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Questions: H.I.R.E. Hoopla, Panama without the Canal, cheap retirement, more

April 2, 2010
Panama City, Panama

It’s been a great week so far in Panama. Each time I come back to this country I become even more sure in my conviction that Panama has a bright future.

For the next few days, though, I am going to set aside market forecasts and expatriation strategies… you see, my friends from the Atlas 400 club are starting to arrive, and I’m looking forward to a few days off at the very exclusive Tropic Star fishing lodge in Panama’s Darien province.

The cast of characters attending this event is really impressive– and I’m excited that several members of our own community will be there.

I’ll tell you more about it when I return on Wednesday. For now, though, let’s move on to this week’s questions.

First off, Jeff in Ohio asks: “Simon, thank you for the clarification about the new H.I.R.E. Act, I was really confused and concerned.  Why do so many people continue saying that this new law is the same as capital controls?”

It’s easy to overreact and say that the sky is falling.  To be fair, a layman’s reading of the bill makes it seem like the government is imposing a 30% tax on foreign bank transfers… but that’s exactly why I had my team of tax attorneys and CPAs analyze it– I wanted to know the truth.

The truth is, the H.I.R.E Act is an administrative enforcement of tax reporting; it’s bad news, but it’s no more capital controls than the qualified intermediary rules or withholding requirement for some payments to foreign companies.

The big problem is that this new law provides a disincentive for foreign banks to work with US customers… more and more, Americans are simply not worth the hassle for foreign banks.

There are still solutions, though. Americans who want to open a foreign bank account (as everyone should) ought to consider larger multinationals that already have a US presence. They’re accustomed to the paperwork already and are less likely to turn you away.

There are, of course, other jurisdictions that frankly don’t care much about the H.I.R.E. Act, and we can discuss those more in the future.

Steve writes, “Mr. Black, is Panama still self-reliant and independently wealthy if income from the Panama Canal drops off?”

This is a good question. Panama is heavily dependent on the Panama Canal, just as Saudi Arabia is heavily dependent on its oil supplies.

Fortunately, Panama has been able to diversify its economy away from transportation and trade– banking services, real estate, tourism, customer service, and others… but the Canal still generates the preponderance of external economic activity.

If global trade were to take a major hit (as it did in 2008/2009), Canal revenues would certainly decline and Panama would suffer economically… but bear in mind that Panama still posted positive economic growth last year.

I suspect that major economic pain would come only with a cataclysmic reduction in Canal usage, either due to another economically viable transportation route in the western hemisphere (unlikely) or a total collapse in global trade.

Mark writes, “Simon: I am a 65 year old disabled retiree.  Later this year I will have about $30,000 per year to reside on. Can you give me several ultra low-cost living places to consider that have SOME civilization?”

Everyone has different personal tastes and circumstances, but here are some ultra cheap countries that are safe and reasonably civilized: Malaysia, Ecuador, Thailand, Sri Lanka, the Philippines, Egypt, India, Paraguay.

There are more, but this should be a good start.

Anonymous asks, “Simon, if I have a civil judgement ruled against me, would that disqualify me from a second passport?”

No, not in most cases. Most countries require a medical exam and a criminal background check. If you have a felony conviction, that’s a red flag. Civil judgments are usually not problematic… you’d undergo more scrutiny testing positive for syphilis.

That’s it for this week. Remember, I will be at the closed-door Atlas 400 event for the next few days in the middle of the jungle, so you will more than likely not be hearing from me until next Wednesday.

About the author: Simon Black is an international investor, entrepreneur, permanent traveler, free man, and founder of Sovereign Man. His free daily e-letter and crash course is about using the experiences from his life and travels to help you achieve more freedom.

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Comments on this entry are closed.

  • Marquelle

    Does Simon have any experience with Paraguay that he can share in future letters?

  • lf

    It is nice to hear that you have relatively optimistic view of FATCAT act
    which I do not share. While some of your ideas definitely make sense,
    thre are 300 million Americans and we cannot just pack and leave.
    In my view, if there is a relatively small group of people who believe that
    they can transform America into Marxist state similar to former Soviet Union (and one of them likes to repeat “Yes, we can”), we need to fight for our economic freedom right here in USA.

  • Mark From Los Angeles

    Greetings Simon!

    I am in Punta Pacifica PC till April 21st and would like to add to Steve’s query regarding the Canal and its revenues for Panama. The canal will undergo expansion in 2014 and almost all Pacific cargo ships bound for the US will forgo L.A. and be using the canal when it is finished. This is because 80% of the US population lives east of the Mississippi and ports in the SE US will get the brunt of the traffic. So it seems the canal revenues won’t be going down anytime soon, barring as you say, a cataclysmic decline.

    If there are any of your readers who have expatriated with little or almost no savings and have met with success (legally of course) overseas, I would love to hear their stories.

    Wishing you continued success,

    Mark from Los Angeles


    “Simon Black”, ARE YOU TRULY SOVEREIGN? ie – UCC-1? As a young family man in the US, it’s becoming increasingly evident that we are not truly free in this country – ie – Strawman. Are you aware?

    Thank you for your time and thoughts -

  • Pete Martinez

    Hello Simon,

    I wonder if you could provide some feedback on the Second Passport Program offered by St. Kitts/Nevis or Dominica. I’m particularly interested in the Second Passport via property purchase offered there (min. $350 K purchase). The fees are expensive, eligible properties marked up at a premium and the Real Estate Market appeal seems questionable or not unique but you can supposedly gain citizenship through this program within 3-6 months. Any thoughts or feedback on this program? How familiar are you with it? Any thoughts or feedback would be much appreciated. Thank you.



  • Papcke

    Hi Simon,

    I’d (I am from Europe) love to hear more about Asian countries to move to

    That would be great


Read more:
Second citizenships
Got grandparents? Four places where you can become a citizen