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The coming American diaspora

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July 16, 2012
Hong Kong

A few days ago in Indonesia’s Lampung province, I was following a sprightly Chinese woman, well into her 70s, as she showed me around her thriving home appliances and furniture shop.

It was an amazing thing to see.

The three-story shop-house was both the family home, and business premises. Yet  every available space was stacked high with goods for sale, including family kitchen and living space.

When I asked her whether her business had always been here, she held her hand out, palm flat to the ground, about 2 ½ feet high and said, “Since I was this tall.”

No doubt, her ancestors had been among the wave of Chinese economic refugees who moved to South East Asia in the late nineteenth century to work as laborers for the British and Dutch colonial powers.

To this day, more than ten million of their descendants remain in Singapore, Malaysia, Indonesia, and the Philippines.  And in each country, they’re disproportionately successful.

Two days later, back in Hong Kong, I got talking with the owner of my favorite Lebanese restaurant.

He and his brothers fled their homeland during the civil war.  They eventually ended up in Hong Kong where they run several successful businesses.

I asked him whether the current euro malaise is affecting things back in Lebanon in any noticeable way.

He said, “You know, the Lebanese always complain how tough they have it. When I go back and I’m in some fancy restaurant talking to the other diners, they complain.  Yet they’re there, spending hundreds of dollars.”

“The secret with us Lebanese is there are only 3.5 million at home, and 15 million overseas.  So everybody has a brother, or an uncle, or a cousin who’s helping out sending money back.”

The current slump in the US and Europe could easily lead to a similar wave of Diaspora– economic refugees who find better opportunity abroad, even those who send remittances back home.

In the US, real median incomes have not grown since 2007.  Those on the lower rungs of the income ladder have fallen backwards.

Net household wealth remains some 37% below its peak.  All gains since 1992 have been wiped out.

For the first time ever, a new generation of Americans faces a bleaker economic future than their parents.

This shocking reality may be new for the US, but it’s an old song for most of the world. Countries rise to prosper, and countries decline.  It is the natural order of things.

As the waves of migrant workers and business owners can attest, there is always something you can do to combat domestic economic challenges. As Simon likes to say, ‘this time is not different.’

Whenever there is a great upheaval, ambitious, productive people leave their homelands and put down roots where they can find safety and better opportunities for themselves, their families, and future generations.

Today, that means countries like Singapore, Chile, Brazil, southeast Asia, etc., all of which we write about frequently in this column.

With long-term prospects for freedom and economic opportunity back home so sparse, maybe it’s time to begin thinking in this new direction: internationally.

Until next time,

Tim Staermose, Chief Investment Strategist
Sovereign Man

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About the author: Born to a Danish father and British mother, in Dar Es Salaam, Tanzania, Tim Staermose has led an international life since the day he was born. Growing up, he also lived in Egypt, Denmark, and Singapore, before eventually settling in Australia, where he completed his education and took out citizenship. Since then he has also lived and worked in Hong Kong, and Manila, Philippines, in the field of equity research — both for a bulge-bracket Wall Street investment bank, and for an independent investment research firm. Today, when not traveling the globe looking for investment and business opportunities for the Sovereign Man community and catching up with his diverse, multinational group of friends, he divides his time between Hong Kong, and the Philippines.

Comments on this entry are closed.

  • Gene

    I think this movement will be someone constrained due to American cultural biases. I’ve traveled all over SEA, and have found that Americans are very rare. You see Russians, French, Brits, Germans…very few Americans. The reason is (I think) that Americans have always been taught, and its continuously reinforced by the media, that America is the best place in the world and everything outside America is a cesspool. Which is laughable of course, but I think it would take several generations to overcome this American blind spot. No, I think that for the most part, Americans will simply stay home and suffer what’s coming. I have seen quite a bit of “stand and fight” attitude within the “prepper” community, along with religious and/or ethnic -motivation relocation (to Montana, Idaho, Texas). Ex-government people seem to be relocating to Wyoming and Colorado.  There’s a lot of “talk” about leaving…second passports, “offshore” banking, etc. But the US government is quickly putting an end to that, and will likely shutdown much of the freedom to travel that we currently enjoy. So I’d say that most (not all, of course) of the people who are planning to get out have already done so.

    • bod ssg

      I agree, I live overseas and see many Brits, Germans, French but we Americans are few and far between. Our government seems embarressed by our diaspora and indeed tries to “hide it” (we don’t know how many of us there are, between 3 and 5 million) or double taxes us which is outrageous in the extreme. Indeed, the USA was founded on one of the priciples “Taxation without representation.” I believe in there will be a “white flight” from America, many going to South America. The great American Diaspora will happen soon.

  • Pascha2u

    Yes, but don’t forget if you are American and move overseas, you will still be required to file tax returns and report the holdings in your overseas accounts to the IRS. If you happen to earn over $92,500 then you get the joy of paying double taxes – taxes to your country of residence, and taxes to the good ol’ USA. And if you are self-employed, be prepared for double taxation as well. Oh, and you might have a very difficult time opening a bank account or getting a business account, or insurance, or investments. Thanks to FATCA, a lot of financial institutions overseas won’t touch American’s with a barge pole. Banks in Hong Kong, Switzerland, Germany and other countries or forcing expat Americans to close their accounts and refusing new accounts from Americans.
    Most foreign businesses are now weighing the cost of hiring Americans vs. hiring just as skilled, just as educated people from other European, English-speaking countries. They are finding that hiring Americans is just too expensive and opens up their financial information to the IRS. You might want to read an article from today’s Wall Street Journal titled:”Obama’s IRS Snoops Abroad: Who wants American partners when that means opening up the books to U.S. bureaucrats?” http://online.wsj.com/article/SB10001424052702303933704577531280097324446.html#articleTabs%3Darticle

    • Psycan

      The recommendation is move your assets overseas.  But given that the next collapse is global, how are they any safer any in other country from that government, than they are from the US gov?  Most of the suggestions of Sovereign Man involving changing residence, depositing in other countries, buying assets in other countries do nothing to solve the problem of protecting your assets – they just change who is going to devalue or confiscate them.  .  

  • http://twitter.com/ammarla marla espiritu ϟ

    Hi! I’d like to get in touch with Tim Staermose please. If you can send me his email or number. You can contact me at marlaespiritu@ymail.com or 09164133209. Thanks 

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