Sovereign Man, Notes from the Field Date: May 25, 2012 Reporting From: Yangon, Burma

 

Notes from the Field

Date: May 25, 2012
Reporting From: Yangon, Burma

[Editor's note: Sovereign Man Chief Investment Strategist Tim Staermose is filling in for Simon today from Yangon, Burma.]

If you’re sick and tired of all the doom and gloom that pervades the US and Europe, and should your personal circumstances allow, I unreservedly recommend that you hop on a plane and go and check out Burma.

This is a rare good news story, and it may very well be one of the most exciting economies in the world.

Shut off from economic sanctions since the early 1990s, Burma (aka Myanmar) is starting to emerge once again. From the looks of things on the ground, it’s not just hype.

The retiring generals seem to have decided that the best way to protect their accumulated wealth and not ending up like Hosni Mubarak is to open the country up and introduce democratic reforms.

This way, they hope, they won’t be remembered as tyrants, but as visionaries who initiated a ‘peaceful transition to democracy’. I imagine all sorts of back-room deals have been struck with western diplomats to ensure Burma’s current leaders won’t be prosecuted.

As a result of this change in the political landscape, economic sanctions imposed by Europe and the United States have been suspended, and Yangon today is awash with opportunity.

The reason is simple. This is a market with huge potential. Burma has a young (median age 24), growing population of 56 million that is exceedingly rich in natural resources.

At the time of the military coup in 1968, in fact, Burma was actually the richest country in South East Asia. Neighboring Thailand, which is roughly the same size, and has a similar population, today boasts an economy eight times larger than Burma’s.

Clearly there’s huge potential for catch-up… and my observations on the ground in Yangon confirm this assertion:

- Many goods and services that we take for granted in the West, for instance, are in limited supply. Others simply do not exist.

- With a few exceptions, the country’s entire fleet of motor vehicles looks like the cast offs from a bad used car dealership.

- Mobile phone penetration ranks 215 out of 217 countries in the world, behind only Bhutan and North Korea.  Burma is the only country I’ve ever visited where my Hong Kong mobile phone can’t roam on the local network.

- The leading business hotel downtown does not accept credit cards. Payment must be made upfront, in cash, in US dollars.

- The few ATMs that do exist are not connected to the outside world.

- Internet access is patchy at best and non-existent for long periods… assuming you can even find a connection.

- Power outages are commonplace. And that’s being polite.

Banking, infrastructure, and telecommunications are some of the most obvious industries crying out for substantial investment.

Yet while the military regime that has ruled the country for the past 45-odd years has finally decided to reform, many issues remain unclear.

There is, in theory, a rule of law based on a British Common Law tradition as a result of the country’s colonial past. But its application and interpretation can be arbitrary.

There is a Foreign Investment Law– a legacy from when the country enjoyed a brief period of economic sunshine in the early 1990s.  But it is currently being revised, and it remains unclear what the exact changes will be.

The series of meetings I’ve had in Yangon have all been useful, and the people here are universally positive on the country’s outlook. But at this early stage, there is more watching and waiting than actually investing and doing.

The local stock exchange, for example, has only two listed companies. And they trade only a handful of times each month.

The head of the exchange told me there are only 11 public companies in the entire country. Two are listed; another two are “qualified” to list, but don’t want to. The rest are too opaque and don’t meet the acceptable standards of disclosure expected of listed companies.

It is possible for a non citizen to own 100% of a local company, however it is currently illegal for foreigners to buy shares from locals. That means, for now, if you want to invest in Burma, you have to start something from scratch.  There are few pure passive opportunities.

For the right person, with the right idea, as well as the energy and talent to execute on it, I would rank the business opportunities in Burma among the most attractive anywhere.

There are still many moving parts, and the business landscape remains in a state of flux. But already many ambitious young people, including highly educated Burmese who grew up abroad, are here on the ground. A certain percentage of them will undoubtedly become wealthy beyond their wildest dreams.

The field is wide open. If you want to be among them, there should be nothing holding you back.

Until next time,

Tim Staermose
Chief Investment Strategist
Sovereign Man

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Sovereign Man, Notes from the Field Date: May 17, 2012 Reporting From: Undisclosed location, United States

Notes from the Field

Date: May 17, 2012
Reporting From: Undisclosed location, United States

I’ve been in the US for a little more than 24-hours. And having flipped through the TV channels trying to figure out what useless drivel big media is passing off as ‘news’, I realized that I’m going to vomit if I hear the word “fair” one more time.

