My inbox has been flooded lately with questions about a luxury real estate development in northern Argentina called La Estancia de Cafayate. Undoubtedly, the volume of emails is a strong indicator of the number of people thinking about expatriation.

Rather than answer the questions myself, though, I decided that it was a good occasion for me to reach out to my own network and call the man himself, Doug Casey, who is developing the project.

Doug and I spent some time chatting about the project, his thoughts on Argentina, investing, and networking with fellow expats. In full disclosure, I have absolutely no financial interest in the property whatsoever in any capacity. Furthermore, I have not purchased a lot at the property because, as a nomadic single male, I am not an ideal candidate.

For the right people, though, Cafayate is probably close to paradise. This would apply to expeditioners, retirees, hedonists, and even hermits.

The weather and scenery are spectacular, and the amenities in the development are second to none– I have seen it with my own eyes, and Doug really did a great job putting together a first class community, right down to the cigar bar.

As I mention in the interview, though, there are a multitude of beautiful places in the world.  One of the things that sets Cafayate apart is that it is a clear example of an ‘open door’ to a fascinating and intriguing network of individuals.

I wrote about this in the Network Infiltration Black Paper– finding a network’s open door often means being a customer first, whether through a club membership or real estate development.  It is the natural way to get noticed and provides an opportunity to start building relationships.

Cafayate is a great example– other buyers in the project include successful investors and entrepreneurs, influential foreigners, high ranking corporate executives, etc., each of whom is ‘philosophically sound’ as Doug explains it.

Becoming part of the community is an opportunity to build relationships with this network of successful individuals, including Doug himself, who will be living and spending time in Cafayate.

While the project and its network are definitely not for everyone, Doug’s commentary is entertaining and valuable for all. I challenge him on his view of Argentine politics, and we enjoy some laughs, especially when I get him to speak Spanish.

You can listen to the interview by selecting one of the streaming audio options below; to download it, right click one of the selections and click “Save As” to save it to your computer.

Doug Casey interview (primary server)

Doug Casey interview (alternate server)

Doug Casey interview (alternate server)

To hear more from Doug, you can sign up for his weekly column, Conversations with Casey.

You probably know the story of the boiling frog.

The premise is simple.  If a frog is placed in a pot of water that is already boiling, it will immediately sense danger and jump out, relatively unscathed. If it is placed in a pot of cool water, the frog will happily stay in the pot while it is slowly heated to a boil.  By the time the frog realizes the danger, it is too late.

The metaphor is used to describe how society is allowing itself to be slowly boiled– small changes that go unchallenged will lead to imminent danger.

History has seen plenty of examples– everyone always cites Nazi Germany or Rwanda, but there are countless others that don’t involve fascism or genocide.  I think today’s Argentina illustrates this point clearly.

After that country’s 2002 economic collapse, Argentina’s legislative assembly granted extraordinary power to the president on the grounds that unprecedented times call for unprecedented measures.

Seven years later, the president is still holding on to those powers, and usurping even more.  The federal government completely dominates Argentina’s economy, either directly through shareholder control, or indirectly through regulation.  Government sponsored thugs execute a mafia-like grassroots agenda, and now the government is seeking to limit the voice of what little free press remains.

The moral of Argentina’s story is simple: the greater the power given to the government, the less likely they will ever relinquish it.

In the United States, the growing tide of government power over the last decade has been equally disturbing.  Each passing bill– the USA PATRIOT Act, the Emergency Economic Stabilization Act, etc. raises the temperature in our collective pot of water by a few degrees.

One by one, some frogs are wising up and are starting to jump out

I find the recent morass to be especially boiling. The CFTC, under the spurious motive of protecting the people, has announced hearings to discuss limiting oil speculation… this is the first step in price controls, and methinks corn and wheat cannot be that far behind.

Further regulatory developments include a proposal coming from the FDIC to limit the size and scope of commercial banks. Comrade Bernanke has endorsed the idea, indicating that it is ‘legitimate’ to artificially restrict the growth and profitability of a private enterprise.

And now we have, within the last few days, the economic luminaries on Capitol Hill unveiling a special tax on the nation’s top earners to pay for the 1,000+ page health care bill… that no one has actually read.

Without even a cursory understanding of the bill, Congress is proposing to legislate the majority of Americans into health care by legislating a minority of Americans out of their wealth. Perhaps the ’stimulus surtax’ will follow close behind.

Is it getting warm yet?

As a casual outsider who has checked out of the nation-state system, I find myself curiously peering inside from time to time wondering about that boiling point… what will it take for people to finally realize the peril that they are in?

It’s clear to me that subscribers to this letter are a cut above. You are a thinker who will keep working to improve your personal lot in life despite the foolish behavior of politicians.  But each of us has a breaking point… a point where we, like Howard Beale in the film Network (clip below), decide that we’re just not going to take it anymore.

What’s your breaking point?  I’d like to know.  Make your voice heard by commenting below.

