A look back, and some 2011 predictions

by · 22 comments

January 3, 2011
Santiago, Chile

Welcome back, and happy New Year.

After a wonderful, relaxing weekend here in beautiful Santiago that involved meeting up with a couple of subscribers, I’m buckling down to the business at hand that will include finalizing preparations for our upcoming workshop, as well as exploring initial plans for the community.

To be honest, I’m not much for New Year’s; it’s just an arbitrary day that has no more or less significance than any other day of the year, but I suppose all the time off over the holidays does give one plenty of time to pause, reflect on the previous year’s events, and ponder the upcoming ones.

I spent a lot of time over the last weeks reviewing our conversations from the past year, and I was actually a bit surprised at how much had unfolded. If you recall the analogy of the boiling frog, each of these events represents yet another degree in the march towards 100 centigrade.

Think about it– in 2010 we saw:

- The TSA ‘tip of the spear’ enforcing subordination to government authority
- Canada’s government authorizing its agents to search homes without a warrant
- Gold hitting all-time nominal highs due to unprecedented monetary inflation
- Governments around the world raising taxes with immediate effect
- Homeland Security began seizing domains without due process
- The beginning of the end of the Eurozone
- World governments engaging in mutually assured destruction currency wars
- FBI raiding the homes of war protestors
- Passage of the HIRE Act in the United States, a precursor to capital controls
- Political heavyweights openly calling for the assassination of Julian Assange
- Switzerland settling with the US government
- Panama caving to pressure and signing a Tax Information Exchange Agreement
- Homeland Security encouraging US citizens to spy on each other at Wal Mart
- North Korea engaging in acts of war against the south

et cetera, et cetera….

When you spend a lot of time around a child, it’s difficult to really notice his/her day-to-day growth. It takes an outsider who hasn’t seen the kid in 3-years to point out “Look at how big you’ve grown!”

Similarly, it takes a brief pause to look back over recent events and realize how rapidly things are changing. Seemingly the one constant has been an almost uninterrupted rise in global equity markets.

It’s truly amazing how markets have remained unfazed by so much change; this is evidenced not only by rising equities, but also by the lackluster level of the VIX ‘fear index’, which was recently as low as 15.45 before the holiday trading sessions.

As the ball dropped and the champagne flowed, I started thinking about what might shake markets from their apathy this year… and perhaps more importantly, what further events will unfold in the war on liberty.

A few ideas crossed my mind:

1) Many of the old monarchs and dictators still clinging to power will finally croak, creating massive opportunity and instability.

Just look at how many octogenarians are still in positions of tremendous power and influence, either de facto or de jure:

King Abdullah- Saudi Arabia (86)
Crown Prince Sultan- Saudi Arabia (82)
King Bhumipol- Thailand (83)
Robert Mugabe- Zimbabwe (86)
Fidel Castro- Cuba (84)
Raul Castro- Cuba (79)
Emir Jaber- Kuwait (81)
Pope Benedict XVI (83)
Hosni Mubarak- Egypt (82)
Sultan Abdul Halim Mu’adzam Shah- Malaysia (83)
Manmohan Singh- India (78)
Than Shwe- Burma (77)
Mahmoud Abbas- Palestine (75)

2) Massive property bubble bursts in Thailand.

Because of the relative size of its economy, low prices, significant population, agricultural wealth, and manufacturing base, a lot of western funny money that’s been printed has ended up looking for a home in Thailand.

In its efforts to thwart rapid currency appreciation, the Thai central bank has matched its western counterparts in polluting the money supply. It’s no wonder that Thailand’s stock exchange rang up a 40.6% return in 2010, the 4th best performing index in the world after Peru, Argentina, and Indonesia.

The other place where the money ended up is in the Thai housing market, which is just bursting at the seams with new supply and rising prices fueled by speculators as opposed to demographic fundamentals.

3) Chinese street inflation exceeds real GDP growth

How can you tell when a politician’s lying? Watch for his lips moving. This goes doubly in China where inflation and growth statistics in China are massaged vigorously.

The government’s efforts to maintain a currency peg have created troubling inflation in the country, and 2011 may be the year when the economic engine runs out of steam.

4) Several major American cities go bankrupt. This has been a long time coming, but it may prove to be the powder keg that sparks the financial mushroom cloud.

5) Julian Assange has an ‘accident’. I sincerely hope it won’t happen, but I won’t be surprised.

6) It becomes illegal to record the police in several US states, Canada, or the UK. You know, we used to be able to rely on the mainstream media to keep governments in check… but these days they’re just petty hacks and cheerleaders.

Fortunately, the Internet is a great equalizer, and videos abound of Officer Bubbles and the like which show the absurd lengths that police forces and government agents will go to intimidate and subordinate the masses.

There have already been arrests, charges filed, and lawsuits pending against citizens who have recorded the police and posted it online… and I fear that governments will pass laws which legally prohibit such action.

Look, I could really go on here, there’s no end to the insanity we may see in 2011, and the pace at which it could happen. Politicians can literally make these changes overnight, and you won’t want your money around when they decide to impose capital controls.