This concept of ‘fair’ seems to be dominating discussion of the US government’s dismal fiscal condition. The talking heads say that it’s ‘fair’ for wealthy Americans to pay higher taxes and bail the country out… or that everyone needs to pay his/her ‘fair’ share.

The whole logic is absurd: you do not ‘fix’ the country’s fiscal imbalances by giving the idiots in charge even more resources to squander… it’s like dumping gasoline on a forest fire. Somehow the debate seems to have missed this point.

This ‘fair’ nonsense is also very dangerous.  Just ask any three-year old– ‘fair’ is completely arbitrary. It’s like a Wiki version morality… if enough people agree on it, it’s fair.

In this case, ‘fair’ is defined in the sole discretion of those who are the direct beneficiaries of confiscating other people’s money. But let’s look at the numbers:

According to the IRS statistical database, the top 1% of income earners in the United States pays roughly 40% of all US individual income tax. They also get audited at least 5-times more than anyone else. Fair?

The other major complaint seems to be that the wealthy are ‘abusing’ capital gains rules in order to pay a 15% rate instead of a 35% rate. Duh. That’s why they’re wealthy, and stay wealthy… they don’t WORK for a living, they OWN assets which are subject to capital gains.

It seems so bizarre that a country once regarded as the freest, most economically enviable in the world would treat its productive citizens with such hostility.

This is where Eduardo Saverin comes in. The Facebook co-founder, who finds himself a few billion dollars richer this week, recently renounced his US citizenship. And, to the intelligentsia, it’s not ‘fair’.

‘Saverin needs to pay his fair share! He owes America more,’ they whine, completely ignorant that the 30-year old is already forking over a $500+ million exit tax (which may end up in the billions).

Apparently it’s not good enough that the company Saverin co-founded has created tens of thousands of jobs, spawned entire industries, and produced oodles of new millionaires. Oh yeah, it’s also made things damn easy for the CIA, NSA, and FBI. You’d think Uncle Sam would pin a medal on his chest.

But no. Saverin left behind a lot of value and decided to move on to greener pastures in Singapore. Now the do-gooders in Congress are cooking up new legislation (the EX-PATRIOT Act) designed to permanently bar ‘renunciants’ like Saverin from re-entering the United States.

It’s interesting that, rather than change their ways of doing business and introducing legislation that provides incentives for productive people to come here and stay here, they maintain policies that chase people away, and introduce new ones to lock the door after they’re gone.

The lesson here (especially for natural-born citizens) is this: simply by accident of birth, you are born with a lifelong obligation that you never signed up for to finance the corrupt misdealings of the political class. And if you choose to abandon this obligation, they will bar you from ever entering your homeland again.

Regardless of what the propaganda says, this is not how a free society treats people. It might look and feel like a representative democracy on the surface, but under the hood it’s the modern day equivalent of feudal serfdom.

The land of the free has certainly fallen a long way.

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
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Sovereign Man, Notes from the Field Date: May 9, 2012 Reporting From: Sao Paulo, Brazil

Notes from the Field

Date: May 9, 2012
Reporting From: Sao Paulo, Brazil

When most people think of Brazil, it’s the incredible beaches that come to mind. Or the crazy parties of Carnival. Or the spectacular vistas and great weather. Or how indescribably gorgeous (and welcoming) the locals are.But here’s a little known fact, and it’s something that sets Brazil apart from most other places: Brazil’s constitution prohibits the extradition of Brazilian citizens to other countries. This is a rare gem in the world… I’ll explain.

Believe it or not, most countries are happy to sell their citizens down the river to another government. If you have been charged with a crime in another country, or are even simply ‘wanted for questioning’, your home government in all likelihood will comply with the request to round you up and ship you off.

For example, only 7% of all extradition requests that the US government made to the British government between 1 January 2004 and 31 July 2009 were denied. The US government denied ZERO extradition requests from the British government over the same period.

You may also be familiar the ongoing case of Wikileaks’ founder Julian Assange, who is wanted in Sweden for “questioning” related to bizarre sex case.

The British government approved Sweden’s extradition request, though Assange has appealed the decision numerous times. He’s lost every appeal so far, and in all likelihood he’ll be on a plane bound for Sweden in the near future.

Assange is an Australian citizen, and his government has completely abandoned him.

You may also remember the more recent case of Kim Dotcom, the German founder of MegaUpload.com who was arrested in New Zealand as part of a US operation to shut down his file-sharing site. Like Assange, the German government has been silent.

