Financial Meltdown?
Sept. 29, 2008
Panama City, Panama
PLUS:
n A Dozen Financial Meltdowns
And Counting…
n Coups, Devaluations, Armed
Invasions, Incompetence, Panic…Wow, Things Are Getting Interesting…
n Don’t Buy, Don’t Sell, Don’t
Move, Don’t Even Think…
n What If The Worst Case Is
Realized? Move To A New Country, Of Course! There’s Always Somewhere Where
Your Money Goes Further…
n Update From The New Napa…
n Panama Breaking All Tourism
Records…
n Infrastructure Improvements
Outside Punta del Este (You Know What That Means, Dear Reader)…
AND:
n The Best Overseas
Retirement Planning Advice You’ll Ever Get…
----------
Launch Your New Life ----------
"What in the world is a nice retirement-aged couple from Vermont doing in
Granada, Nicaragua?”
Jay Snyder gets this question all the time.
Here’s how he responds…
----------
Dear Overseas Opportunity Letter Reader,
“Financial meltdown? A dozen and counting,” writes friend and correspondent
Paul Terhorst this morning.
“Vicki and I figure we've lived through a dozen or so financial meltdowns
already, most of them in the Third World. Our first occurred in 1981, the first
year we lived in Buenos Aires. That year Argentina changed governments five
times, with five different presidents.
“What with one coup and another, the biggest crisis hit in June of that year.
The peso went from 2,000 to the dollar to 10,000 to the dollar. Vicki and I had
just arrived, we'd been given no time to lose money on pesos. But Argentine
investors who had kept their money in high-interest-rate peso accounts were
wiped out overnight.
“By the following year, Argentina had stabilized. Vicki and I decided to buy
a small apartment in the chic Recoleta district. We paid 25 billion old pesos,
or about US$25,000.
“Two months later, the Argentine army invaded the Malvinas/Falkland islands.
Terrible idea. The economy collapsed--again--and our new apartment was worth
only about US$8,000.
“As I said, a dozen and counting…
“What have we learned from Argentines, Mexicans, Thais, and others who have
lived through financial panics over and over? That is to say…how can you best
deal with the crisis on Wall Street and in U.S. real estate?
“First, keep plenty of cash on hand. Vicki and I like to have five years of
living expenses in cash. Depending on where you live, you may want to place that
cash outside your home country. Wealthy Mexicans keep money in Europe or the
U.S. as a matter of course.
“When Thailand's former prime minister Thaksin exiled himself in England two
months ago, the Thai government froze his assets. But Mr. Thaksin (and his rich
friends) knew to keep plenty of assets outside the country. He and his family
live on that overseas cash, in the house they own in London.
“Argentina's president from 2003 to 2007, Nestor Kirchner, took the
cash-abroad concept one step further. In the old days, when he was governor of
Santa Cruz province, he was so horrified with the incompetence in Buenos Aires
that he moved a good chunk of Santa Cruz's money to Switzerland. He figured that
what's good for the wealthy was good for the fine taxpayers of Santa Cruz. No
need for misplaced patriotism.
“A second lesson learned: Don't panic. Don't buy, and don't sell. Don't make
decisions, don't move, don't even think about the chaos around you. You'll get
through this, you always do.
“Argentina imploded in late 2001, and, by 2002, was reduced to a barter
economy. The country defaulted on its debt, stopped paying pensions, confiscated
bank deposits, and more. Real estate values collapsed. It was as bad as it could
get. But within two years the country was back on its feet; apartment prices
exceeded those before the crash.
“Similarly, Thailand blew up in 1998. Literally hundreds of unfinished
apartment towers in Bangkok, see-through skeletons, were abandoned and stayed
that way. But Thailand, too, got back on its feet, and those apartments were
completed and sold for big money.
“Remember, too: After the recovery gets going, you'll have plenty of time to
buy undervalued assets. No need to rush.
“Finally, consider the worst case scenario. What would you do if it really
got bad, if you and everyone else lost nearly everything?
