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Your questions: anarchy, healthcare, mortgages, China

February 5, 2010
Mexico City, Mexico

Greetings once again from Mexico; I’m sure many who listen to the mainstream press would be amazed to find that I have spent 48 hours on the ground here with nary a swine flu infection nor simple mugging to report.

I did, however, miss my flight to Canada.

What can I say… Mexico City traffic has got to be the most dangerous thing in this country. I was able to change my plans and will be in Vancouver this evening.

Before I get started on answering your questions from the mailbag, I wanted to mention a brief administrative note– if you ever have difficulties opening or reading the daily email in your inbox, you can always read it online at www.SovereignMan.com; in the meantime, my staff is working on resolving all readability issues.

Moving on to questions.

To start off, John asks: “Hi Simon- you don’t talk about politics much, though I have a feeling where you stand by reading your letter each day. Can you give me a better idea of how you see the world, politically?”

First and foremost, I want to make an important distinction. I am an avowed anarchist. Just the word itself has an incredibly negative connotation– it conjures images of subversion, treachery, and treason… or at least crazy guys hoarding guns in Montana.

People too often confuse ‘anarchy’ with ‘chaos’, usually citing examples like “if there were no laws, what would keep people from driving on the wrong side of the road?” or “who would come and put out the fire when your house is burning?”

These arguments are weak and only serve to indicate the extent to which governments have brainwashed people. Most citizens now believe that the political establishment is vital for their own survival, as if we would all spontaneously combust were it not for the FDA.

Anarchy is not chaos. The political establishment is chaos. Politicians have a horrific track record managing wars, finances, education, health care, and just about everything else they put their hands on… all at the expense of public resources.  Very little changes for the better, at least thanks to the government.

And yet, every few years, we still put on a charade to cast our vote, as if this ridiculous exercise has any meaning whatsoever. It’s an unpopular thing to say, but participating in the political process is a complete waste of time… particularly since we have a much more powerful voice.

The most important votes we cast are as consumers, not constituents… we vote with our dollars every single day. The best candidates, i.e. the producers, win our votes, and the worst candidates go bust. No amount of baby-kissing can save a defunct company.

Hell, not even a government bailout could keep Chrysler and GM alive.

Personally, I would prefer to have all of my tax dollars back in my pocket and pay a usage fee for privatized roads, or an annual subscription for a privatized library, rather than have some bureaucrat funding pet projects with my hard-earned money.

I recognize that this is all just a pipe dream, at least for now. Political institutions are here to stay, and the trend is bigger government, not more limited governments.

That’s one of the reasons why I have chosen this lifestyle– with a multiple flags approach, I minimize the impact that any single government has on my life.

Betty sends along the following comment: “You wrote that hospitals in Boquete, Panama were substandard. You are badly misinformed. Hospital Chiriqui is a modern hospital with excellent doctors who speak English for the most part; I should know, I was in intensive care there for three weeks and had five specialists attend to me.”

Noted, Betty. Thanks.

Captain asks, “Simon, do any ex-US real estate markets employ US-style mortgages?”

Yes. Panama is one of them; foreigners can get a 50% to 70% mortgage, and a better rate if you become a resident. Many European countries also underwrite mortgages for foreigners.

The other thing to consider is developer financing instead of bank financing. This tactic is being used in a lot of places around the world to mop up extra inventory. I see this everywhere now– Spain, Thailand, Morocco, and here in Mexico.

Standard packages generally require 10% to 30% down, and will finance the balance on a 30-year amortization schedule for a 5-year term.

Nathan asks: “Simon- Regarding China, I know a lot of people have been high on the country for some time. But what is the real analysis here?”

To be clear, I am not a blind China bull… but I’m happy to call a spade a spade. The ‘good’ part of the analysis is fairly simple. In the long run, there are two things needed for sustained economic growth: technology and savings.

Technology makes production (i.e. wealth generation) more efficient, and a large pool of savings becomes investment capital to create businesses, build factories, etc… things that add value to an economy.

China has both, and so the foundation for its economic growth is sound. However, there are a LOT of potential problems with China– the economy succeeds despite its government, and I’m concerned about future political instability.

Furthermore, I expect one day that China will go through significant challenges as it finds that it can no longer compete with its neighbors for low-skill manufacturing. The country will have to develop entirely new industries, and that could be painful.

Lastly, the Chinese are become cultural consumers… shop-a-holics really. This consumption depletes the pool of savings, and if sustained, will create long term structural issues.

That’s all for today, I’m off to Vancouver.  Have a great weekend.

Our goal is simple: To help you achieve personal liberty and financial prosperity no matter what happens.

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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.

Comments on this entry are closed.