Greetings– lots of questions this week so I’m going to jump right into it:

MARK NESTMANN INTERVIEW

Thanks for the emails and comments from yesterday’s Nestmann interview, I’ll try to do more things like this… and thanks to Matt for doing such a great job on the interview. The most common question was whether there is a great book like Nestmann’s Lifeboat Strategy specifically for Canadians.

We asked Mark, and he said to check out How to Tax a Billionaire by Doug Smith. Mark also works with several prominent Canadian asset protection lawyers, and you can contact him on his website for referrals.

LITHUANIA

Several people asked about citizenship in Lithuania– My understanding, as it has been explained to me by a government minister, is that if you can prove that you have ancestors who were Lithuanian citizens prior to 1940, the government will award you citizenship with little red tape. A trusted contact here gave me the name of a lawyer who can help– Marius Tamosiunas, office number +370 5 249 7100. PLEASE do not flood him with calls unless you meet the above criteria and have the proof in hand.

ARGENTINA

More questions about Cafayate. Let me disclose fully– I have not purchased a lot there. I will likely buy one as an investment, but I still probably won’t be spending much time in Salta because quite honestly it’s just not my thing– too remote. To be even more clear, I receive no compensation of any sort from Doug or Cafayate regardless of what I say about the project. I’m just giving you my straight opinion– for some people it’s probably paradise. For my taste, the town is too small.

HONDURAS

Great comments and questions. There are certainly as many, if not more Zelaya detractors as there are supporters. He is no angel, notwithstanding the coup. His government has been filled with corruption, rising crime rates, and reduced civil liberties. All in all, the country is probably better off without him.

That being said, there are definitely scenarios whereby US troops could be engaged by Venezuelan forces should Chavez decide to invade Honduras. If a Venezuelan solider would happen to so much as break wind in the general direction of a US troop stationed in Honduras, Obama’s policy wonks will bring overwhelming force to bear as an excuse to tease out a larger conflict and neutralize the Chavez threat.

The likelihood of that scenario playing out at this point? very low. Zelaya will probably just end up making a deal with the coup leaders, and someone will walk away with a thick white envelope in his jacket pocket.

SILVER TRADE

We had a lot of really fantastic comments about this. To briefly explain my own strategy, I should first say that while I am certain inflation will be a menacing force in the long run, deflation will likely persist in the short run. As such, I can see quite a few scenarios for a stronger (or at least stable) dollar, at least through the end of the year. Mark Nestmann discussed this in his interview yesterday.

I mentioned in this week’s missive how I don’t buy the 70:1 gold/silver ratio. And while I can’t possibly determine what the price of silver will be tomorrow, I am absolutely certain that the future price in the next several years will be much higher.

I’m specifically looking to sell long-dated PUT options where I can find liquidity– $10 strike price December 2011 for $1.20-$1.50, for example. This means that, as long as silver is trading above $9 over two years from now, I make money. If I am wrong, I will still happily be a buyer at $9 (my effective price) and take delivery.

Simultaneously I’m also buying CALL options, for example the $15 strike price, December 2011, for around $2.00; if silver is trading above $17 by that time, I make money.

Some of this may sound confusing if you’ve never traded options before… let me know and we can have a more in-depth dialogue if need be. There are a lot of options alert services available– and thanks to those of you who provided some recommendations. I’ve decided that I will sign up for many of the services that you recommended, conduct a full audit of the track records, and publish the results for everyone to see.

In the meantime, aside from the silver trade, I’m investing heavily in some of the pharma picks from the Dr. George Huang’s FDA letter that I mentioned a few weeks ago. I’ve already audited his record and it is really impressive– his options strategy has been spot on and generated a lot of short-term gains.

MISCELLANEOUS

I’ll be reporting from Latvia and Poland next week, then heading to Hungary for awhile. Over the next several weeks I will try to make my way to Geneva, Vienna, and Luxembourg to sit down with some bankers on your behalf. If anyone is in the area, feel free to drop me a line.

On that note, actually, the BEST way to reach me (and to get a response) is to leave a comment on the site… I read every comment, and it is a much better way to grab my attention. If we need to have a private conversation, let me know and I’ll try to find you on email. Bear in mind that I simply cannot respond to everyone (especially as this community grows), but I’m doing my best.

Have a great weekend.

Today I wanted to get down to the business of answering some of your questions from earlier this week:

First of all, I apologize if I failed to make things clear when I started this letter: I am no longer part of Without Borders; Notes from the Field is not affiliated with Casey Research or Without Borders.  Furthermore, Notes is free and not tied to any other subscription that you might have.

LITHUANIA:

I received one question about the passport program– Lithuania has a very straightforward citizenship program as long as your ancestors were born before 1940. You can also marry a Lithuanian, and citizenship is granted after 3-years. My understanding from speaking to the Minister of Justice is that there is little red tape in the program.

ARGENTINA:

A few days ago you asked about the Cafayate (pronounced Cafa-zha-tay) project in Salta province, Argentina.  Doug Casey is involved in the project and he gave me a personal tour of the site last December… it’s absolutely beautiful, and I can definitely see the appeal for many people.