These aren’t things to panic about, but merely to prepare for. When you take action that diversifies your sovereign risk, you sleep a lot better knowing that your assets, interests, and livelihood are not all inextricably linked to an empire in decline.

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Tagged as:

2011-01-03
  • Anon Cowherd

    Hi.

    Around a month ago, I posted a comment asking if there were any “ordinary people” reading this site, or only wealthy Americans.

    I thought my comment didn’t go through, so I never noticed the replies. Thanks for those, by the way :p

    Well, here we are again.

    This time we’ve got a list of various rather scary things going on, and in the end we’re told it’s alright because we can prepare by “diversifying” our “sovereign risk”.

    But what does that mean, especially for an ordinary person, again? I’ve got around 10 – 20k euro to spare (which is actually more than most people in my European home country have).

    Can I “diversify my sovereign risk” with that? What should I do?

    I’m hanging around in Asia, and had a handful of gold coins with me until I read I couldn’t enter Thailand with them (without some bullshit permit), so I sold them for Japanese yen.

    I’ve got a sole proprietorship in my home country, but I’d be interested in setting up an LLC in Hong Kong to have a way to pay less taxes on some of whatever income I’ll scrape together in the relatively near future.

    OK, enough rambling for now. Any suggestions? :p

    • amerikanka

      I would consider myself a “normal person”, definitely not wealthy. I turned a profit on a sale of a business a few years ago, and with a portion of that – 20k euro – I bought a parcel of land in a cheap foreign country instead of joining what was the US housing boom or getting into the stock market. Sorry, I can't advise you on LLCs in HK.

  • Cwarner

    Simon-
    You missed a very important trend, popularized by our friend Mr. Chavez, and now adopted by the US Government- governing by decree instead of legislative processes. Three important recent events in the US that illustrate this:

    EPA claiming the authority to regulate CO2, in spite of a lack of consensus in the legislature over the appropriate approach.

    FCC attempting to take over the Intenet without clear legislative authority.

    The Surgeon General initiating “End of Life Counseling” in spite of the clear legislative defeat of the original proposal in the Healthcare Reform Fiasco.

    We could add things like Customs officers seizing your computer and demanding access to your private data without due process or reasonable cause. Fortunately, modern bureaucracies are so inefficient and so occupied with chasing phantoms, it becomes easier and easier to live under the radar…

    • dboy

      I would like to comment on your Customs issue. Check into cloud computing options. You should NOT carry sensitive data through any kind of customs checkpoint. Encrypt your data and store it in the cloud. When you reach your destination, pull the data down to your laptop. This is what I do in order to protect my trading accounts (I am a location independent trader). As a US “citizen” (in quotes because I am a citizen in terms of passport, not in terms of mentality) I do not trust my data with the TSA monkeys or their handlers.

      • Cwarner

        Putting sensitive data in the cloud to protect it from prying eyes? Isn't that sort of akin to publishing it in the New York Times? The government already claims the right to mine Internet data without warrants (supposedly focusing on communications channels, not content, but how do you know?).
        No, I think taking my chances with a customs encounter is a bit less threatening than risking Assange getting ahold of my private information and selling it to the Guardian…

  • Anon Cowherd

    Oh, and here’s the original thread for context: http://www.sovereignman.com/expat/questions-swiss-bankers-education/

    Simon says:
    ————-
    Anon, the “as little as $250K” number specifically relates to these private Swiss bankers. While not everything we cover may be applicable to you, we do work quite hard to ensure we’re offering solutions for “normal people” (to use your phrase).

    For instance, in our premium service we recently covered a caribbean bank that offers accounts with no minimum balance. Also, we’re devoting a portion of our workshop in Panama to discussing internet business building. Neither of these topics are geared toward ‘wealthy Americans whose biggest single problem is how and where to secure their vast wealth’.
    ————-

    No offense, but if those two are the best examples of advice applicable to an ordinary person you could think of, then it seems this website really is geared towards wealthy people.

    Even I can handle a minimum balance of hundreds or thousands of dollars, and I know something about building an Internet business because I’m a software guy by trade.

    Besides, building an Internet business isn’t a way of saving yourself from whatever the world is about to face. There’s no guarantee of becoming rich, and it would take years in any case.

    One other thing I’ve been wondering about is why you’d recommend getting a second citizenship in Singapore, when it seems Singapore won’t let you keep your current one. If that’s correct, wouldn’t it be relevant information?

    Would an ordinary person benefit from Sovereign Man: Confidential? You’ve sure done your absolute best to sell it to even us: http://www.sovereignman.com/SMC.html and you keep plugging it at every turn. It’s obviously a for-profit venture.

    The problem with this kind of service, and say, for example Chris Martenson’s: http://www.chrismartenson.com is that you both are _monetizing fear_.

    People who find your websites either are already afraid of what the future may bring, or will be after reading your sites for a while. So they’ll be highly motivated to pay you for even more information.

    If you’re as big an international man of mystery, connections, dozens of business ventures & money as you say, you certainly don’t need the money you make from SMC.

    Now don’t take this message as a personal attack – I’m just curious and not particularly fond of beating around the bush.

