties are calculated on the CIF value (cost, insurance and freight) the Caribbean consumers hardly benefit.

Quality of Chinese Products

Many people associate Chinese products with low quality. And, granted, there are many Chinese products on the market with an abominable quality / short lifetime. But does that mean all Chinese products are inferior? Certainly not! China has many of the most technologically advanced factories and famous Western brands are very often produced in China from very simple to high tech products. The purchaser’s mission is to obtain good quality from reliable suppliers at a reasonable price.

The main reason why Chinese factories make low quality products is simply because their customers ask them to. In the Western hemisphere, companies may have a hesitation to produce sub-standard products; many Chinese companies do not have that “problem.” If a good quality product costs $10 and the customer asks to make it for $8, the Chinese factory may do so.

If the customer says he can get that product at a competitor for $6, they will do their utmost to meet the price by lowering the quality of the components of that product. Ultimately, consumers are also part of the problem: If they only buy the cheapest products they force the retailers (and indirectly, the wholesalers) to produce a lower quality.

On the other end of the spectrum there are excellently managed companies with impressive quality assurance programs, certified by respected companies. They do not compromise on quality and are even more concerned about their image then leading Western companies. They are often the ones supplying famous quality Western brands with products under the Western brand. These Chinese companies are therefore in the position to produce the same quality as they make for the famous brand, under different brands. And that happens frequently when the customers decide to move to a cheaper supplier. The abandoned factory then searches for alternative customers.

In between there is also a group who focus on the mid range. Not the very best quality but the best quality/price performance. It must also be said that many Western brands that were known as “solid as a rock” are also moving along the same lines, thereby also creating a market for mid range products at a competitive price. Usually these are technologically less complex products. This means that products from the past that used to have lifetimes from dozens of years now are often written off after i.e. 5 years. But at a substantially lower price and that is what the consumers very often deliberately wish.

From the outside it is not so easy to determine in what category a supplier fits; even the most shabby companies can have an impressive website and show ignorant buyers documents with many stamps implying they are quality programs while in reality they are just business permissions (in Chinese).

Other pitfalls are one-man operations with fluent sales presentations that disappear after the buyer paid the (usual and generally not negotiable) deposit. When these salesmen are visited by customers they insist to meet in a hotel or restaurant, which is definitely not a good sign; Legitimate Chinese companies are proud on their business and want to show off their production, testing and quality assurance systems.

The “One Product (Line) Per Container” Dilemma

Chinese companies normally always offer FOB (free on board) prices, which mean a full container load for one product or a product line. For large Western markets this is not a problem, but small Caribbean islands would not be able to deal with i.e. 17,500 brake pads or 1,800 grass cutters (locally known as weed eaters). Such quantities could work for the Caribbean as a whole, but the high inter-island transport costs and associated risks (i.e. theft) and, on top of that, double duties make this concept prohibitive. The only solution that works is to consolidate containers in China, but that requires very good coordination and negotiations to ensure high efficiency and economic prices.

The Best Logistic, Quality and Economic Concept for the Caribbean

As mentioned before, it is vital to have a local presence in China, preferably with Chinese logistic partners who verify the quality and quantities before shipping. The logistic partner must have an export license and be trusted by the factories (if they make a mistake with the complex export paperwork the factory cannot claim a tax credit – a sort of export subsidy). The project manager must have considerable experience in doing business with China and have won the trust and respect of the Chinese factories.

The best approach is to make mixed containers in warehouses strategically located close to the factories and close to the port, in order to keep transportation cost under control. Ignoring this will be penalized with a total cost increase of up to 20%. To get the right price, the volume must be acceptable to the supplier. In most cases they will want a quantity equivalent to a full container. If, for instance, each island can handle 200 grass cutters or 2,000 brake pads, it requires nine islands to satisfy that requirement. Hence, the approach must be Caribbean-wide and each island must purchase the same products. This requires careful planning and coordination.

Who Picked up the Challenge?

A small company in Grenada, headed by a Dutch national with 36 years experience in international business and expert in doing business with China entered into a logistic partnership with a Chinese company located a stone’s throw from the port in Ningbo (China’s second largest harbor in the mid East) in the heart of China’s industrial activities. Additionally, they consolidate containers in Tianjin, close to the steel products producing factories in the North East.