This is ironic because most people are brought up to believe that their governments will protect them… that if you get into a jam overseas, they’ll send the military to rescue you.

The reality is that, far more often, governments trade their own citizens away in order to score diplomatic brownie points, even when there’s not even a crime involved.

The US-Mexico extradition treaty, for example, lists a number of extraditable offenses, such as:

- Violations of the customs laws
- Offenses against copyright or intellectual property
- Offenses related to international trade and transfers of funds or valuable metals
- Offenses relating to prohibition “unfair transactions”

We’re not exactly talking about violent criminals here; these rules so opaque that just about everyone on the planet is in violation of some offense.

That’s why Brazil’s Constitutional guarantee is so refreshing. Brazil has a long history of rejecting extradition requests for citizens… and if Assange and Dotcom had thought that far ahead, they’d be sitting on the beach in Rio right now instead of wearing electronic ankle bracelets under house arrest.

Needless to say, this requires obtaining Brazilian citizenship… which, if you’re in a hurry, you can qualify for in just 12-months. More on that in a future letter, I’ve got a plane to catch!

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: May 8, 2012 Reporting From: Jakarta, Indonesia

Notes from the Field

Date: May 8, 2012
Reporting From: Jakarta, Indonesia

[Editor's note: Sovereign Man Chief Investment Strategist Tim Staermose is filling in for Simon today from Jakarta.]

If you swallow the line parroted by the mass media in the West (my adopted country of Australia being the prime offender), you’d think Indonesia was a strict Islamic state where terrorists run around bombing nightclubs frequented by tourists.

And you probably have a mental image of an economic backwater reliant on exports of natural resources such as coal and palm oil to pay its bills.

Rubbish.

Toss all your clichéd, preconceived assumptions about Indonesia out of the window immediately.

Jakarta, Indonesia’s capital city, is a modern, sophisticated metropolis populated by friendly, tolerant people of many cultures and religions.

The world’s biggest Buddhist temple is in Indonesia. There are more Christians here (28 million) than the entire populations of Australia and New Zealand combined.

Oh, and there are more registered users of Facebook than in almost every other country in the world! Not exactly the hotbed of ultra-conservative Islam.

More broadly, Indonesia is already the third-biggest market in Asia after China and India, with 240 million people. In seven of the past eight years, its economy has grown by more than 5%. On current growth rates, it’s doubling every 11 or 12 years.

“Growth slows in 1st Quarter,” read the headline in the paper this morning. Yeah. From 6.5% the previous quarter, to 6.3% in the quarter ended March 31st. Boo hoo.

There’s not a single economic policymaker in the West who wouldn’t kill for economic growth like that. But in Indonesia, the figure was mildly disappointing.

As Simon and I frequently point out, though, the official statistics are usually worthless… you have to trust what your eyes and ears tell you on the ground. And the reality certainly backs up the figures–Indonesia is buzzing.

This is clearly a place that’s on the rise.  It’s already almost a trillion-dollar economy. Fifty percent of the population is under the age of 30 and yet to enter their peak working and consuming years.

Millions of new workers enter the labor force each year.  Yet, unemployment is falling… to 6.3% on the most recent statistics, down from 6.8% 12 months before.

Indonesian wages are lower than they are in China now (US$160 a month is typical), and there are many multinational companies starting to relocate production here.

The engine room of the Indonesian economy is NOT low-value-added exports of natural resources.  It’s domestic consumption demand, which accounts for 53% of the economy; and, investment, which accounts for 32% of GDP.

What’s more, policymakers are cognizant that adding value to the country’s natural resources at home, before exporting them, could be another important driver of growth.

Indeed, Indonesia has just imposed duties on the export of most raw metal ores.  The duties do not apply to refined products, and are designed to encourage investment in domestic treatment and refining facilities.

It may or may not work.  But, let’s face it–there are worse problems to have than figuring out what to do with an abundance of raw materials.

This, combined with a young and growing labor force, as well as room for great improvement in its infrastructure, are all good reasons to be bullish on the long-term economic future of Indonesia.

Moreover, from what I’ve seen so far, the rampant credit creation and likely overbuilding that characterize the sky-lines in places such as Manila and Bangkok right now, are not evident in Jakarta.  At least not yet…

More to follow.

