Sovereign Man, Notes from the Field Date: February 29, 2012 Reporting From: Santiago, Chile

Notes from the Field

Date: February 29, 2012
Reporting From: Santiago, Chile

In Warren Buffett’s latest round of gold-bashing last weekend, he described all the gold in the world as a useless cube that would fit snugly within a baseball infield.If you owned such a cube, you would only be able to ‘fondle’ it… but generate no investment return.  The same ‘value’, meanwhile, would allow the owner to purchase all the productive farmland in the United States plus 16 Exxon Mobils, in total yielding over $800 billion annually.Granted, Buffett’s views on gold are perhaps stymied by his poor experience investing in silver some 15-years ago. But still, he fails to see some obvious fallacies in his logic.

Most assets left unmanaged will fail to produce an investment return. The virtuous farmland that Buffett extols in his hypothetical example does not magically spawn corn, nurture it, harvest it, sell it, and deposit the proceeds into its owners’ pockets. Our farmland here in Chile certainly does not.

No, it takes a lot of work, a lot of experienced people, a lot of know-how, and a little bit of luck. All of this has to be managed.

Even the baseball field that Buffett references (when trying to give his investors an idea of the scale of all the gold in the world) is an asset. Simply left sitting there, a baseball field will soon be overtaken by erosion, weeds, and the dilapidation that comes with neglect.

Maintained and well-managed, however, a savvy owner of a baseball field can lease it out to the local little league. Or pull a Kevin Costner and turn it into a tourist attraction. None of this happens without appropriately managing the asset.

Even Exxon Mobil, with all of its royalties and intellectual property, requires tens of thousands of employees to manage the company’s assets, collect the profits, and ensure shareholders get paid.

Likewise, a huge cube of gold left alone in a baseball infield will fail to produce any investment return. When managed, however, gold is like any other asset– it can be leased, traded, loaned out, used as collateral, etc.

More importantly, though, the reason that many gold investors purchase the metal to begin with is because physical gold carries no counterparty risk.

Unlike paper currencies which are issued at will by corrupt central banks, or even Exxon Mobil, whose success depends heavily on the management team’s goodwill and diligence, a one ounce gold coin in your pocket will still be a one ounce gold coin tomorrow. This is the entire premise behind money as a store of value.

As my friend Tim Price told me over drinks in London several months ago, fiat currency is simply an abstraction of the concept of money; paper money conjured out of thin air cannot be real money, it’s merely an idea based on confidence and collusion.

Curiously, only a tiny percentage of worldwide money supply is actually physical paper– most ‘money’ is in digital form, simply entries in a computer… a few bits of code which constitute your net worth. In this way, our currency is actually an abstraction of an abstraction of the concept of money.

To this I would add that the entire financial system is underpinned by a complex network of hypothecated debt and derivative instruments whose notional total exceeds (by many multiples) the entirety of world GDP. In this manner, we are talking about abstractions of abstractions of abstractions.

Gold is real. It exists. And it scarcity dictates that it is a reasonable store of value, particularly in a world of abstract money.

There’s a lot of talk right now, for example, about rising oil prices which have created uncomfortably high gasoline prices. In gold terms, however, gasoline prices are in a deflationary spiral. The chart below shows unleaded gasoline prices in grams of gold since January 1976:

and for the last five years:

Priced in grams of gold, gasoline is near an all-time low. [In fact, there's a great site run by my friend Charles V. that shows this trend with a variety of commodities and retail goods.]

Buffett (and others) argue strongly that investors should be in stocks… that a company like Coca Cola or productive farmland is a better long-term investment than a useless hunk of metal.

He’s probably right. Except that the useless hunk of metal isn’t really an investment. It’s an anti-currency… appropriate for those who want to sit out of the market and be in cash without having to be in cash.

Until Tomorrow,

Simon Black

This article appears courtesy of SovereignMan.com: Notes From The
Field, a free newsletter dedicated to individual freedom,
internationalization, asset protection and global finance. For a
complimentary subscription, visit http://www.SovereignMan.com

Maine’s New Governor….Meet the Man we need for sure…28 February, 2012 via E-Mail

Meet Maine ‘s New Governor — In case you haven’t heard about this guy before, his name will stickin your mind!

The new Maine Governor, Paul LePage is making New Jersey ‘s Chris Christie look like an enabler.He isn’t afraid to say what he thinks. Judging by the comments, every time he opens his mouth, his popularity goes up.

He brought down the house at his inauguration when he shook his fist toward the media box and said, “You’re on notice! I’ve inherited a financially troubled State to run. Observe…cover what we do…but don’t whine if I don’t waste time responding to your every whim just for your amusement.”
During his campaign for Governor, he was talking to commercial fishermen who are struggling because of federal fisheries rules. They complained that 0bama brought his family to Bar Harbor and Acadia National Park for a long Labor Day holiday and found time to meet with union leaders, but wouldn’t talk to the fishermen. LePage replied, “I’d tell him to go to hell and get out of my State.” The Lame Stream Media crucified LePage, but he jumped 6 points in the pre-election poll.

The Martin Luther King incident was a political sandbag, which brought him National exposure. The ‘lame stream’ media crucified him, but word on the street is very positive. The NAACP specifically asked LePage to spend MLK Day visiting black inmates at the Maine State Prison. He told them that he would meet with ALL inmates, regardless of race, if he were to visit the prison. The NAACP balked and then put out a news release claiming falsely that he refused to participate in any MLK events. He read it in the paper for the 1st time the next morning while being driven to an event and went ballistic because none of the reporters had called him for comment before running the NAACP release.