The product line is very diverse and ranges from chain link fencing, steel construction materials, windows and doors to consumer items such as garden and power tools, soap, shampoo, laundry and washing detergent as well as more specialized items like car parts. While there is no limit to the number of products, they must be easily sellable within the whole Caribbean. As a guideline, the company aims at consumer savings of 40%.

They only deal with factories that have a proven track record and an internationally acclaimed Quality Assurance System, such as ISO 9001. For most products they deal with factories that are qualified for supplies to Europe, where the import restrictions are most severe. For car parts, it is illegal to import (for instance) brake pads that are not at least equal or better than the original brake pads, as installed by the car manufacturer, and this requires formal testing by an independent Western laboratory approved by the authorities.

Only a few Chinese companies are qualified for that and clearly these brake pads are not the cheapest on the market. In the Caribbean, such stringent rules do not apply and consequently most brake pads available in the Caribbean are of a lower quality and also have a much shorter lifespan. Nevertheless, the European certified (ESE R90) are offered cheaper than the low quality models!

The company’s policy is to deal with exclusive distribution partners for each product line in each island. For a wide range of products this obviously takes time; it is scheduled to have St. Vincent, St. Lucia, Barbados and Dominica lined up before the end of the second quarter of 2010, with the other islands to follow soon thereafter. The participating factories accept this approach and are prepared to grant the conditions for a Caribbean-wide approach during the start-up period. This demonstrates the strategic importance these factories recognize in the business model and is in line with the Chinese long term approach and commercial flexibility when dealing with partners they trust and respect.

Current Products

At this time (October 2009) products are available for ordering in Grenada. While distributors in other islands can already make purchase arrangements, the fulfillment will depend on the assignment of partners for enough product lines in each island. As the final goal is two containers per island, per month, deliveries can start when one container can be filled with mixed products.

The selection of products and suppliers has been a long process and involved four visits to China. The goal was to offer the very best price/quality ratio and prices for consumer products that are at least 40% lower than comparable products. Below, each product line’s characteristics are discussed.

Liquid Hand Soap, Body Wash, Shampoo and Other Body Care Products

In most parts of the Western world, liquid hand soap has conquered the market, primarily because of hygiene considerations (a bar of hand soap may be contaminated by the previous user). Not in the Caribbean, where the price of liquid soap is relatively high and demand therefore low, which leads to an even higher price. The selected high concentration liquid hand soap is available in disposable dispensers (last at least 8 loads) and large, very economical refill bottles. Additionally, wall mount dual dispensers are available that could combine hand soap and body cream.

The same approach applies to body wash, shampoo and conditioner. Especially when using the large refill bottles, the savings compared to disposable consumer flacons (bottles) are very significant and far exceed the targeted 40% consumer savings. Fairly new to the Caribbean is the conditioning shampoo, which is very popular in Western hemisphere. The same dual dispensers can be conveniently mounted on the shower wall and contain body wash and shampoo or conditioning shampoo.

What most people do not know is that the active ingredients in soap products are usually the same; the relevant differences are in concentration and fragrances. Body cream ingredients on the other hand may vary widely, but very often the concentration of advertised added ingredients is so low that they could hardly have an effect. Another factor is the marketing, positioning and bottling of body and hair care products; price conscious consumers will do themselves a considerable favor by performing a comparative test.

In the Caribbean’s hot climate it is certainly of importance to use antibacterial body care products. In contrast to what most consumers believe, this does (should) not increase the price more than 8%.

Laundry and Dish Washing Detergents

Like with the soap products, the main differences between products are the concentration of active ingredients and fragrances, added with the foaming agents. In many Western countries it is mandatory to specify the percentage of active ingredients so the consumer can compare. Not in the Caribbean where “super concentrated” may mean a few percent more than usual – whatever that may mean. As a significant part of the cost of detergents is packaging and transport, it makes sense to introduce double concentrated laundry and dish washing detergents. The internationally accepted regular concentration (of active ingredients) is 10%; double concentration is therefore 20%. Clearly, using half the usual amount will have the same effect. Considering this, the savings exceed the 40% target significantly.

Car Parts

At this time, China is the world’s major producer of both original and after-market car parts. There are huge differences in product quality. The products selected for importation to the Caribbean comply with the strictest European standards. In the EC it is law that i.e. brake pads offered to the market must be equal or better than the original product installed by the car manufacturer. This is regulated by the ECE R90 certificate. Manufacturers complying to this rigid standard are typically priced more than double their low cost (low quality) brothers. However, by importing direct, the prices of high quality, European grade car parts could still be competitive with the low end products brought in by American distributors.