Tim Staermose
Sovereign Man Chief Investment Strategist

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: May 7, 2012 Reporting From: Asuncion, Paraguay

Notes from the Field

Date: May 7, 2012
Reporting From: Asuncion, Paraguay

Long-time readers know that I’m unabashedly bullish on agriculture. The supply and demand fundamentals for food speak for themselves, but let’s briefly review:

On the demand side:

1) World population isn’t getting any smaller for now. Even some of the most Malthusian models show a continued rise in global population for the next few decades until peak resources and economic conditions begin to thin the herd. In the meantime, demand for basic sustenance will continue to rise.

2) More importantly, millions of people in the developing world are being lifted from poverty into the middle class. More wealth means demand for more Calories. Not only does this increase general food demand, but often specific demand for things like beef which require far greater resources to produce.

On the supply side:

1) While industrial farming techniques and genetic modification have dramatically increased productive yield, cultivated land is on the decline. The UN Food and Agriculture Organization estimates that, over the last several decades, cultivated land per capita has declined by 43% worldwide.

2) Topsoil erosion, anomalous weather, and lack of water availability are becoming especially problematic in certain countries, further reducing the supply of arable land.

3) Rising input costs (particularly oil prices) have pushed many farmers out of business in recent years, reducing the already low number of people who dedicate their lives and land to feeding everyone else.

And of course, there’s the monetary side… arguably the most important factor:

1) Central bankers continue to expand their balance sheets and create more money at an alarming rate. This pushes up the price of real assets like agricultural commodities as there is simply too much paper chasing to scarce resources.

2) Meanwhile, politicians have enacted completely idiotic policies to subsidize and encourage inefficient biofuels, further reducing food output.

It’s true that technology may very well save the world from its agricultural woes one day, but this is unlikely to take place over the next few years.

As such, the above points suggest that, at a minimum, food prices are bound to keep rising.

I see this over and over again throughout the world as I travel, particularly in developing countries where food purchases often comprise more than half of a typical household budget.

Rising food prices mean that people are forced into making very difficult choices. And history teaches us that, while people generally put up with a lot of BS from their governments, all bets are off if a food crisis strikes.

From the French Revolution (Let them eat cake!) to the Arab Spring, messing with someone’s ability to put food on the table for his family has almost always caused a restructuring of the social contract.

Politicians understand this. It’s why some governments (Saudi Arabia, Kuwait) provide retail food subsidies, and why others (Russia, Argentina) foolishly mandate food export bans… or even try price fixing.

Between the obvious supply and demand challenges, the political and monetary idiocy that exacerbates the problems, and the potential revolutionary spark, it makes sense to have a position in agriculture.

The most comprehensive way to do this, by far, is to own agricultural property. Sure you could buy ETFs and futures contracts, but just like in the gold market, such instruments are full of counterparty risk and exposed to a manipulated financial system.

Owning a farm or ranch is like owning physical gold. Instead of trading one kind of paper (fiat currency) for another (ETFs), buying agricultural property or physical gold is essentially trading paper for a real asset.

Regionally, the best deal in the world right now on a risk-adjusted basis for farmland or grazing land is definitely Latin America, specifically Chile, Uruguay, and here in Paraguay.

Paraguay is, in fact, still the cheapest place in the world I’ve seen for agricultural property… particularly in the dry Chaco area where you can pick up an acre of land for the price of a couple of pizzas.

To give you an example, a friend of mine is looking at a 5,000-acre plot in the central Chaco for less than $300,000.

On the other side of the country near the quaint town of Paraguari, I’ve seen a small 50-acre, fully planted personal farm with a spacious home for just over $100,000. Based on my math, they’re selling the house for the cost of construction and giving away the land for free. Not a bad deal…

The carrying capacity, growing conditions, and soil quality in Paraguay are lower than in most of Uruguay and central Chile, but the net yields (particularly for cattle, soy, corn, and stevia) are still strong.

The dark side to Paraguayan agriculture is that ultra-cheap prices have attracted the likes of Monsanto, which is using some of Paraguay’s countryside as proving grounds for its genetically modified seeds.

Overall, though, Paraguay is definitely worth the trip if you’re interested in foreign agricultural property. The barrier to entry is quite low given the ridiculously cheap prices and reasonable foreign asset ownership rules, while the potential for both yield and speculative upside are quite high.

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: April 30, 2012 Reporting From: London, England

Notes from the Field

Date: April 30, 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 a week that saw Britain slide into its first double-dip recession since 1975, we quite fittingly also saw evidence of the sort of insular bigotry and protectionist narrow-mindedness that one associates with that same ugly, painful decade, when Barry Sheerman, Member of Parliament, said:

“I’m getting increasingly worried about the free movement of people across Europe. It’s a very competitive world out there, and my constituents resent that.”

