June 22, 2010
Oxford, England

In our daily conversations, we talk a lot about planting multiple flags– this is the practice of diversifying sovereign risk in order to protect or asses and our assets.

After all, sovereign risk is the greatest risk we face today as investors, entrepreneurs, professionals, and free individuals. Governments have absolute authority to seize, commandeer, or otherwise control any asset of their choosing, including ourselves, and they can back it up at the point of a gun.

If you have all of your eggs in one basket– i.e. you live, work, invest, own property, run a business, bank, etc. in the country of your citizenship, then you’re risking everything. If you want to do something about it, then you only really have two options:

First, you could go dark… and I mean completely black. There is some merit in this approach, but it’s incredibly tricky to pull off in the long-term.  Going off the grid in 2010, at least in a developed country, requires intense discipline and adaptive creativity.

The second option (my favored approach) is to use the system to your advantage. Play governments against each other by diversifying different aspects of your life across different geographies– plant multiple flags.

As an example, this means structuring your business in one country, banking in another, having official residency in another, having citizenship in another, and investing in another. It might sound complicated on paper, but I assure you in practice, once you get the hang of it, it’s quite simple.

When I write this daily letter, I normally stick to the major areas of planting flags– banking, brokerages, citizenship, residency, property, etc., but when you really sit down and think about it, there are literally innumerable ways of diversifying yourself geographically.

Some people may choose certain jurisdictions for shopping, for example (a country with no VAT, or a state with no sales tax). Others may choose certain countries for dental care (due to the value for price), others for hiring outsourced labor (due to high skills and cheap wages), and others for acquiring pharmaceuticals (due to price and legal differences).

The possibilities are nearly endless, and just about every country has something it can offer.  As I find myself in the UK this week, I thought I would raise this point again by taking you through my own analysis of the country:

Would I establish tax residency here? No. I wouldn’t want to get involved in this country’s slippery slope of a tax net.

Would I store gold here? No. Scotland Yard has already established a trend of raiding private vault facilities and confiscating the contents.

Would I establish electronic assets here? No. The UK has little regard for privacy, and this is one of the most critical elements for electronic assets like an email or web server.  Digital property should be located in a country that respects privacy and won’t bow to a foreign court to lift this veil.

Would I intentionally seek medical or dental treatment here? No. Public hospitals in the UK are substandard, and the private facilities are too expensive compared to Asia and Latin America.

Would I invest here? Yes. But with my eyes wide open and protective measures in place. There are significant risks to investing here, including rising taxes and a depreciating pound. Foreign exchange losses can be mitigated with options and forward contracts.

I’ll have a deeper analysis about British investments in a future letter because it’s an important topic.

Would I spend time here? Yes, definitely. To me, the greatest value of the UK is for planting a flag that I seldom talk about– countries that you go to just because you like to have fun there.  After all, what’s the point of life if it’s all about business, investing, asset protection, and sovereign diversification?

I, for one, derive great pleasure in experiencing the finer things in life, particularly in the course of travel… and there are certain places that I simply just like to be.

For all of its faults, southern England is one of these places for me– specifically London and Oxford.  And right now, it’s on sale. Given all the deep retail discounts, and with the Queen’s pound sterling under $1.50, England is cheap for US tourists and “ridiculously cheap” for Canadians and Aussies.

Call this a ‘fun flag’ or a ‘pleasure flag’ or ‘vacation flag’ or whatever floats your boat… but think about these places where you can get away and do nothing but enjoy life for a little bit.

Lastly– would I bank here? No. There are too many quasi-state owned zombie banks in this country. There is, however, an interesting alternative that I’ve investigated a bit in my time here.

The UK’s famed Lloyds Banking Group has a subsidiary in the Channel Islands called Lloyds TSB Offshore, Ltd.  Lloyds wouldn’t be my first choice– there are better banks out there… but if you’re really looking to open a foreign bank account and are constrained by travel limitations, consider Lloyds TSB Offshore.