Windows and Doors

In the Caribbean, PVC slide-up windows are most popular as they have proven to resist the marine climate. Rather than the low cost versions usually supplied to the Middle East, Africa and South America, a supplier was selected who qualified to supply to Europe, the most demanding market. In the Caribbean’s rigid climate, steel doors have proven to be the best choice and China happens to be the major producer. A new approach are “security windows” that combine the traditional window looks with burglar proof. From a distance they look like “regular” windows, but instead of PVC separators these windows have solid steel bars that effectively block burglars. To complement the program, highest grade stainless steel hinges were selected, as well as automatic door closers.

Construction Steel Products

Tucked away in the North of China, five hours from Beijing, there is the town called An Ping. It is known to be the wire mesh capital of the world. With just 200,000 inhabitants, this little (by Chinese standards) town is now the dominant supplier of welded wire mesh (BRC) used in construction and road works, as well as chain link fencing. Virtually every company in this town has the ability to offer hot dip galvanizing, an effective anti-rust process, exactly what the Caribbean needs. New products introduced to the Caribbean are ready-made column and beam steel products that significantly save on labor while being resistant to corrosion.

Power & Garden tools

China’s province Zhe Jiang is known as a major industrial heart of China. Most of the power and garden tools available in the world are produced here, including most of the world’s well known brands. The selected suppliers have well implemented Quality Assurance systems, while being accepted by European vendors. Availability of affordable spare parts is a key in Caribbean distribution.

Hopefully this article introduces a “new” China to you – one that is still located a world away, but is now becoming a major partner and supplier to the Caribbean.

SPYING ON YOUR PHONE AND EMAIL

The UK turned into a surveillance state long ago ... and unfortunately the trend is getting worse.

As bad a surveillance state as the U.S. has become, Great Britain is in the lead in the population-monitoring race as of now. While Prime Minister Gordon Brown was paying lip service to the Cold War victory and the fall of communism 20 years ago, his government was simultaneously planning to introduce the “Interception Modernisation Programme.” All electronic communication providers will be required to keep a record of every communication by every customer for a year, and make the data available to 653 (!) public agencies. The citizenry will pay around $360 million per year in reimbursement expenses to communication providers for the privilege of being so monitored. What a deal.

Information on making your electronic communications more private has been posted on other places on our website, e.g., here. Black mentions a another resource worth knowing about: PublicVPN.com. From the site’s home page: “PublicVPN.com provides you with commercial–grade security for your Internet connection when you’re on the road. Whether you use Wi–Fi® access points, hotel room network connections, or other, non–trusted networks, PublicVPN.com makes sure that your Internet transmissions are protected from eavesdropping.” The service is not designed for home use, but road use where you are not sure of the security of the internet connection. Overseas, “you can protect your data from interception by third parties and bypass any internet-related content filters imposed by your host country.”

It was with great irony and despicable deceit that UK Prime Minister Gordon Brown was commemorating the fall of communism in Berlin on Monday. In his remarks, he insisted that the tide of history was moving towards our “best hopes,” and praised the people who helped end tyranny and bring down the wall.

Too bad it was all poppycock.

Simultaneously, Brown’s government back in London was announcing its plans for the rather innocuous sounding “Interception Modernisation Programme,” which is a law that grants the British government access to the phone records, emails, and web searches of its citize ... er, subjects.

To be clear, ALL European Union member states, including the UK, are already required by EU Directive 2006/24/EC to retain private electronic data for a period of 6 to 12 months. The information that governments must collect includes the date, time, duration, source, destination, and device information of all electronic communication, to include phone and email.

I came face to face with this directive while attempting to use a public internet terminal in Italy earlier this year – the attendant was required to make a copy of my passport, and I was notified that my web activity would be logged. Needless to say, I politely declined.

Despite these utterly draconian measures, the British government believes that the EU directive does not go far enough.

Now, the Interception Modernisation Programme plans to force all electronic communication providers (wireless companies, cable companies, internet service providers, etc.) to keep a record of every communication by every customer for a period of 1-year, and make the data available to 653 public agencies.

The most insulting part about the program is that the communication providers will be reimbursed for this inconvenience at taxpayer expense to the tune of about $360 million each year.

The UK turned into a surveillance state long ago ... and unfortunately the trend is getting worse, not better.

There are legions of yellow-vested government do-gooders in constant presence across Britain’s cities without any apparent mission other than to exist and take notice.