The signs of unravelling are not confined to British shores. French voters in the presidential elections shocked markets by

(a) favouring the socialist Francois Hollande; and
(b) giving almost a fifth of their votes to the far-right extremist Marine Le Pen.

Meanwhile in another turn of the sovereign debt screw, Spain was downgraded toward reality. And the Dutch government collapsed altogether.

Amazingly, the people of Europe just don’t seem that keen on austerity. Yet it’s worth asking– why hasn’t the recession of today produced the same sense of crisis from the 1970s?

Chris Dillow of the Guardian newspaper suggests that average real wages are much higher now, so although standards of living are falling, they’re falling from a much higher level that softens the pain (even though the real pain of austerity hasn’t even really arrived yet).

But there is one outcome from the 1970s that is genuinely to be feared… the risk of which seems to be rising every day, if it has not indeed already arrived: Stagflation.

Stagflation– the utterly painful combination of stagnating growth and steep inflation that marked the 1970s– and will be the natural side effect of extended central bank quantitative easing during a period of widespread deleveraging.

In other words, stagflation is the consequence of printing money that nobody wants.

Moreover, an outbreak of serious stagflation will decimate conventionally managed debt and equity portfolios. And given that most people invest with the crowd, with conventional investments or conventionally managed portfolios, stagflation will wipe the savings and livelihoods from untold masses.

But, we live in strange times– times, for example, that reward bankers handsomely for bankrupting the economy. This is why the likes of so many politicians and financial commentators are able to insist with impunity that central bankers should ‘keep printing more money’ despite never having provided a scintilla of evidence that such tactics work.

Case in point– in a letter to the Financial Times from April 26, 2012, economist Roger Alford remarked:

“The utterly disparate time horizons and the very different experience and skills required… make it virtually impossible for any one person to have the experience and depth of understanding to provide effective leadership [as head of a major central bank].”

Intellectually constrained by his faux science “profession”, Mr. Alford does not take this argument to its logical conclusion: if the institution is so difficult to govern and the role so difficult to effect, why have it in the first place ?

We know the answer to this question. Central banks exist to protect the banking system and to finance the government’s debts at all costs… even if it means bankrupting the taxpayer and productive economy.

Yet the urgent need for austerity and an insoluble sovereign debt crisis make for uneasy bedfellows.

By definition, we cannot shrink our way back to the sort of growth required to service the West’s accumulated debts. Something has to give.

That something will ultimately be social and political disorder on a continent-wide basis, particularly as the taxpayer becomes increasingly frustrated in his obligations to fund the rapidly growing and untenable costs of Big Government.

Such disorder is almost universally feared– by politicians, by markets, by institutions. As the London-based marcoeconomic research consultancy Capital Economics recently commented:

“The last thing that the markets need right now is increased political uncertainty at the heart of Europe at a time when the economic outlook is already bleak…”

The only reasonable response to this is: tough. If social and political disorder is what it takes to shift an unsustainable status quo in which vampire banks and clueless bureaucrats suck the life out of the productive economy, bring it on.

Tim Price
Director of Investment
PFP Wealth Management
Sovereign Man Contributor

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Field, a free newsletter dedicated to individual freedom,
internationalization, asset protection and global finance. For a
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Sovereign Man, Notes from the Field Date: April 10, 2012 Reporting From: Singapore

Notes from the Field

Date: April 10, 2012
Reporting From: Singapore

View of Marina Bay, Singapore from my 39th
floor hotel room

The flight from Bangkok to Singapore is a quick 2-hours south down the Malay peninsula… though it might as well be 2-years given their differences; Singapore and Thailand are about as distinct as Switzerland and India– it’s yin & yang. Order vs. Chaos. Safety vs. Insanity.

I spend a fair amount of time in both places and tend to get this question a lot– which is better for living in? Which is better for basing a business? It’s a tough question, but I’ll try.

Singapore (like Switzerland) is essentially perfect. Everything works. It’s efficient, clean, and ridiculously safe.  Crime rates in Singapore are incredibly low, and violent crime is almost unheard of. This is extraordinary for a place with so much ethnic diversity.

The economy here is perennially strong; I’ve often written that Singapore is ablaze with opportunity for workers, professionals, entrepreneurs, and investors who are willing to trek across the Pacific.