I say this because you can apply to open an account online and denominate funds in either US dollars, euro, or British pounds. They’ll even send you a Visa debit card that can be used worldwide to access funds… no need to show up in person.

June 21, 2010
London, UK

While I have been traveling around Latin America and Europe for the last few weeks, there has been one constant in my travels: World Cup football.

I’m not a huge fan of the sport, but as an amateur athlete I appreciate the excitement and spectacle of international competition, particularly one that draws billions of eyeballs. Watching Brazil’s victory in Rio was definitely an amazing experience, as was watching the UK’s draw in London over the weekend.

In case you haven’t seen the games, one of the things that has been so interesting about this particular World Cup is how most of the European teams which usually dominate the FIFA world rankings– Italy, Spain, Portugal, France, UK, Greece, etc.– have really been struggling on the field.

Ironically, these are also the same countries struggling with disastrous balance sheets and bloated entitlement programs.

At the same time, young upstart teams like Paraguay, South Korea, New Zealand, and Uruguay have proven themselves to be extremely effective against these legendary, once-dominant opponents of Old Europe.

I feel like this sports metaphor, which is being consistently played out on the field during the World Cup tournament, represents the changing of the guard that is taking place in global economics and geopolitics– the rise of the developing nation, and the decline of the developed.

If you’d indulge me a bit more leeway with the sports metaphor, one could argue that this tournament’s lackluster teams of old Europe are well-endowed with enormous assets– great players, goodwill, training programs.

Just like governments which rely on the same tax and spend playbook year after year, Europe’s great football teams are being rendered ineffective by sticking to the same old tired tactics of the past.

The more effective teams from developing nations, however, are experimenting with innovative approaches, such as extreme conditioning regimens, or Chile’s unique 3-3-1-3 formation, and even North Korea’s massed defense approach.

Overall, the results are clear, both on and off the field.

Here in London, where the national team has been suffering from anemic performance thus far, the population is simultaneous gripped with a severe economic crisis. With a new political party at the helm, England’s leadership is now tasked with the mission of doing *something* to stem the crisis.

Needless to say, this will unfortunately rely on the old, ineffective playbook of drastically higher taxes. The government has already announced increasing capital gains tax from 18% to 40%, and yet another VAT increase from 17.5% to 20% is also expected.

By comparison, South Korea charges a 0.3% tax on capital gains for small investors, and 11% in other instances.  In Paraguay, the rate is 10%, as is the income tax rate. (in Singapore, UAE, Labuan, and Hong Kong, there is no capital gains tax at all)

Tomorrow, the UK’s new Chancellor of Exchequer, George Osborne, will unveil the kingdom’s “emergency budget,” which should provide more details on the tax increases. The government has been vocal about its intention to curb spending, though most cuts are paltry line items like a $6 million swim program for kids.

How about taking a look at the millions upon millions of government workers who add no value to vital production in the economy? With their bright reflective vests, they’re ubiquitous in England, yet they have less authority, responsibility, and productive value than your average high school hall monitor.

It’s difficult (but possible) to fathom a greater waste of taxpayer money.

I would suggest that for countries like the UK, both their politicians and football coaches should take a few pages from the playbooks smaller, developing countries.

For us, I think this rather interesting sports metaphor highlights the importance of selecting the right jurisdictions to plant multiple flags– focus on cities and countries that have a bright future of strong economic growth, a stable balance sheet, and politicians who don’t belong in prison.

If you do happen to be drawn to a country with less than stellar fundamentals, be very careful about which flags you intend to plant, and ensure that you have properly protected yourself with the right structures if you do decide to invest time and money there.

I’ll talk more about these steps later this week when I examine the UK in more detail.

May 14, 2010
Undisclosed location

I want to start off today by once again thanking you for all the well-wishing emails after my operation this week. I read through a large backlog of email last night, and I was truly humbled by all the positive energy and goodwill out there. Thank you.