Similarly, during one stay at a swanky London hotel, I counted 7 CCTV cameras on the route from the hotel bar to my room. I once counted over 20 cameras at a busy London intersection.

In fact, signs reading “CCTV Monitoring in Progress” are ubiquitous, even in places where there is absolutely, positively no camera present. It is almost as if the government intends to spook people into behaving properly, just like the “Do not open door, ALARM WILL SOUND” signs you see in the U.S.

Hey, nobody wants to be the guy responsible for the alarm sounding ... better keep that behavior in check.

Ironically, the UK’s spying program has its roots in a 1985 law called the Interception of Communications Act; at the time, the European Court of Human Rights ruled that the practice of intercepting communications violated Article 8 of the European Convention on Human Rights.

Ah, once upon a time, privacy was a human right? But then again, we were all fighting godless Soviet commies at the time and went out of our way to underscore individual freedom and liberty.

Now our governments feel the need to protect us from angry men hiding in caves, damn the consequences.

I think there must be a lot of boiling frogs in the UK that are starting to notice how hot the pot is becoming. Sadly, the reality of all governments is that once a power is given to the politicians, it is rarely relinquished.

Consequently, do not expect the British government, or any other, to sound the “All Clear!” bell and suddenly abdicate its ability to monitor the citizenry.

So ... what to do?

We have talked about anonymous mobile phone calls, offshore email accounts and TrueCrypt hard drive encryption before. In addition to these tools, there are email encryption platforms available like EndCryptor and PGP, which I will review in greater detail in the future.

For a more private web surfing experience, you can use a browser add-on like Tor, and go through a secure tunnel VPN that will change your IP address, like PublicVPN.com.

Let me know if you would like more information on these tools and I can write a more detailed article. Furthermore, I plan on releasing a list of countries that I have traveled to where privacy is still the rule, not the exception.

Vicious and Voracious Violation of Volition

British government has announced that it is going to maintain DNA profiles of innocent people for “only” six years.

Fresh from the outrage described in the post immediately above, Simon Black read an even more disturbing story the day afterwards. In response to an European Court of Human Rights ruling that Britain’s policy of keeping DNA data indefinitely was a clear violation of human rights, the UK will keep the data “only” six years. This is not DNA data from convicted criminals. It is from anyone arrested or even just detained.

Black opines that this is going down “the mother of slippery slopes.” What next – a national ID card? Whoops ... already in the works. “If you are looking for privacy, stick to smaller countries that would never cough up so much money for complicated DNA databases,” e.g., Panama, Moldova ... or Mongolia. It seems it has come to that.

Please begrudge me the quote from V for Vendetta, but I am really starting to worry about what is going on in the United Kingdom.

[I previously] wrote about the UK’s “Interception Modernisation Programme.” New rules under the program require wireless companies and internet service providers to archive phone records, web history, and emails for a period of 12 months, and to make that data available to 600+ government agencies without a warrant.

Naturally, the erosion of privacy was absolutely shocking, and I was sickened ... at least until the next day when I read an even more disturbing story, also out of the UK.

Now the British government has announced that it is going to maintain DNA profiles of innocent people for “only” six years.

You see, this is actually a shift in policy. Since being established in 1995, the government has built up its “National DNA Database” to over 4.7 million people, and it grows by 30,000 per month. This is about 7.6% of the population. Oh yeah, and it costs British taxpayers about $100 million/year.

How did the database get so large? The UK’s Criminal Justice Act of 2003 authorized DNA samples to be taken by police on everyone they arrest or detain ... you do not even have to be charged with a crime.

Without any consent whatsoever, police can take oral swabs, footwear impressions, fingerprints, and in some cases blood, urine, semen, and dental impressions.

Until now, the British government has maintained DNA profiles indefinitely, even for people who had been found innocent and released from police custody without ever having been charged.

In a historic case, the European Court of Human Rights recently ruled that Britain’s policy of keeping the DNA data indefinitely was a clear violation of human rights ... so on Wednesday, the British government announced that it would discard innocents’ DNA profiles after 6 years.

The great irony with both the DNA compromise and the Interception Modernisation Programme is that they were announced right around the same time that European leaders were collectively celebrating the end of communist tyranny and the secret police.

Naturally, the British government does not consider keeping DNA records to be remotely totalitarian; rather, authorities maintain that the information helps the war on crime and terrorism.