He arrived at that event & said in front of a TV camera, “If they want to play the race card on me they can kiss my ass”, and he reminded them that he has an adopted black son from Jamaica and that he attended the local MLK Breakfast every year that he was mayor of Waterville. (He started his morning there on MLK Day.)
He then stated that there’s a right way and a wrong way to meet with the Governor, and he put all special interests on notice that press releases, media leaks, and all demonstrations would prove to be the wrong way. He said any other group, which acted like the NAACP could expect to be at the bottom of the Governor’s priority list!

He then did the following, and judging from local radio talk show callers, his popularity increased even more: The State employees union complained because he waited until 3 P.M. before closing State offices and facilities and sending non-emergency personnel home during the last blizzard. The prior Governor would often close offices for the day with just a forecast before the first flakes. (Each time the State closes for snow, it costs the taxpayers about $1 million in wages for no work in return.)

LePage was CEO of the Marden’s chain of discount family bargain retail stores before election as governor. He noted that State employees getting off work early could still find lots of retail stores open to shop. So, he put the State employees on notice by announcing: “If Marden’s is open, Maine is open!”
He told State employees: “We live in Maine in the winter, for heaven’s sake, and should know how to drive in it. Otherwise, apply for a State job in Florida !”

Governor LePage symbolizes what America needs; Refreshing politicians who aren’t self-serving and who exhibit common sense.

THE LAW IS THE LAW!

I really love this one.

This is one of the better e-mails I have received in a long time! I hope this makes its way around the USA several times over!!!!! HERE IS WHAT Governor LaPage said,

“THE LAW IS THE LAW So “if” the US government determines that it is against the law for the words “under God” to be on our money, then, so be it.

And “if” that same government decides that the “Ten Commandments” are not to be used in or on a government installation, then, so be it.

I say, “so be it,” because I would like to be a law abiding US citizen.
I say, “so be it,” because I would like to think that smarter people than I are in positions to make good decisions.
I would like to think that those people have the American public’s best interests at heart.

BUT, he said, “YOU KNOW WHAT ELSE I’D LIKE?
Since we can’t pray to God, can’t Trust in God and cannot post His Commandments in Government buildings, I don’t believe Government (Federal, State and Local) and its employees should participate in Easter and Christmas celebrations which honor the God that our government is eliminating from many facets of American life.
I’d like my mail delivered on Christmas, Good Friday, Thanksgiving & Easter. After all, it’s just another day.
I’d like the” US Supreme Court to be in session on Christmas, Good Friday, Thanksgiving & Easter as well as Sundays.” After all, it’s just another day.

I’d like the Senate and the House of Representatives to not have to worry about getting home for the “Christmas Break.” After all it’s just another day.

I’m thinking a lot of my taxpayer dollars could be saved, if all government offices & services would work on Christmas, Good Friday & Easter. It shouldn’t cost any overtime since those would be just like any other day of the week to a government that is trying to be “politically correct.”
In fact….I think our government should work on Sundays (initially set aside for worshipping God….) because, after all, our government says that it should be just another day….”

What do you all think???? If this idea gets to enough people, maybe our elected officials will stop giving in to the “minority opinions” and begin, once again, to represent the “majority” of ALL of the American people.
SO BE IT………..Please Dear Lord, Give us the help needed to keep you in our country! ‘Amen’ and ‘Amen’ Touché!

Sovereign Man, Notes from the Field Date: February 28, 2012 Reporting From: London, England

Notes from the Field

Date: February 28, 2012
Reporting From: London, England[Editor's note: Tim Price, a frequent Sovereign Man contributor and Director of Investment at PFP Wealth Management in London, is filling in for Simon today.]In December last year, the poet Alice Oswald withdrew from the TS Eliot poetry prize on the grounds that the prize was being sponsored by an investment company (Aurum, a fund of hedge funds manager).How you feel about this principled stance may depend on whether you are a UK taxpayer. If you are a UK taxpayer, you will probably feel relieved that your tax pounds are no longer being squandered on the Arts Council’s sponsorship of the prize in question “a tiny victory” but a victory nevertheless against the arrogant dissipations of the state.

Ms Oswald seems to believe that poetry prizes should be funded with everybody else’s money, rather than by a private patron grown-up enough to be responsible for its discretionary expenditure (private patronage being what you might call “traditional” in the arts).

As a graduate in English Language and Literature, this commentator has no animus against poets. But I am not sure we want them in charge of the economy. They are notorious for starving in garrets for a reason.

Ms Oswald’s “protest” is part of a wider intellectual malaise that lazily conflates government spending with the real economy and which conveniently ignores the fact that without a flourishing private sector, there would be no government and certainly no government spending to speak of.

It is part of that lazy thinking that inspires journalists to keep speaking of “the government” spending money on this or that, as if “the government” were somehow sitting on an infinitely large pile of “government money” that most of the time it was unreasonably withholding from worthy causes.

The reason our economy is knackered is because successive governments have indeed pandered to subjective worthy causes with money that those governments did not possess.

Tomorrow and tomorrow and tomorrow, taxpayers will be paying the bill. It is not government money because the government doesn’t have any. It has liabilities only. It is taxpayers’ money.

The finest achievement to date of the UK’s coalition government has been a triumph of PR’ as one might expect, given that PR appears to comprise the only work experience our current Prime Minister has ever had outside politics.