    The bottom line here is that some ordinary people are awake too, and afraid. We’re probably even more afraid than all the rich people here, because we don’t have the safety that wealth and having your “sovereign risk diversified” brings you.

    We can’t just waltz around the world, applying our wealth to securing it and “planting flags”.

    But I’d be really glad to hear that I’m barking up the wrong tree here, and that I can actually prepare for whatever’s coming by means available even to me.

    • http://www.facebook.com/profile.php?id=1235111526 Anne Grothe-Chericone

      Thanks for your ideas – appreciated.

      • Anon Cowherd

        Glad to be of service :p Do you happen to be an ordinary person then?

  • http://www.facebook.com/profile.php?id=23925315 Sara Dyson

    Hi Simon,

    This morning, we came across a BBC article stating that Latvia is now offering EU residency rights and citizenship to anyone who invests or purchases property there. Based on some additional research, it seems like the cost of property in Latvia is quite reasonable, if not cheap. What are your thoughts on Latvia as far as planting a flag and gaining additional citizenship?

    Here is the link to the article: http://www.bbc.co.uk/news/business-12106988

  • Leland

    “To be honest, I’m not much for New Year’s; it’s just an arbitrary day that has no more or less significance than any other day of the year …”

    I agree with you on that. Someone asked me if I had plans for New Years about 6:00 PM on New Year’s Eve and it was the first I’d even thought about it being New Year’s Eve.

  • flipspiceland

    Time to revisit, “One Flew Over the Cuckoo's Nest”.

    When the participants are all living in an insane asylum, that is the normal state of affairs. The only ones who actually look crazy in that environment are those who think they run place, the doctors, nurses, attendants who are greatly outnumbered.

    Welcome to the new Normal. And good luck fighting it.

    I'm going all in long as I should have done 3/8/9 the day before the epic rise since then, when the sellers were in charge and running the asylum.

    The Inmates are now in control.

  • SpiritWalker

    Here is another development more than confirming the stance this posting takes: http://USAFWeeC.notlong.com —such technology is always spun in the light of being wielded against threats and potential threats of US “Interests” by the MSM and it rarely dawns on the consumers of such Media that said tech’s actual longterm goal is their own enslavement …

  • http://pulse.yahoo.com/_7L7TC42A7F5GCGGQXPATUCNUGA Mark

    The US House and Senate are full of octogenarians. If it weren’t for the grim reaper, Robert Byrd and John Murpha would still be around. At least Arlen Spencer was voted out of office. I wish America had term limits.

  • http://www.facebook.com/silvershamrockfarms Robert C. Mullins

    A couple of things you didn't mention with regard to the 'Great Equalizer' (I.E. The Internet) is that one of these three laws, (maybe all three) will most likely be passed this year which will have an enormous impact:
    The Kill Switch (as introduced by Jay Rockefellar)
    The Fairness Doctrine
    Net Neutrality

    Have fun!

  • http://www.facebook.com/profile.php?id=1235111526 Anne Grothe-Chericone

    1. Begin getting to know your neighbors. 2. Begin to study and practice the arts, yes, arts of communication and co-operation. 3. Turn off your T.V.'s. 4. Purchase local products if possible. Support your local businesses even if it costs more (It hits the big boys where it hurts – their bottom line). 5. Hold those is public office responsible (In other words – get off your asses and let the greedballs know you don't like the way things are turning out). 6. Think of community solutions rather than national or global ones. Remember, we are not 'consumers', but citizens. We, ultimately are the ones who make this nation run successfully.

  • http://comment.myopenid.com/ Hagbard Celine

    >> Canada’s government authorizing its agents to search homes without a warrant

    Chiming in from Canada, I would be obliged if anyone directed me to the source or to more information. Thank you.

  • http://markmeir.com Mark Meir

    Yes, the ostrich has had it's head in the sand for 2 years now and is about to be attacked, this is clear. 2011 is definitely the year to stay out of equities and the Euro and time to focus elsewhere. UK vat increase to 20% coupled with 4 time inflation rate rises in the cost of public transport will ensure inflation is high and will get much higher.

  • Pingback: These will be the next battles in the war on liberty | TheTradersWire.com

  • Rp80923

    People in the US have already had their camera’s confiscated and possibly arrested for photographing the police. I recall news articles on the subject in 2010.

  • John from WE-ARE-NH

    We should be more worried about what the government is putting into our bodies. Our wealth will not matter.

  • http://bradyinc.com Frank Brady

    Great article as usual. However, you wrote: “It’s truly amazing how markets have remained unfazed by so much change; this is evidenced not only by rising equities, but also by the lackluster level of the VIX ‘fear index’, which was recently as low as 15.45 before the holiday trading sessions.”

    I most respectfully suggest that this is not surprising at all. The “Plunge Protection Teams” (the Treasury, the Fed, and Big Banks) that have been in operation since the days of William Jefferson Clinton have plenty of funny money with which to prop up markets–and enliven “animal spirits”. Hang on and watch what happens!

  • Tom webb

    this is the thinking i like…. i have set up in belize what do you think about belize???

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