According to the government’s statistics, 6,504 rape and murder crime scenes over the last 8-years have had DNA evidence matching a profile in the national database. Apparently this is supposed to make people rest easy.

Personally, I am left wondering about the other 4.7 million DNA profiles that were not involved in these crimes. I am also left wondering how many of the 6,504 profile matches just coincidentally happened to be near the crime scene but were not involved with any criminal act ...?

The scariest part is the following line I copied from the government’s website – “Maintaining and developing the [DNA] database is one of the government’s top priorities.”

I almost passed out when I read it.

The “nothing to hide, nothing to fear” argument is flawed for two key reasons.

Yes, I recognize that there are people out there who believe that, “hey, if you have nothing to hide, why are you so concerned about the government monitoring your emails or maintaining your DNA records?”

This “nothing to hide, nothing to fear” argument is flawed for two key reasons.

First, it means that the individual agrees to a “guilty until proven innocent” paradigm; in this case, you may have nothing to hide, but you are agreeing that the government will assume your guilt until it goes through your private affairs to prove innocence.

Second, it is the mother of slippery slopes. In a span of three days, the British government has announced its electronic surveillance program, and now an insipid response to the European Court of Human Rights for its DNA database standards.

I am an incredibly positive and optimistic person, but these clowns are really going down a dangerous path.

What will it be tomorrow for the Brits – a national ID card? Oh wait, that is in the works already.

Look, I am an incredibly positive and optimistic person, but these clowns are really going down a dangerous path ... rather than spend an entire letter decrying the British government’s complete disregard for civil liberties, however, I will leave you with a few suggestions.

If you are looking for privacy, stick to smaller countries that would never cough up so much money for complicated DNA databases.

If you are looking for privacy, stick to smaller countries that would never cough up so much money for complicated DNA databases. Panama comes to mind. Croatia. The Philippines. Chile. Moldova. Tanzania. Ecuador. Mongolia. Uruguay. ...

FIREFOX KEEPS MICROSOFT “HONEST” ON 5TH BIRTHDAY

Mozilla Firefox is the very successful open source browser which disrupted the cozy dominance of Microsoft’s Internet Explorer, for which its coders certainly deserve thanks. It celebrates its 5th birthday/anniversary on November 9.

Mozilla is celebrating Firefox’s fifth birthday today by proclaiming 330 million users worldwide since the browser was launched on 9 November 2004.

The open source outfit, which last week released the first beta of Firefox 3.6, is popping open the Asti Spumanti today.

“We’ve come so far in the past five years and we’re incredibly excited about the next five,” gushed Mozilla in a self-congratulatory blog.

Unsurprisingly, Mozilla fans are hosting parties “all over the globe” in a campaign dubbed “Light the World with Firefox.”

And the org has reason to be cheerful, given that it is now the world’s second most popular browser behind Microsoft’s Internet Explorer, which of course comes bundled with the software giant’s Windows operating system.

Mozilla’s Christopher Blizzard was also quick to claim that the organization was responsible for making the browser market shift gears and respond to the growing popularity of Firefox.

“We have managed to keep Microsoft honest and forced them to release newer versions of their browsers,” he opined. “Firefox’s presence was a large factor in Apple being able to ship a browser to its user base as the Mac came back to the market. We’ve made it possible for third party browser vendors like Google to enter the market.”

But perhaps the most interesting part of Blizzard’s ode to Firefox, came when he hinted at what is in store for the future of the browser. And just like Google’s Chrome, Mozilla is beavering away at all things video-based.

“Expect to see big changes in the video space. HTML5-based video and open video codecs are starting to appear on the web as web developers make individual choices to support a standards-based, royalty-free approach,” he said. “Expect to see changes in the expectations around the licensing of codecs.”

Meanwhile, those of you interested in jelly, ice cream and musical chairs can pop corks here. El Reg advises you pack a bib.

Firefox at 5: The Google Cold War

Google is not threatening to become the second coming of Microsoft, but the company is at root advertising revenue driven. Google wants to put ads in front of Web viewers’ eyeballs and have them buy stuff, similar to the cable and over-the-air TV networks. This is at odds with the more idealistically inclined who since envision the World Wide Web as a great big share-for-all.

The movers and shakers behind the Mozilla Firefox lean in that later direction. But most of Mozilla’s funding has heretofore come from Google. So a latent ideological conflict has always existed. Now Google has come out with its own browser, Chrome. The conflict is now less latent.

The two companies remain allies for now, but increasingly wary ones.