A myth has arisen, polished frequently by an ignorant media, that the British government has started to deal with the grotesque debt inherited from the previous government. But as Prosperity Capital’s chief economist Liam Halligan points out, government spending was actually higher for the fiscal year 2010/11 than under the last year of the last government.

The UK debt figures are also much worse than conventionally believed because 2011 debt including “interventions” stood at ~£2,270 billion as at September 2011, or 150% of UK GDP. To this we should add public sector pensions (~£1,100bn+), PFI (~£400bn+) and sundry other off-balance-sheet obligations of the state.

Liam Halligan’s bleak summary is that after five years of supposed austerity, UK government spending will be back to 2005 levels… but with twice as much debt.

Just as there has been no real austerity in the UK, yet’ there has been no real deleveraging in the global economy at an aggregate level. Paul Marson of Lombard Odier points out that global credit market debt stands at $220 trillion, having grown by 11% annually since 2002, versus 8% nominal GDP growth:

In debt markets we are seeing a catastrophic example of the law of diminishing returns. As Marson makes clear, it takes greater amounts of debt to have the same marginal impact on GDP. The marginal effectiveness of debt has collapsed during the period since the end of the Second World War.

For the USA, for example, 1 unit of debt generated 0.63 units of GDP between 1953 and 1984; that same 1 unit of debt generated 0.24 units of GDP between 1985 and 2000; since 2000, 1 unit of debt has generated just 0.08 units of GDP.

The problem is insuperable. More debt has been created in the past forty years than will ever realistically be paid back…  which leads us to the existential financial problem of our time:

The modern, debt-based economy requires constant economic expansion if only to service all that debt. So what happens when the modern economy goes ex-growth and stops expanding?

Iceland already found out. Greece is in the process of discovering. But we will all get a chance to participate in this lesson.

Runaway fiscal and monetary stimulus throughout the western economies is in the process of destroying the concept of creditworthiness at the centre of the modern monetary system.  Private investors, we suspect, have little or no conception of the extent to which the state is now the predominant player in the financial markets.

Central banks control the money supply and interest rates. Central banking and commercial banking interests have essentially become fused.

The ECB’s long-term refinancing operations are banking bailouts by the back door. Central banks are now also the swing players in government bond markets which directly influences the price for corporate credit. Central bank monetary stimulus also directly influences equity market direction and confidence.

Be careful, be very careful about the sort of government debt you hold. You may well end up being paid in whole- but in such depreciated terms that being “kept whole” will be meaningless in real terms.

In all other respects, our investment choices remain what they have always been: high quality, high yielding defensive equities; uncorrelated systematic trend-following funds; gold, silver, and gold and silver mining companies.

There will come a point, and it may admittedly be some time in coming, when a major government bond market goes bang. Perhaps Japan, some peripheral market in the euro zone, some core market in the euro zone, the UK, or even the US.

You will hear the echo throughout the world. We intend to be a very long way away when that time comes.

Tim Price
PFP Wealth Management
Sovereign Man Contributor

This article appears courtesy of SovereignMan.com: Notes From The
Field, a free newsletter dedicated to individual freedom,
internationalization, asset protection and global finance. For a
complimentary subscription, visit http://www.SovereignMan.com

Sovereign Man,Notes from the Field Date: February 27, 2012 Reporting From: Talca, Chile

Notes from the Field

Date: February 27, 2012
Reporting From: Talca, Chile

Banking privacy is dead. Completely, totally dead. Murdered, really. The US government is the assailant, and FATCA is the murder weapon.

We’ve talked about this a few times before– FATCA is the heinously insidiously piece of legislation that the Honorable Barrack Hussein Obama passed into law in 2010 as part of the “Hiring Incentives to Restore Employment Act”.

There were no hiring incentives, and there was no restoration of employment. But any vestiges of banking privacy were destroyed.

In brief, FATCA has two key concepts. First, it requires an additional (and completely unnecessary) layer of reporting from all US taxpayers who have ‘foreign financial accounts’ at ‘foreign financial institutions.’ Though as we have discussed before, both of these critical terms are ridiculously and flagrantly ambiguous, putting the onus entirely on the taxpayer.

Without clarifying what constitutes foreign financial accounts and institutions, Congress has effectively created decades of debate in tax court… a move that will undoubtedly ruin the lives of the unfortunate folks who get dragged into the fight.

The second key issue is that FATCA puts a burden on ALL foreign financial institutions worldwide to enter into an information-sharing agreement with the IRS; this essentially obliges every bank on the planet to submit reports and customers’ private data to the IRS.

Banks who don’t enter into this information sharing agreement will have a 30% tax withheld on funds that originate from, or go through, the US banking system. Further, banks who enter into the information sharing agreement are obliged to withhold the 30% tax on transfers to other banks who do NOT enter into the agreement.

Such provisions are absolutely, 100% impossible. And it’s becoming clear that FATCA was passed with no intention of being enforceable. It’s inconceivable that every institution on the planet could enter into an agreement. And it’s inconceivable that every institution on the planet could possibly know whether every other institution has entered into the agreement.

The only thing FATCA has accomplished is scaring the living daylights out of non-US banks. So much so that foreign banks have approached their governments to ask for help.

As I wrote last week, in order to dull the effect of FATCA in their countries, the governments of Spain, Italy, Germany, France, and the United Kingdom recently announced that they were entering into inter-governmental information sharing agreements.  Individual banks will no longer have to comply with the IRS, but instead share all with their home governments.