  • lrm

    I would also add environmental issues-they will come back to bite china in the you-know-what.

    Plus,they will increase serious health issues.
    communist china streamlined traditional chinese medicine,to provide healthcare for it’s popluation effectively,combingin it with western medicine for severe emergencies. (TCM is streamlined in that all the lineages were absorbed into one system of set points and protocols,and herbal medicine was incorporated through set texts-although the historical canon of medical literature from china was extensive to begin with—but they streamlined it.) Anyway,it provides a very cost effective and effective overall means of healthcare,in the process preventing severe health concerns from developing(preventative).
    OF course,environmental issues will increase health concerns,and raise the costs of caring for people beyond the nominal fees for acupuncture,herbs and self-care. As well,displacing hundreds of thousands of people to build a dam,for example,creates health issues by proxy-people’s traditional ways of life and community structure breakdown,and negative health consequences arise.

    Add to that the aforementioned consumer mindset,and many traditionally healthy ways will be eschewed in favor of fast and modern,and foreign/exotic.

    I have actually said the same thing-china is creating a similar culture to the US,as far as mindless consumers who are not educated per se (the direction the US finds itself moving in)….where is the innovation and creativity needed to create new industries for china? And,if they are shifting their dependence upon foreign [us] consumers in favor of internal consumption,when they become a country of a billion walmart shoppers with a smidgeon of macy’s and bloomingdale’s…what strength is their economy,then?

    The political instability is even more of a concern b/c people are not educated to be part of any kind of thinking,interactive process,for the most part. Jumping from agrarian/no running water to industrial in a very short span of time creates problems in itself. Add to that only a blind sense of patriotism,and how can anyone speculate that china will be a superpower when we see this kind of problem taking the US out of superpower status?

    china will be a major player,but not enough for everyone to run out and learn mandarin just yet. IMO.
    of course,for those interested in the language and culture,it’s fantastic. my son has been interested in china and saying he loves the culture and wants to learn chinese,since he was 3 yrs old. very cool for him.

    I personally think the future will be more diversified in terms of power players;not just regionally,but different countries will hold power for differnent reasons. so really,depends on what one’s main interests are in life.

    Glad Simon brought up the points about China;we get told enough times by the media that ‘china’s the wave of the future’—and people assume it’s a fact. Time will tell.

    • Marquelle

      Just think of the country as a Hong Kong writ large…same strenghts and weaknesses, all magnified!

  • Marquelle

    Smart…you waited for the rain to pass over Vancouver before you arrived!

  • Tomie O’Neil

    Hi Simon,

    You write about relevant and interesting topics for our time. I have property in Panama and am a friend of Bobby O’Neill. I am at my father’s house in Phuket until the 15th. He got out 20 years ago. How about lunch if you make it down here?
    All the best.
    Thank You Kindly for you info and voice,
    Tomie O’Neil

  • http://nomadgreg.wordpress.com/ Greg

    I am just setting foot on the path of freedom laid out by the 5 flag theory. In three weeks I will start teaching ESL in Seoul Korea. I just opened an account with goldmoney.com and euro pacific capital to get my money away from the states and the dollar.

    I have a couple of rookie questions for you Mr. Black or any of the other great readers of this site. I am a US citizen and will be earning my money in Korea. If I buy gold at goldmoney.com or invest with euro pac from an Asian bank account will Uncle Sam make me pay taxes? What if I pay with my US account?

    Will I have to file taxes in the states next year even though I will not be earning income there? Does putting money in my US account or keeping it in a bank like the Hong Kong one you recommended change this?

    Like I said I am a total rookie but am eager to learn. Also are there any other tips for someone just starting out on the path to financial freedom? Thanks in advance of any replys.

    • http://nomadgreg.wordpress.com/ Greg

      Actually I just looked back at the bank post and the Hong Kong one was a brokerage called BOOM. What foreign banks would you recommend. Thanks again

  • http://dorianenterprizes.com/ Steve Kusaba

    I actually think there will be a window where the stranglehold of government can be loosened, in the very near future. There is a great deal of deep anger from most people I talk to about the bank bailouts and there is much more universal hatred of both parties than most people would think. All that is really missing is an effective way to deliver the message to the public so that they can be aware of an alternative. Peter Schiff is doing a great job in the political arena. A combination of entertainers, news people, and almost anyone that can get face time might actually sway enough citizens to create an outlet for a different way.

    I will probably be disappointed yet again but pulling for this outcome is an amusing hobby.

  • Connie

    You should check with an account because of the amount of money you will possible make in Korea as an ESL Teacher. (Good Luck) Korea pays way more than most other countries like, China where I worked as a teacher sometimes and becasue of the dollar amount I believe I would pay taxes on this anyway to stay under the radar.

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