To be clear, most of Argentina’s problems will be localized in Buenos Aires province. Salta is far away, near the Bolivian border, and has an almost separate and distinct culture than the porteno culture of BA that I decried in my original article. Salta is much safer than the capital and I do not expect it to feel the same level of social chaos.

My honest hope (though it may be a pipe dream) is that, if Buenos Aires burns in an economic meltdown, Salta will break away to an independent republic.

FINLAND:

Have I ever been detained or stopped while traveling w/ gold and silver? Yep. It depends on the country, but in most places this is not illegal. The customs officials searched my bag, looked at the gold, and put it right back. They were much more interested in the enormous stack of foreign currency that I was carrying, including the $10 trillion Zimbabwe note.

I would not prescribe a particular amount of gold and silver to travel with because, as I stated, this is not illegal… it would be like suggesting a particular number of bottles of water or DVD movies to travel with.  For the time being, officials do not regard gold/silver as monetary instruments.

If you have any doubt, you can always declare it on Fincen Form 105

PANAMA:

Panama does not have the equivalent of an FDIC; most of the world does not. Does this mean the banks are unsafe? No. It means that they must practice sound banking because they do not have taxpayer money to bail them out.

OTHER:

The biggest question I get is for specific WHO and HOW to get started offshore; I explained last week that I was working on a way to share my contacts with you… this information will be for limited distribution so as not to overburden my network, but it will hopefully solve the ‘WHO’ problem.

In the meantime, to get started on the ‘HOW’, I wholeheartedly recommend that you read Mark Netsmann’s book The Lifeboat Strategy; Mark is a leading asset protection specialist and a trained lawyer… I know Mark and have read his book– it is definitely worth the price if you are serious about saving your ass and your assets.

Argentina is still doomed.

If you don’t know Argentine politics well, I’ll give you a quick history: the country has vast natural resource wealth and was once one of the richest in the world. It has been serially run by a group of incompetents ever since the Perons first came to power after World War II.  After years of military dictatorship, several revolutions,  and a crippling financial crisis, Argentina has never regained its status as a stable, developed nation.

The current president of Argentina is Cristina Fernandez Kirchner, wife of her predecessor Nestor Kirchner.  The couple has been in power since 2003 and has been extraordinarily effective at consolidating power at the federal executive level.  They are among the most anti-market leaders in the world whose policies have continued to waste and squander Argentina’s natural wealth.

This past weekend, Argentines took to the polls (which, by the way, is cumpulsory for Argentine elections).  Similar to the US mid-term elections in 1994 and 2006, the people grew tired of the ruling party and cast them out.  Cristina’s party was soundly defeated– even her husband, a former president, lost his bid for a congressional seat.

While Argentines clearly voiced their dissatisfcation, nothing will change.

The problem with Argentina is not the Kirchners, or even the long history of criminals who ran the country before them.  The problem with Argentina is Argentines.

I have spent a great deal of time there and agree wholeheartedly with Governor Mark Sanford– the women are beautiful and it is full of natural splendor… great place to visit. But I’m worried about the future of Argentina, so with few exceptions, I don’t think it is a great place to live permanently– especially considering the nearby alternatives that I will be discussing in future letters.

While there are certainly plenty of individual exceptions, Argentines as a collective are fatalistic and inefficient. More importantly, though, they are unwilling to take personal responsibility for problems and blame the government for negative outcomes. This is perhaps human nature but is more acute in Argentina, and in Buenos Aires in particular.

Argentines have revolution flowing in their blood; they are intolerant of their politicians and in years past installed a new leader every other Tuesday. They think it nothing to take to the streets and demand resignation, revolution, or just plain ole’ handouts (real change is spare change, after all)… and yet each president was more incompetent than the previous.

Sure, the Argentine government is terrible– but it is the great scapegoat of the Argentine people; rather than take personal responsibility to change their own behavior and improve their own lot, Argentines as a culture will collectively bemoan government policy.  Naturally, the situation never improves because the people never look inward.

What makes a country great, wealthy, and competitive is not related to its government, but to its people.  Despite its communist, centralized government, China prospers because its people are industrious and thrifty. They work hard and save their money.  Argentines don’t come to work when it’s raining outside.

I’m convinced that Argentina is going to experience another revolution, and this will affect mostly Buenos Aires province.  Their economy will likely continue to deteriorate, and I doubt Cristina has the capacity to survive.  Unlike Honduras where the present coup is political in nature, Argentina’s will be economic and likely result in substantial instability in Buenos Aires… remember, these are the people who set the trains on fire last year because they weren’t running on time.

Bottom line, regardless of a change in political parties, I would not invest in Buenos Aires at this time; Argentine bonds have surged in recent days, and I consider this to be ignorant optimism and worthy of a short position.

I’d like to find out from readers who have been to Argentina– what are your thoughts on the government and future instability? Add your comments.