In other words, French banks will report to the French government, US banks will report to the US government, and the two governments will swap data.

It’s no small coincidence that the first signatories to such an inter-governmental sharing agreement are five of the largest (albeit most insolvent) countries on the planet, forming the core of the OECD. Now it’s only a matter of time for smaller nations to fall in line.

Last Friday, Isle of Man became the first. Treasury Minister Eddie Teare announced that “the inter-governmental partnership approach announced by the US, France, Germany, Italy, Spain and the UK should be explored by the Isle of Man Government” and that a “high-level FATCA working party has already been formed.”

With Isle of Man laying down, we can expect places like the Channel Islands, BVI, Cayman, Bermuda, Mauritius, and other popular offshore banking jurisdictions to sign up next.

There are two key points I’d like to make here-

1) There is no such thing as banking privacy. Do not trust your banker to keep secrets for you, and definitely do not trust a government-regulated banking system to keep secrets for you. If you have undeclared income that’s been nestled offshore, it should be obvious at this point that such arrangements will soon unravel.

Voluntary disclosure is always better than getting caught by your home government’s tax authorities. And, especially if you’re a US citizen where tax noncompliance is a criminal offense, paying hefty penalties is a much better outcome than going to court and ending up in a day-glow orange jumpsuit.

2) Most people who are interested in financial privacy tend to use cash. But since carrying large amounts of cash is more and more being criminalized (and confiscated), this is no longer a viable option.

The best form of financial privacy at the moment is physical gold, at least until a better option for digital currency hits the market. Gold may not be useful for day-to-day transactions, but as a store of value tucked away in an anonymous offshore facility, there is no better way of maintaining financial privacy.

Until tomorrow,

Simon Black
Senior Editor, SovereignMan.com

This article appears courtesy of SovereignMan.com: Notes From The
Field, a free newsletter dedicated to individual freedom,
internationalization, asset protection and global finance. For a
complimentary subscription, visit http://www.SovereignMan.com

My Review of Roku 2 XS Streaming Player

Originally submitted at Roku

Adds an enhanced remote for playing games, plus extra connectivity options.

Roku 2 XS Streaming Player

The RoKu 2 XS…Yes, it’s our 2nd one…

By Coral_daze from Cape Coral, Florida on 2/26/2012

 

5out of 5

Pros: Built in Wi-Fi, Video selection, Reliability, Great value, Easy to use, Easy to set up, High quality picture

Cons: None so far

Best Uses: Secondary TV, Bedroom

Describe Yourself: Home entertainment enthusiast, Netflix fan, Movie buff, Technophile

More and Better than ever…..Thanks again RoKu fo such a great product…It’s made our TV viewing so much better all around.

(legalese)

Sovereign Man, Notes from the Field Date: February 24, 2012 Reporting From: Santiago, Chile

Notes from the Field

Date: February 24, 2012
Reporting From: Santiago, ChileI want to start off today’s letter by thanking the 120+ folks who’ve made the journey down to Chile over the past two weekends to break bread on the farm. Last weekend’s event was a real delight, and I’m looking forward to tonight’s festivities with the new group.It’s a pleasure to spend time around people with a similar world view, and it was amazing to see dozens of complete strangers forming fast friendships in such a pleasant setting.

On to this week’s questions.

First, Art asks, “Simon, we know the index fund ‘buy and hold’ strategy of most financial advisers is for the birds. What kind of investment(s) would you recommend for someone without much time to manage their portfolio, but wants good long-term investments through an easily accessible brokerage account?”

The traditional mantra of ‘buy and hold US blue chip stocks’ is absolutely for the birds. Turkeys, to be exact. Adjusted for inflation, the S&P 500 is down 2.41% in the ten years since February 24, 2002. Throwing in the average index fund’s fees would have soured that loss even more. Pitiful.

[Editor's note: for math wonks, the St. Louis fed has tracked the compounded inflation rate since February 2002 at 27.48%; the S&P 500 closed at 1090 on Friday, February 22, 2002.]

The fact is that right now, markets are completely fractured. The price discovery mechanism has been buried under bailout rumors and policy innuendo. Fundamentals really don’t matter anymore, it’s just a question of politics and money supply.

To make things worse, we live in a zero-yield world where risk quantification is deeply flawed. The largest debtor in the history of the world, which is on a one-way road to going debt supernova, is considered ‘risk free’. This is completely idiotic, and it has created severe structural issues in the market.

In my mind, nothing beats investing in private businesses that provide honest, tangible value to the market.  Such deals are much more exciting and easier to understand than divining what toxic assets Citigroup has on its books. Plus, as a director of an operating business, you can generally influence many risks yourself.

Managed trading accounts and trading services may also be reasonable options. Our partner Tim Staermose’s now sold-out Fourth Pillar strategy is one example; it uses takeover arbitrage in Australia to generate consistent double digit returns devoid of the volatility that typifies capital markets.

Well-managed productive land in investment-grade scale also strikes me as a very sound option, especially in an environment of continued monetary debasement. This is what we’ve done in Chile– we’re growing a LOT of food… and if the investment thesis isn’t 100% correct, there’s still a lot of personal benefit.

There’s also the option of applying the ‘buy and hold’ strategy to certain frontier markets– accumulating a basket of select, high quality equities in a place like Mongolia where you can walk away for five to ten years while the economy grows like a weed.