Best of all, the government runs a very flat, transparent operation. There’s hardly anything you can’t do online, and bureaucracy is minimal. Taxes are also extremely low as Singapore is locked in a never-ending battle with Hong Kong over low-tax bragging rights.

For almost all of the expats I know who live here, Singapore is the -only- place to be. It’s great for families, finance professionals, and entrepreneurs who don’t want to slog it out in the mud with UNICEF in some third world country.

On the other hand, Singapore could also be described as vapid, or even sterile. Nightlife is a bit dull, and nothing terribly exciting happens. People work, earn, and shop. Most of the key areas around town lack character and soul; it’s a bit like new Las Vegas in that way.

On an intellectual level, Singapore definitely ticks all the boxes. There are few other places on the planet, if any, which offer access to so many amazing opportunities, economic vibrance, social stability, and extremely high living standards.

As a friend of mine told me this evening, “I love it with all of my head…”  It’s a rational choice. I usually tell people that Singapore makes a great home… for your money.

On a deeper emotional and spiritual level, however, it may fail to resonate. For my personal taste, I need a bit more picante in my life.

In this capacity, Bangkok is the polar opposite of Singapore; it’s a freewheeling, in your face, super-corrupt wild west. In many ways, Bangkok is like the Tangiers of Asia– a place that attracts international arms dealers and beach-going tourists alike.

Last night while out with some friends, a relative newcomer to Thailand started a question, “Here in Bangkok, can you–”

“– Yes,” we interrupted. In Thailand, the answer is always yes.
Anything goes.

The culture is also completely different. Despite Thailand’s reputation for revolution and debauchery, locals are fundamentally peace-loving Buddhists. They’re comfortable in their poverty and find happiness in simple pleasures.

In Singapore, society tends to be dominated by money– making money, investing money, spending money. This entire country is practically designed to promote financial success above anything else. It’s no coincidence they’re among the wealthiest people on earth.

To borrow from Warren Buffet, doing business in Thailand should come with a warning label. I tried it once a few years ago… it’s not pretty. The business environment in Thailand is based on coercion, corruption, and deceit. In Singapore, it’s all about the market.

Bottom line, in Thailand, you’re going to be in for a wild, roller coaster ride… especially when the King finally kicks the bucket. You can expect months of turmoil as the royals, military, and politicians wrestle for control of the country.

In Singapore, you can bet on a very stable, comfortable future where job prospects and other professional opportunities are bound to be plentiful.

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: April 5, 2012 Reporting From: Hanoi, Vietnam

Notes from the Field

Date: April 5, 2012
Reporting From: Hanoi, Vietnam

[Editor's note: Sovereign Man Chief Investment Strategist Tim Staermose is filling in for Simon today.]

For the past eight days I’ve been spending time with friends in Vietnam; I’ll be leaving in a few days to link up with Simon in Thailand, but for now, I’m really impressed by Vietnam. The country has a great deal going for it.

In the ancient town of Hoi An and the capital city Hanoi, the lifestyle is generally very laid back and relaxed.  Excellent cafes and restaurants, offering both local fair and foreign food, are everywhere. Nearly all offer free, reliable WIFI connections.

Prices are very reasonable even in the fancier western-style places, and they border on ridiculously cheap in the local ones.  For a great lunch today of grilled pork and rice noodle soup accompanied by a huge plate heaped high with fresh local herbs to accent the flavors, friend and I paid $3. Total. For TWO.

In Hoi An, a popular tourist town about thirty minutes’ drive south of Da Nang, at the northern end of what was once South Vietnam, our group of five adults and five children dined out in style each evening. We always ordered multiple courses, and several rounds of drinks. Yet the bill seldom exceeded $100.

A fifteen-minute taxi ride to the beach from our hotel in town cost $3.75.  In Hanoi, the metered taxi rate works out to about $0.85 per mile.  And the drivers I’ve dealt with have all been scrupulously honest.

Another thing that’s very noticeable here is that no one expects tips. I suppose it may have been different if the Americans had won the war.

Taxis may be plentiful and cheap, but in order to really explore any city, I prefer walking. And though the weather here can be hot and humid, Hanoi has many lakes and is actually very pleasant to explore on foot.

It also feels extremely safe. My friends here have three young daughters aged from two to six. When I went out with them, the two older ones were able to ride their bikes around their neighborhood without a care in the world.