As Firefox pops the champagne on its 5th birthday, one of its founding fathers has warned the world against an interwebs ruled by a certain money-minded tech giant.

That would be Google.

The Mountain View Chocolate Factory was instrumental in the rise of Mozilla’s open-source web browser, contributing not only code, but considerable amounts of cash. Since 2004, Mozilla has pocketed a slice of all Google search cash generated by Firefox traffic, and in 2006 and 2007, Mountain View dollars accounted for more than 85% of the open-sourcers’ revenues.

But following the debut of Google’s very own Chrome browser last year, a certain chilliness has come between the two. Their financial relationship has not changed – Mozilla still needs the cash, and Google still needs the traffic – but in other ways, they are not as close as they once were.

Firefox was founded to revive the mid-‘90s browser wars with Microsoft and Internet Explorer. But five years after the official debut of Firefox in November 2004, a kind of browser cold war has developed with Microsoft’s biggest rival.

“I look at Google and I don’t see a lot of alignment with the big picture of the internet,” says Asa Dotzler, the 10-year Mozilla vet who was among the team of three or four who founded the Firefox project back in 2002.

“Google is essentially an advertising company. That’s where they make their money. They provide a wonderful service – primarily their search service – but it serves their advertising goals. It serves their revenue goals. The more they can know about their users, the more effective they believe they can advertise, the more money they believe they can make. That is most fundamental.”

He does not see Google as the new Microsoft. Far from it. But Google is still a threat to the Mozilla way. Redmond and Mountain View have absolutely nothing in common, Dotzler says, except that they are both public companies legally beholden to maximize revenue for their stockholders. He is adamant that if Google’s ad-centric vision comes to dominate, the Web will wind up as something we have all seen before.

“I hope that there is renewed competition in the search space and in the advertising space and in revenue models for the web beyond advertising,” he says. “I fear that we would end up in a worse case scenario where the users of the web become consumers of content who sit in front of commercial advertising all day long and have no control over their experience. And that sounds like cable TV to me. The internet can be so much more.”

The irony, of course, is that Google ads are still propping Mozilla’s bottom line. But the organization has revenue deals with multiple search engines, and Dotzler insists that none of them – not even the most lucrative – has an effect on the company’s egalitarian mindset.

As you might expect, he wholeheartedly nominates Mozilla as the outfit who can save the net from both Microsoft and Google. “Mozilla creates a product that makes sure that the non-commercial aspects of the web – those things which have not purely been designed to generate revenue – are well represented and that anyone can come along and participate without having to be a part of the financial model of the web,” he says.

“There are civic and cultural and educational aspects of the internet that needs a defender and an advocate. They won’t get that from traditional commercial organizations who have a legal responsibility not to care about this stuff.”

Phoenix from the, well, you know ...

The Firefox project was originally known as Phoenix, a standalone open source browser rising from the ashes of Netscape. The project was launched in early April 2002, but its roots trace back to 1997, when Netscape released its Communicator suite as open source software – before anyone called it open source software.

When Netscape’s code went free, Asa Dotzler was among the first to file a bug report. And by 2000, after helping to build a thriving community of testers, he had landed a job with the Netscape-backed Mozilla Organization, well before the outfit morphed into a standalone not-for-profit.

“I had always had some interest in the free software community, but I couldn’t stand Linux. I was a Mac user and it was abhorrent to me,” he remembers. “But here was a product I did use – the Communicator suite – and I said to myself: ‘I should get involved somehow.’”

In those days, Mozilla’s efforts centered around the development of the suite as a whole – a package that included not only a browser but several other online tools, including email, chat, and HTML editing. But two years later, Dotzler and a small group of developers launched another project on the side.

The group had worked on Camino – nee Chimera – a standalone browser that wrapped Netscape’s Gecko rendering engine in a Macintosh front-end, and they soon decided to do something similar using Mozilla’s front-end language: XUL.

Enter the Phoenix.

The Mozilla brain trust set aside some space in the source code repository, and within three or four months, Dotzler says, 10 to 15 thousand people had tried the thing.

The browser wants to be alone.

In those days, Microsoft controlled 95% of the browser market, a lead so large that the Borg actually disbanded its IE development team following the release of Internet Explorer 6 in 2001. The only way to chip away at Microsoft’s seemingly unassailable position, Dotzler and crew soon realized, was through a standalone browser – not a suite bogged down with all sorts of other stuff.