In last month’s Sovereign Man: Confidential, we walked readers through top undervalued picks on the Mongolia exchange, as well as how to open a brokerage account through the mail. Take advantage of our limited time special pricing today and get immediate access to this content.

Next, Frank asks, “Simon, year in, year out, I seem to be in trouble with the IRS. Last year I took the step of obtaining a second passport from St. Kitts, and I’m seriously considering walking away from my US citizenship in the hopes that they’ll leave me alone. Is this a reasonable supposition?”Yes and no. The day you renounce (or relinquish) your US citizenship, your future obligations to Uncle Sam are gone for good. You can open up any bank or brokerage account you want without worrying about filing an FBAR, and you can earn as much non-US income as you like without ever filing a 1040 ever again.This does not, however, get you out of existing obligations. If they’re coming after you for unpaid taxes from two years ago, you’re still on the hook, even if you manage to renounce your citizenship.

Renunciation is a move you make with an eye to the future. It will not fix the past.

Next, Barry asks, “Simon- I read your note about Singapore citizenship; isn’t it true that the government of Singapore does not allow dual nationality?”

That’s correct; individuals who become naturalized Singaporeans are technically obliged to relinquish their other passports. However, there is no real enforcement mechanism for this… and I have several naturalized Singaporean friends who simply forgot and/or haven’t gotten around to relinquishing yet.

Last, Jeff C. asks, “Simon, when I read stuff like this, I have a hard time thinking I won’t be targeted by the US government for having a foreign bank account, etc.  I’d love to get your thoughts on that potential risk.”

History shows us that when governments decline and fail, they cannibalize the citizenry and shake every last nickel they can from the sheeple. It doesn’t matter who you are– a retired school teacher, a small business owner, a struggling single mother– everyone becomes a target.

Everyone ultimately has a choice. We can either choose to be a target and be safely diversified abroad, or we can choose to be a target and have all of our assets in one basket for easy pickings. We’ll all be targets regardless.

Until tomorrow,

Simon Black
Senior Editor, SovereignMan.com 

This article appears courtesy of SovereignMan.com: Notes From The
Field, a free newsletter dedicated to individual freedom,
internationalization, asset protection and global finance. For a
complimentary subscription, visit http://www.SovereignMan.com

Sovereign Man, Notes from the Field Date: February 23, 2012 Reporting From: Santiago, Chile

Notes from the Field

Date: February 23, 2012
Reporting From: Santiago, Chile

The idea of international diversification is a simple one– if you live, work, hold investments, own property, structure your business, store gold, etc. in the same country as your citizenship, then you truly have all of your eggs in one very fragile basket.

If just one little thing goes wrong, whether it’s a court case, divorce settlement, political instability, government agency ‘administrative error’, or some noxious bureaucrat who’s out to get you, all of those aspects of your life can be put at extreme risk.

The idea of ‘planting flags’, or diversifying internationally, involves spreading these aspects of your life across multiple jurisdictions and territories overseas. Banking in one place. Setting up a brokerage in another. Investing in another. Storing gold in another. Owning property in another.

You can do this with dozens, potentially hundreds of aspects of your life and/or business– using an offshore email account, obtaining medical treatment overseas, seeking personal companionship abroad, setting up an overseas credit card processor for a web business, initiating an IPO for your company on an overseas exchange, foreign health insurance, etc.

Taking these kinds of steps can make your life much, much easier. Suddenly all of those aspects of your life no longer fall under the jurisdiction of your home government; legions of blood-sucking bureaucrats no longer have access to confiscate your assets and frustrate your life with a few mouse clicks.

Potentially the most important and most powerful aspect of your life to diversify, however, is citizenship. I view this as the ultimate insurance policy– something that you hope you’ll never have to use, but you’ll really be glad you have it in case you do.

Having a second citizenship is like having a ‘get out of jail free’ card. It creates options. No matter what happens in the world, you’ll always have a place to go. You’ll always have a ticket out. And as I’m fond of saying, nobody ever hijacks an airplane and threatens to kill all the Lithuanians. Second citizenship does bring a greater sense of security.

Obtaining citizenship, however, is elusive for many people. Some people are lucky enough to come from a line of Irish, Polish, or Italian ancestors. For most, though, it takes a combination of three things:

- Money
- Time
- Flexibility

If you’re willing to simply pay for it, there are certain countries like St. Kitts and Dominica which offer citizenship to people who are simply willing to pay. Most folks unfortunately can’t afford the $250,000+ price tag that’s required, so that leaves the other two.

Just about every country is willing to eventually naturalize permanent residents who reside in the country for a particular amount of time. It varies greatly from place to place. This past weekend, I learned from a subscriber who came down to Chile that, in Japan, it takes two decades of continuous residence.

Other places, like Belgium, offer naturalization after as little as three years, possibly two in extreme circumstances. This is a much easier option for most people, especially for such a valuable passport.

Then there’s the ability to obtain citizenship through what I call ‘flexibility’. This may include something like getting married to a local, which in many countries can provide an extremely rapid path to naturalization.

As an example, I’d like to outline a few options below of high quality passports that anyone can obtain with either time and/or flexibility:

1) SINGAPORE. Easily the most valuable travel document on the planet, a Singaporean can travel almost anywhere without a visa, including to the US and Europe. It takes two years of residence after obtaining permanent residency to qualify for naturalization. And obtaining permanent residence is a snap– you can simply set up a local company to qualify.

Pitfalls: Singapore does have mandatory national service, and it’s important to review the rules to find out whether you would fall within the window.