My friends rent a 3-story, 4-bedroom, 2-bathroom house with a courtyard and several balconies for just $1,150 a month– HALF what I pay for a tiny 2BR apartment in Hong Kong.  And that’s in the up-market Tay Ho (West Lake) district popular with wealthy locals and expats.

Looking around Vietnam today, it’s hard to fathom that forty years ago the United States was still fighting an incredibly costly ideological war over what was then a communist backwater. Thankfully, Hanoi was left largely intact. The Americans never mounted wholesale bombing campaigns over the Vietnamese capital.

Of course, before the “American War,” as they call it here, Vietnam was a colony of France. And while many ordinary Vietnamese suffered under the colonial regime, French colonial influence undeniably left some positives behind.

The wide tree-lined boulevards, lakes, and magnificent colonial architecture, as well as the vibrant cafe society which define present-day Hanoi, are largely a product of the French colonial legacy.

Bottom line…  Hanoi has a lot to offer if you have the ability to live the PT lifestyle, either because your job is location-independent, or because you have the financial means to support yourself from passive income.

And that applies whether you’re carefree and single, or you have a young family like my friends who are based here. For the right person, the quality of life you can enjoy here for the small amount of money you have to pay is really very difficult to beat.

Until next time,

Tim Staermose, Chief Investment Strategist
Sovereign Man

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
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Sovereign Man, Notes from the Field Date: April 2, 2012 Reporting From: Vancouver, British Colombia, Canada

Notes from the Field

Date: April 2, 2012
Reporting From: Vancouver, British Colombia, CanadaAfter a long trip up from Santiago and making stops in both Miami and Dallas, I arrived to Vancouver last night a bit tired… but excited for the the trip ahead. I’m leaving in just a few hours for a 2 1/2 week, 11-country tour that includes Hong Kong, Singapore, Laos, Malaysia, Thailand, and much more.[By the way, I highly recommend the new Fairmont Pacific Rim if you find yourself in Vancouver.]

Aside from getting a lot of business done and inking a few deals that my partners and I have been working on, I’m excited to just be spending time in the region again. I enjoy strong, vibrant economies where optimism and opportunity dominate the scene– not chaos and negativity.

There are a lot of places around the world that fit this mold– their economies are healthy and people are legitimately confident about the future. From Estonia to Hong Kong to Andorra to Singapore, there are common elements in these countries that have greatly contributed to their success:

1) They’re small.
2) They have governments that generally stay out of the way.

An obscure 20th century economist named Leopold Kohr wrote extensively about these factors; my colleague Tim Price introduced me Kohr’s writing last year, and his 1957 book The Breakdown of Nations has proven quite prophetic.

In the book, Kohr extols the virtues of ‘smallness’ and indicates that most of the political challenges in the world– military over-extension, debt, poverty, bureaucratic stodginess, etc.– are caused by the unsustainable expansion of nations.

For Kohr, it is simply a matter of scale. Once a country becomes too large, any system of government will become oppressive.

Small countries, conversely, don’t have the resources to wage wars or build huge bureaucracies. They’re forced by circumstance to allow the market to work and the private sector to flourish.

Singapore and Hong Kong are great examples. They’re not waging wars, dropping bombs, or establishing far flung military bases. Both countries are devoid of any natural resources, and their only means of survival and success have been to step out of the way and let the market take over.

In a matter of decades, they have become two of the most prosperous nations on the planet, and remain among the healthiest today.

Conversely, the ‘big’ countries of today have assembled massive states which have spawned massive governments that require massive resources to administer… and quite oppressively I might add.

Democracy may look great on paper, but in modern practice of today’s ‘big countries’, it is a terrible perversion of the principles of liberty. Like Rome and the Ottoman Empire before, the individual now exists to support the state, not the other way around.

This is exactly what Kohr warned would become the ‘crisis of bigness’. Faced with economic challenges and a debilitating cost structure, big governments and bloated bureaucracies will only beget more bigness, more bloat… until the only possible outcome is collapse.

It reads like a playbook of exactly what’s happening today in the west. Already suffocating from too much debt, governments are going deeper and deeper into debt, and hiring more and more workers to administer ‘stimulus programs’ and an ever-expanding tax code.

To politicians, the solution is to expand the state and expand their authority. This is the exact opposite of what they should be doing… and as has happened numerous times throughout history, it may very well lead to an entire system reset.