“We were looking and saying ‘No one is really taking browsers seriously,’” he says. “The only way to have an impact, to make something that was going to get millions of users, was to attract Internet Explorer users, and they did not want or need to move over to a large suite of applications. We wanted to let them keep their email client or chat client and just give them a browser.”

By the time the Mozilla Foundation was founded in 2003 – a way of saving the project from a sinking Netscape – the organization’s focus had shifted from the original Mozilla suite to Phoenix. Firefox 1.0 was released on November 9, 2004, and in the five years since, the open source browser has reclaimed nearly a quarter of the market.

Based on the number of security updates downloaded each month, Dotzler and Mozilla estimate their browser boasts roughly 330 million active users – plus or minus 10 or 20 million.

Microsoft is still the market beast, with a nearly 65% share. But Mozilla has proven that despite Redmond’s grip on the desktop operating system market, an alternative browser can succeed – in spades. And in doing so, it forced Microsoft into (at least partially) updating Internet Explorer for a modern internet.

Google? “It’s awkward”

But this we know. The bigger question is how Firefox will progress on a web increasingly dominated by Google. At the moment, Google Chrome owns a mere 4% of the market, but it will soon be the centerpiece of a Google desktop operating system, and with Android – which uses a separate browser based on the open source WebKit project – Mountain View is stretching its beefy tentacles onto mobile phones, an area where Mozilla – like so many others – is still searching for a foothold.

Since the Chrome beta was released in the fall of 2008, there is no denying that at least the logistical relationship between the two companies has changed. “[Google] actually participated in the development of Firefox and have worked on other Mozilla projects, so we have [Google] friends and allies who are programmers and testers and they have offered device and usability expertise and distribution help and all kinds of other things,” he says. “That has changed a little bit. Some of the people who were working on Firefox at Google are now working on Chrome.”

Dotzler tosses in that common argument that more competition is a good thing. But he acknowledges that such competition has put an added strain on the relationship. “It is a little bit awkward. And it is completely OK to say it’s a little bit awkward,” he says.

“Google has a different vision of the web than Mozilla and a different set of motivations for building a browser. No matter what happens in terms of feature competition and things like this, we have something distinct at Mozilla. We are trying to make sure that individual empowerment and choice and participation are fundamental pieces of the fabric of online life.”

Yes, Google's vision is providing 88% of Mozilla revenues – at least by last (public) count; the organization’s 2008 tax return is due out later this month – but Dotzler does not see a contradiction.

Mozilla and the Search for Meaning

In so many countries – including the U.S. and the UK – Google is Mozilla’s default home page and its default search box. But Mozilla chooses those defaults independent of any revenue pact. Dotzler says that Google receives such prominent placement only because it is the best search option – in those countries. In China, the default is Baidu. In Russia, the default is Yandex.

Mozilla has revenue deals with myriad search engines, and Dotzler dreams of a world where more outfits are pushing Google for that default spot. “We believe that search is getting more diverse at least geographically, but within the States and Western Europe, it is dominated by Google right now. In some ways that is wonderful, because they provide a great service. But in other ways, it is little bit unfortunate, because it means there isn’t a highly competitive landscape that is moving the state of the art forward,” he says

“Less competition is not what we’re after here.”

In 2004, the not-for-profit Mozilla Foundation spun-off the for-profit Mozilla Corporation so that it could make use of the ample funds streaming in from Google and others. But unlike Google and Microsoft, Mozilla is not a public company.

“We are a mission-driven organization that is at its roots an open-source, non-profit, public-benefit organization,” he says.

He even hints that there may be a way for Firefox to help spark some extra competition in the search market. “Maybe there is some opportunity for Mozilla to help feature or highlight emerging search organizations or features in a way we are not doing today,” he says. “This is definitely something we are thinking about.”

Cold war indeed.

SHORT TAKES

Dignified Bermuda Turns to Value Offerings

Bermuda’s economic and travel slump has prompted hoteliers to offer travel promotions, value-adds and targeted discounts, in many instances reaching consumers that would not normally consider Bermuda for a vacation due to its pricey offerings.

But when tourism numbers dropped nearly 8% in the second quarter, to 203,061 visitors, and visitors staying in commercial accommodations dropped 16.5%, Bermuda’s hotels turned their attention to the matter needed to turn its attention to value offerings, a first for most of its hotels.