2) BRAZIL. There are two great things about Brazil. One, they refuse to extradite their citizens to answer for foreign crimes. It just doesn’t happen. Two, ANYONE can be Brazilian, whatever their ethnicity– black, white, brown, it doesn’t matter. Brazil is a huge melting pot. We are all Brazilian.

Brazil is the KING of ‘flexible’ citizenship options– getting married, adopting a child, hell even adopting a rain forest in some cases. And it can happen in as little as six-months to three years. Just don’t expect the process to be crystal clear.

3) ISRAEL. Speaking of flexible, if you’re willing to become Jewish, the State of Israel’s Right of Return entitles you to citizenship. Make no mistake, though, it’s not just going through the motions– you have to work with local religious leaders and actually make the conversion before they’re willing to go through the process.

Pitfalls: The downside of Israeli citizenship should be clear as military service is compulsory.

4) BELGIUM. At its core, Belgium’s naturalization laws allow foreigners who have maintained residence in the country for three years to apply for citizenship. “Residence” can either be in Belgium, or even abroad so long as you can demonstrate ties to Belgium, i.e. family, friends, employment, property ownership, paying taxes, etc.

Aside from being an incredibly valuable travel document, Belgian naturalization also passes to all minor children– in other words, if you become a naturalized Belgian, your kids do too.

Until tomorrow,

Simon Black
Senior Editor, SovereignMan.com

This article appears courtesy of SovereignMan.com: Notes From The
Field, a free newsletter dedicated to individual freedom,
internationalization, asset protection and global finance. For a
complimentary subscription, visit http://www.SovereignMan.com

Our FLAG and what it means to some of us????….via E-mail this AM

I forward this as received, but without comment. Yes, he told us in advance what he planned to do. Few were listening. The following is a narrative taken from a 2008 Sunday morning televised “Meet The Press’. From Sunday’s 07 Sept. 2008 11:48:04 EST, Televised “Meet the Press” THE THEN Senator Obama was asked about his stance on the American Flag. General Bill Ginn’ USAF (ret.) asked Obama to explain WHY he doesn’t follow protocol when the National Anthem is played. The General stated to Obama that according to the United States Code, Title 36, Chapter 10, Sec. 171… During rendition of the national anthem, when the flag is displayed, all present (except those in uniform) are expected to stand at attention facing the flag with the right hand over the heart. Or, at the very least, “Stand and Face It”. NOW GET THIS !! ‘Senator’Obama replied: “As I’ve said about the flag pin, I don’t want to be perceived as taking sides”. “There are a lot of people in the world to whom the American flag is a symbol of oppression..” “The anthem itself conveys a war-like message. You know, the bombs bursting in air and all that sort of thing.” (ARE YOU READY FOR THIS???) Obama continued: “The National Anthem should be ‘swapped’ for something less parochial and less bellicose. I like the song ‘I’d Like To Teach the World To Sing’. If that were our anthem, then, I might saluteit. In my opinion, we should consider reinventing our National Anthemas well as ‘redesign’ our Flag to better offer our enemies hope and love.It’s my intention, if elected, to disarm America to the level of acceptanceto our Middle East Brethren. If we, as a Nation of waring people, conduct ourselves like the nations of Islam, where peace prevails – - – perhaps astate or period of mutual accord could exist between our governments …..” When I become President, I will seek a pact of agreement to end hostilities between those who have been at war or in a state of enmity, and a freedom from disquieting oppressive thoughts. We as a Nation, have placed upon the nations of Islam, an unfair injustice which is WHY my wife disrespects the Flag and she and I have attended several flag burning ceremonies in the past”. “Of course now, I have found myself about to become the President of the United States and I have put my hatred aside. I will use my power to bring CHANGE to this Nation, and offer the people a new path..My wife and I look forward to becoming our Country’s First black Family. Indeed, CHANGE is about to overwhelm the United States of America “ WHAAAAAAAT, the Hell is that??? Yes, you read it right. I, for one, am speechless!!! Dale Lindsborg , Washington Post EVERYONE IN THE UNITED STATES OF AMERICA NEEDS TO READ THIS, KEEP IT GOING ! !SAVE AMERICA BEFORE IT’S TOO LATE ! !

Notes from the Field Date: February 22, 2012 Reporting From: Santiago, Chile

Reporting From: Santiago, Chile

Date: February 22, 2012

“[T]he more complicated the forms assumed by civilization, the more restricted the freedom of the individual must become.”Benito Mussolini
Grand Fascist Council Report, 1929When I was a kid, the morning announcements at my taxpayer-funded public school dragged on for a good 15 or 20 minutes. They announced the birthdays. They told us what was for lunch. For some reason they even told us the weather, as if a bunch of 6-year olds cared what the relative humidity was.

Then we broke out into the propaganda. We recited the Pledge of Allegiance. Then we sang the national anthem. Then we sang America the Beautiful. THEN we sang the state anthem, “Texas our Texas”. I still hear it in my sleep from time to time.

It’s bizarre, when you think about it. Children are indoctrinated from such a young age to subordinate themselves to the ‘republic,’ a system of government. They learn that the state is paramount above all else, and the belief is inculcated at a time when young minds are typically incapable of rational analysis.
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It seems difficult to heavily distinguish such practices from those of the Deutsches Jungvolk section of the HJ– the Hitler Youth organization for 10-14 year old boys that instilled loyalty to the Third Reich above all else.