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: March 29, 2012 Reporting From: Santiago, Chile

Notes from the Field

Date: March 29, 2012
Reporting From: Santiago, ChileIt wasn’t too long ago that nearly every human being lived their entire lives without traveling more than 10-miles from home. For the small handful of people who actually did venture out, you could make it across the globe with no official documents whatsoever.This began to change rapidly in the 1920s. The newly formed League of Nations began meddling in the business of international travel and worked to standardize an international identification document that would be required by travelers to cross most borders.The ominous phrase, “Papers, please”, was born from this standardization.

These days, international travel is big business for governments. Think about all the massive bureaucracies that have been created as a result of national borders: Immigration checkpoints. Customs. Border patrol. Passport offices. Even the IRS is involved in passport application procedures.

As much as it would be nice to go back to the days when people were free to criss-cross the world without such inconveniences and indignities, this just isn’t going to happen. So since we can’t go back to a zero passport world, the next best solution is a multiple passport world.

Let me explain.

Nearly everyone on the planet becomes a citizen of some country at birth… either due to the citizenship of their parents or the country that they were born in. Most people live their entire lives with this sole citizenship, and usually reside in the same country.

In a way, this is akin to having all of your eggs in one basket– living, working, banking, etc. in the same country of your citizenship. And history is full of colorful examples of those baskets breaking… from economic hardship to social turmoil to natural disaster to all-out genocide.

Ultimately, the concept of having multiple citizenships is about having more baskets… and spreading your eggs around. It means having more flexibility, no longer being constrained by the limitations of a single country. For example:

1) Safety. As I’m fond of saying, nobody ever hijacks an airplane and threatens to kill all the Lithuanians. There are no evil men in caves plotting terrorist attacks against Uruguayans. Nobody is burning Panamanian flags in the streets of Pakistan to protest innocent deaths at the hands of Panama’s fleet of unmanned Predator drones.

Simply put, some nationalities are a bit more high profile due to the actions of their governments. Others aren’t.

2) Travel freedom. Did you know that a US or Canadian passport isn’t particularly useful to travel to South America? US and Canadian citizens have to obtain a visa, in advance, just to travel to Paraguay! Or Brazil. Plus Argentina and Chile both charge ‘reciprocity fees’ on arrival (since the US and Canadian governments do the same thing.)

Other nationalities are welcomed with open arms. Singaporean citizens, for example, enjoy visa free (or visa on arrival) travel to nearly every country on the planet. Singapore is the only passport in the world that commands visa free (or visa on arrival) travel to the US, UK, European ‘Schengen Area’, China, and India.

Further, did you know that you can be barred from traveling to some Middle Eastern countries if you have an Israeli immigration stamp in your passport?

Once again, multiple passports means more options, and more freedom… in this case, the freedom to travel.

3) Business and investment freedom. If you’re a US citizen, foreign banks don’t want to deal with you, foreign brokers don’t want to deal with you, and most foreign investors don’t even want to risk getting in bed with you.

FATCA, Dodd Frank, etc. all make it too difficult for foreigners to deal with US citizens; nobody wants to risk the IRS or SEC knocking on their door. As a result, many US citizens have been kicked off the boards of foreign companies, had their foreign bank accounts closed, and been disallowed from buying into lucrative foreign IPOs.

Having another citizenship normally circumvents these hurdles.

4) ‘Citizen benefits’. If national healthcare is your thing, there can be a lot of benefit in having a second citizenship– in many cases, you’ll enter the public healthcare and pension system, giving you a potential backup in case you need it.

5) Relocation and work possibilities. With a second citizenship, you’ll always have the right to live and work in another country. Imagine, for example, having a European passport, entitling you to work anywhere in the EU. If you’re living in the US or Canada now, that could potentially open up an entire new line of lucrative opportunities to pursue.

6) The insurance policy. Ultimately, having a second passport is like having an insurance policy. You might not ever need it… but you’re going to be really glad that you have it in case you ever do.

Again, history is full of catastrophic events that have caused tremendous turmoil in nations… and people who have been trapped inside with no way out have had their lives turned upside down.

A second passport can be that ticket out… safe passage for you and your family to a new place where the opportunities are better, safer, and brighter. It’s a scenario that no one can really imagine… but history shows that few people ever do.

You probably have the foresight to understand that the western world is entering another period of severe turmoil.  You might even already be thinking about second citizenship. If so, I really want to encourage you to take advantage of my exclusive Emergency Offshore Survival Kit. The Emergency Offshore Survival Kit is a crash course… everything you need to know to begin taking action on important steps like obtaining a second passport. Click here to read more about it, as well as our limited-time special offer that expires tomorrow.

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