“Answer, after a decent interval: Move to a new country. There's always
somewhere out there where your money goes further.
“Vicki and I are perpetual travelers, we move every now and again. We're used
to it.
“But we understand that the first move overseas is the toughest. After you
settle in abroad the first time, you'll move and adjust much more easily. Pretty
soon, moving will become a core competence. That's your advantage over the poor
guy who's stuck back home.
“I'm talking about worst case here. With any luck, you'll never have to live
through really tough times. Then again, if you do, you'll do fine.
“In 1957, Helen Keller wrote, ‘Security is mostly superstition. It does not
exist in nature...avoiding danger is no safer in the long run than outright
exposure. Life is either a daring adventure or nothing.’”
Kathleen Peddicord
P.S. Paul and Vicki Terhorst have 25 years of experience living and investing
abroad. I know no one whose advice on these subjects I value more. That’s why I
was grateful when Paul agreed to act as a regular columnist and contributor for
our new Overseas Retirement Letter. In those issues
each month, he will detail and develop his time-proven strategies for living
well (in retirement or otherwise) overseas. In the premier issue, out in
October, Paul shares three financial planning strategies for your retirement
abroad. This is retirement-planning advice like you can’t get anywhere else…for
it’s based on developed and refined out-of-the-box thinking. Precisely the kind
of thinking you want to be doing right now.
----------
Winter In Thailand ----------
Escape...full- or maybe only part-time…to one of the most beautiful, diverse,
exotic, and affordable places on earth.
Find out more about Thailand real estate here.
TODAY:
Global troubles notwithstanding, Panama this year is seeing
more tourists than any year in its history…and, year-to-date, 12.2% more than
during the same period in 2007.
***
Uruguay has approved plans for a new marina, with 400
mooring spaces, a hotel with a casino, and various real estate developments, in
Punta del Chileno outside Punta del Este. The port and hotel alone represent a
US$280 million investment…in an area of this country that continues to boom.
FROM THE MAILBAG:
“Please let your readers know, Kathleen, that the magic number 20 has been
reached.
La Vida Buena Wine Club has surpassed the 20-member
benchmark for Founding Membership, and Yvonne and I want to thank all of you who
made this possible.
“We are off to Argentina Sept. 28 and will not return to Phoenix until Nov.
25. During this time, we will be working with our agronomist regarding the
preparation of the soil for the Wine Club vineyard and the planting of the
Malbec grapevines, which will be the first.
“Yvonne and I attended an International Real Estate Conference in Los Angeles
recently, where I was a guest speaker on both Argentine vineyard opportunities
and on how to use IRA funds to purchase real estate. Yes, your IRA can actually
buy a vineyard.
“We made great contacts at the event, including an invitation to visit
Mexico’s La Routa del Vino in the Valley of Guadalupe in the center of Baja
about an hour south of Tecate. The wine route features about 40 vineyards with
dozens of small, medium, and large wineries and a few great restaurants.
“Here’s the thing: A 5-acre planted vineyard in Mexico will cost you
US$399,000…while you could own a 5-acre planted vineyard in Argentina for
US$97,500.
“Specifically, you could purchase a boutique vineyard of 5 acres, completely
planted, in San Rafael, Argentina, for US$97,500. This includes all the costs of
planting but not a home…though the land is buildable and would make for a great
place to spend time. Building costs start at US$50 per square foot.
“By way of comparison, a comparable investment in Mexico’s Valley of
Guadalupe would cost upwards of US$400,000—again with no home included, and,
here, building costs start at US$80 per square foot.
“Obviously, a Californian could travel to the Valley of Guadalupe in about
three (from San Diego) to five (from Los Angeles) hours. It comes down to the
old question of time versus money.
“If you are willing to travel a little farther, you can make the same
investment (I’d argue it’s a better investment, for Argentine wine is superior
to Mexican wine) for a lot less.
“Yvonne and I will have another update in two or three weeks with pictures of
the La Vida Buena Vineyard in progress.”
-- Tom Phelan,
La Vida Buena Wine Club