Children learn that the United States stands for liberty… the land of the free. It’s simply not questioned. That’s what they’re told, that’s what they grow up believing. But as Hayek wrote in the early 1940s,

“Freedom and liberty are now words so worn with use and abuse that one must hesitate to employ them to express the ideals for which they [used to stand.]“

‘Freedom’ now comes with all sorts of strings attached, special stipulations. These days, we’re told: “You’re free. Now follow all of these regulations that are interpreted at the exclusive discretion of hundreds of executive agencies under the penalty of imprisonment and/or financial penalties so egregious that you’ll be paying for the rest of your natural life.”

The rule of law no longer exists– not in the United States, not in the western world.

In the EU, member states and unelected, supranational agencies are now routinely violating their own charters and international agreements to bail out, print, and borrow however much they want, whenever they want, irrespective of what the law says.

Moreover, hundreds of US government executive agencies and their ever-expanding authorities are creating a complex ‘shadow code’ system of policies and regulations, each of which can be interpreted in the sole discretion of a single bureaucrat who’s out to get you.

Consider:

• US-based Gibson Guitar Corp has twice been raided by FBI agents on suspicion of importing wood that violates India’s trade regulations. They don’t care that Gibson’s CEO has a memo from the Indian government approving the deal. The wood remains confiscated, even though charges have never been filed.

• There’s a regulation on the books, buried deep within the system, requiring you to first fill out a form with the Census Bureau of all places. It’s rarely (if ever) enforced, but it exists… and anyone who doesn’t do it is subject to fine and/or imprisonment at the pleasure of the Census Bureau.

• A few months ago, a fisherman from New Bedford, Mass. accidentally caught an 800-pound bluefin tuna in his trawl gear after setting out from dock. It was freakish good fortune, albeit short-lived. The man was relieved of his tuna by the National Maritime Fisheries Service because there is ‘no permit that allows catching bluefin with a trawl net.’

• Even having too much cash now can be considered a criminal offense. There are countless stories like Anthony Smelley’s, who in 2009 was pulled over on I-70 in Putnam County, Indiana and found with $17,500 in cash. He was able to prove that the money was his, legitimately. It didn’t matter. He was relieved of the cash, but charged with no crime.

• You can’t so much as apply for a passport now without being threatened with “fine and/or imprisonment under U.S. law including the provisions of 18 USC 1001, 18 USC 1542, and/or 18 USC 1621.”  The same goes for ‘alteration of a passport’ or even using a passport ‘in violation of the restrictions contained herein..’, whatever that’s supposed to mean.

This is not the land of the free. The US government’s extraordinary network of codes, regulations, and policies has created a nation of citizens who live in a state of constant violation, governed by criminals who have the authority to defraud them.

A few months ago, one obscure police agency of the National Oceanic and Atmospheric Administration (NOAA) was found having spent several hundred thousand dollars of funds and assets that were confiscated from fishermen (without charge) to buy a luxury boat that was used for pleasure cruises and barbecues.

In 2008, the Bureau of Alcohol, Tobacco, Firearms, and Explosives submitted a request for bids to purchase 2,000 Leatherman pocketknives for its agents. The ATF wanted the knives to be inscribed with the phrase “Always Think Forfeiture”, as in ATF.

The order was rescinded after it was reported in the Idaho Statesman… but it’s emblematic of how government agencies view their role… and ours.

At this moment, you are guilty of dozens of crimes and/or regulatory violations.  Such rules are selectively enforced; the rule of law means nothing, it’s all about who your connections are, whose palms are greased, and whose campaign you enriched.

Like a cheap credit card offer, all the song and dance about ‘land of the free’ comes with fine print at the bottom of the page– “terms and conditions may apply, void where prohibited.”  This is not freedom. It’s freedom*

Until tomorrow,

Simon Black
Senior Editor, SovereignMan.com

This article appears courtesy of SovereignMan.com: Notes From The
Field, a free newsletter dedicated to individual freedom,
internationalization, asset protection and global finance. For a
complimentary subscription, visit http://www.SovereignMan.com

Sovereign Man,Notes from the Field Date: February 21, 2012 Reporting From: London, England

Date: February 21, 2012

Reporting From: London, England

[Editor's note: Professional money manager Tim Price is filling in for Simon today from London. His thoughts below on gold, bonds, and the false pretext of investing in equities is delightfully insightful.] 

“No government has ever commanded the resources at the disposal of our ungodly Leviathan, which consumes about 25% of the product of the world’s richest country. It is driven by a voracious alliance of government’s own employees, and those who receive benefits from the state. At least 90 million Americans either depend directly on government handouts or jobs, and each private worker must support not only himself and his family, but also carry a government worker on his shoulders.”-Tom Bethel, “Freedom and its Enemies,” June 1999.Financial markets don’t really do the long term anymore, but if they did, they might spend less time drooling at the prospect of more monetary crack, and more time wondering who will be funding all the government debt that now towers above everyone further than the eye can see. CLSA’s Russell Napier (hat tip to Macro Advisors’ Filip Ruszkowski) recently pointed to an ominous development from the summer of 2011:”..a terrible burden fell upon the people of the USA. For the first time in 15 years, those who had money (savers) began to fund their government, rather than the printers of money (central banks). This shift has already hurt private-sector growth and asset prices, and as federal debt to GDP reaches 100%, it will squeeze out private-sector activity. Structural moves to coerce markets into funding government have begun in Europe and will come to the USA too..”The chart above confirms that US corporate profits have now reached record levels as a
percentage of GDP. They are unlikely to stay there. Napier suggests, perfectly logically, that when the government needs money to fund itself, it will target those constituents that actually have some. That is, in other words, wealthy individuals and corporations.What will be awkward about this financial repression of the moneyed classes, if it comes (which it surely will), is the timing. Well, not just the timing, but the yields on offer consistent with that timing. With the benefit of hindsight it would have been no bad thing to be coerced into buying US Treasuries when they yielded, say, 16% (the chart below shows generic 10 year yields going back to 1979; source: Bloomberg). But now that they yield 2% or so (a negative real yield of 1% or so using official inflation data), well, who wants that? Answer: not foreign central banks, many of whom have stopped buying this yieldless junk.