One promotion at the Fairmont Southampton offered rates as low as $99 a night, down from its more typical $300 to $500-per-night rates ... more than 15,000 room nights were booked as a result of that promotion. Also, a group of hotels participated in a 400th Anniversary promotion, which offered up to a $400 resort credit for a four-night stay, which, according to Ewart Brown, the island’s premier, served to produce another 15,164 room nights as of June 30.

Bermuda has built its reputation as an upscale resort destination, one perceived as very British in its reserve and dignified informality. While that position will not change, the perception that the product offered in Bermuda will as the island’s hoteliers go after the value-conscious travel market.

The message of a new ad campaign produced under the direction of Bermuda’s tourism team in New York, was carefully scrutinized. “Given that Bermuda’s competitors are relying on slashing prices to drive visitation, without concerns for the effects of this behavior on the brand, it was clear the new campaign would need to sell the island without cheapening the brand,” Brown said in a speech earlier this month.

Would You Use Your Medicare in Mexico?

It would make all the sense in the world to extend Medicare coverage to senior citizens using foreign medical facilities due to the cost savings. ... Except that cost savings are not a priority of the U.S. political system. Channeling cash to politically connected people and organizations is. The U.S. health care system is very well connected. Now where were we? ...

If you could use your Medicare in Mexico, would you?

Consider this – health care in Mexico costs less than a third what it does in the U.S. and is often provided by U.S.-trained doctors.

That could equal saving not only for patients, but for the Medicare program itself, according to Paul Crist, founder of Americans for Medicare in Mexico.

Crist owns a resort in Puerto Vallarta, Mexico, and once served as an aide to former U.S. Senator Paul Sarbanes. He says that, although 200,000 of the estimated one million Americans living in Mexico are eligible for Medicare coverage, many of them are forced to return to the States to get covered treatment.

Which does not make much sense when you consider that a 2007 study by the University of Texas showed that a $63,000 hip replacement in the U.S. can cost $12,000 in a modern Mexican facility, or that a $149,000 heart bypass procedure in the U.S. can cost just $21,000 south of the border.

Crist and his organization have been campaigning for Medicare reforms to let U.S. citizens use their Medicare in Mexico, but the health care debate has monopolized the news cycle, overshadowing his efforts. But he and other groups of U.S. expats like the Association of American Residents Overseas (AARO) are maintaining the pressure on Congress through letter-writing and informational campaigns.

Powerful U.S. health care groups resist extending Medicare coverage outside the U.S. because they fear it will lead to outsourcing of healthcare to even less expensive markets like Eastern Europe and China, taking a huge bite out of U.S health industry profits.

But thousands of Americans are already heading for Mexico either full or part-time to take advantage not only of lower health care costs, but lower property taxes and general cost of living as well.

“Many in the baby-boomer generation have seen their retirement savings disappear and it is not likely those funds will be built back up quickly,” says Crist. “The opportunity to provide services to Americans at much lower cost outside the U.S. border is enormous. This is pushing even private insurers to explore coverage options outside of the U.S., and Medicare will certainly be a part of this globalization, sooner or later.”

Canadians Get Stung by Cost of Health Care in U.S.

The absurdity of this example is consistent with the absurdity of the U.S. health care system. We were not there, so this constitutes taking potshots from the sidelines without knowing the situation, but it seems neither the Canadian patient nor the U.S. facility involved showed much common sense, nor much sense of responsibility.

Canadians carry their national health care coverage with them wherever they go, but unfortunately they do not carry the Canadian cost of health care with them.

This can make for some costly surprises if they happen to get sick in the U.S., where they must pay the difference between their Canadian coverage and the high cost of health care in the States.

In one recent case, a sniffle in Florida cost a Canadian patient dearly in the U.S. He went to a U.S. health care facility for a cold ... what his Canadian doctor would have known to be a common and non-serious complication of a recent chemotherapy treatment. But by the time his brush with the U.S. health care system and its battery of tests was over, the bill was over $100,000.

Almost none of the costly tests that ran up that tab were deemed necessary by the Canadian health system, which meant the patient himself was liable for the difference.

Health care providers in Canada are trained to advise patients about the difference between the cost of health care in Canada and other countries, but the enormous difference between Canadian and U.S. costs present a real financial risk to Canadians who get injured or sick in the U.S. and require immediate treatment.

For the same reason, many U.S. citizens are seeking medical care in countries such as Mexico, Panama, Ecuador, and others where the cost of health care is lower than the States. Canadians carry their national health care coverage with them wherever they go, but unfortunately they do not carry the Canadian cost of health care with them.

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