But somebody will have to buy it. As bank-robbers and their public sector rivals, governments, know, if you need money, go where the money is. Napier points out that previous peaks in the corporate profit-to-GDP ratio were 1966, 1997 and 2006. Subsequent long-term returns from equities were uniformly poor. As he makes clear, there is a difference between central banks and the private sector when it comes to buying government debt.

Central banks can print money to finance their purchases, which makes them more or less wholly price-insensitive. But the private sector cannot print money – it will be forced to sell other assets to pay for the government debt it will soon be coerced into buying.

Perhaps some of those other assets will be stocks. Stocks will get smashed in any case, because the private sector will also have to get used to paying more tax. (The government will get its money one way or another.) More tax = lower net profits,
obviously. Tax paid by corporations is close to its average level of the past 30 years. More awkwardly, the federal debt to GDP ratio over the same period, Napier observes, has risen from 32% to 100%.

The UK faces a similar problem, which makes the current euphoria in FTSE-land just as difficult to rationalise. Absent QE, and given the potential for a rather messy bang emanating from Greece over the coming months, and accepting an economy facing dollops of austerity well into the future, should UK stock markets really be as euphoric as they currently are?

UK government bonds are comparably unattractive to their American cousins. The chart below (source: Bloomberg) shows generic 10 year Gilt yields over the past 20 years. Being forced to buy them at 10% might not have been so bad. Being bludgeoned into buying them at 2% will be a little more painful.

So how precisely will governments go about stealing savers’ money? The Dutch pensions regulator gave an indication of one possible wheeze back in February 2011 when it ordered the Stichting Pensioenfonds Vereenigde Glasfabrieken (bless you!) pension fund to sell its gold holdings (13% of the fund) on the premise that it was too risky.

In an NBER paper last year, Carmen Reinhart and M. Belen Sbrancia pointed the way. As their abstract states,

“Historically, periods of high indebtedness have been associated with a rising incidence of default or restructuring of public and private debts. A subtle type of debt restructuring takes the form of “financial repression”. Financial repression includes directed lending to government by captive domestic audiences (such as pension funds), explicit or implicit caps on interest rates, regulation of cross-border capital movements, and (generally) a tighter connection between governments and banks..

Low nominal interest rates help reduce debt servicing costs while a high incidence of
negative real interest rates liquidates or erodes the real value of government debt. Thus, financial repression is most successful in liquidating debts when accompanied by a steady dose of inflation.”

The UK government has already achieved partial control of directed lending given that it owns half of our banking system. (Not that it seems to know how to control its remuneration. But then it is practically a binding characteristic of governments to be half-assed about virtually everything.) Both of the Anglo-Saxon economies have also achieved saver theft status by the manipulation of interest rates. Next on the list will be a creeping abuse of those captive domestic audiences and, perhaps, regulation on capital controls.

Very few of these will actually be novelties. The US previously had Regulation Q, for example, which put a government-sanctioned limit on the interest rates available for savings deposits.

Indeed Reinhart and Sbrancia point out that the widespread use of such policies between 1945 and 1980 has been “collectively forgotten”. We have had half a century of increasingly free markets. In the official governmental version of reality, those markets became too free, and now require the firm hand of the state. Governments are unlikely to acknowledge the extent to which their own untenable borrowings laid the groundwork for the financial crisis.

Highly paid shills for the status quo on Wall Street have recently been wheeled out to observe the fundamental ugliness of western government bonds. They are correct. This is an asset class that has managed to defy the laws of economics in becoming ever more expensive even as its supply swells.

Their response has been to recommend piling into stocks instead. The logic here is not so
pristine. If Napier’s thesis is correct, the West faces a period of outright deflation, which will be deeply traumatic for exactly the sort of speculative stocks that have lately done so well.

Admittedly, the picture is confused, and prone to all sorts of political horseplay, as observers of the long-running euro zone farce can attest. Nevertheless, when faced with a) huge underlying uncertainties; b) structurally unsound banking and government finances; and c) central banks determinedly priming the monetary pumps, we conclude that the last free lunch in investment markets remains diversification.

G7 government bond markets are a waste of time (though you may end up being cattle-prodded into them regardless). But there are still investment grade sovereign markets offering positive real yields. Stock markets are partying like 1999. Which, in
many cases, it probably is. We would normally advise to enjoy the party but dance near the door.

This time round, we weren’t invited to the party – and we don’t mind in the slightest.

Tim Price
Director of Investment
PFP Wealth Management

This article appears courtesy of SovereignMan.com: Notes From The
Field, a free newsletter dedicated to individual freedom,
internationalization, asset protection and global finance. For a
complimentary subscription, visit http://www.SovereignMan.com