With that, I’d like to jump in to this week’s questions:

Phil says, “Simon, I sincerely appreciate the info contained in your letter. I’d like to take your advice: get second citizenship, buy property overseas, store assets outside the US, etc. I’m wondering if you can recommend a ‘how to’ guide with specific instructions for these issues?”

At the moment, there really isn’t one out there that covers the specific ‘how to’ details of getting started with multiple flags. I try to cover these issues on a daily basis, but as our conversations cover so many different topics an abbreviated space, I know we could go much deeper.

Right now, I’m working with a very capable partner to draft a multiple flags instructional overview. I suspect it will be exactly what you’re looking for. We should be finished in a few weeks, so stay tuned for more information.

Maldek asks, “Simon, how do you think the Euro/dollar exchange rate will change if Germany leaves the eurozone and introduces its Deutschmark (DM) again?”

Rumors are already flying that both France and Germany have separately threatened to bail out of the eurozone. It will happen eventually– the single currency is absolutely doomed, just as I believe the integrity of the United States are doomed in the long run.

A German factory worker would no sooner pay for a Greek hairdresser’s early retirement than an overtaxed California entrepreneur would pay for a Rhode Island school teacher’s pension.

Yet these are the kinds of mandates that politicians are forcing on people. Voters may act like sheep when their civil liberties come under attack… but put your hand in their wallets and they get militant.

The real irony is that breaking apart the eurozone is a popular idea in Europe, so you can be sure that the dissolution is inevitable.

If the relatively healthier economies in Europe actually did break away– Germany, Luxembourg, Slovakia (yes I’m serious), Netherlands, Austria, Belgium– the resulting economic union would certainly be among the healthiest, most balanced in the western world.

In other words, today’s euro would become worthless, but the future euro would be quite valuable and respected by investors. The major issue is whether the new currency would be large enough to challenge the dollar’s dominance. We won’t know the answer until they piece the deal together.

William writes, “Simon, I bought Terry Coxon’s book “Unleash your IRA,” and it’s probably the best thing I’ve bought this year. I’m amazed at everything I can do with my retirement funds, including buying gold bullion and foreign property, tax free. Is this a good way to plant another flag offshore?”

Absolutely. Terry is one of the most knowledgeable people I have ever known about all matters related to money, and the Open Opportunity IRA structure he talks about in his book is one of the biggest no-brainers I see out there right now.

Why? A couple of reasons.

First, the US government has its targets set very squarely on retirement funds. There are trillions of dollars of savings that politicians could easily regulate.

For example, do-gooders in the Congress could whip up a new law tomorrow requiring that a percentage of managed retirement funds be invested in US Treasuries… you know, because they’re so secure.

Through Open Opportunity IRA structure that Terry describes in his book, you ensure that no one can confiscate your hard earned savings.

More importantly, though, you can take ordinary returns and make them extraordinary by planting a retirement savings flag overseas.

Imagine that you buy an undervalued property in Colombia. The property is selling for $100,000 and yields about $1,500 per month in net rental income.

Over the years, as Colombia’s economy continues to perform strongly, the property appreciates substantially in value. The Colombian peso outperforms the US dollar. And the rental income rings the register month after month with the reliability of a Swiss train. Not a bad deal, right?

Now let’s assume that you bought the property with your retirement funds through an Open Opportunity IRA. Not only do you receive the rental income, the property appreciation, and the currency appreciation, but you get to take it all tax-free because your IRA owns the property.

I could cite you a million more examples, but frankly Terry’s book does a better job. Bottom line, this is one of the best ways to plant and overseas return and make lot more money at the same time.

Finally, Libero asks, “Simon- you mentioned that Italy has a reciprocity agreement with Panama. I just spent about 2 hours searching and can’t find anything. Can you provide more information?”

Sure. I’m not surprised. Google is the Black Hole of accurate information, and most of the people who write about this sort of thing are just armchair expats who parrot others’ work without putting boots on the ground.

I can tell you with 100% certainty that Panama has a bilateral agreement signed with Italy that provides instant residency for nationals of either country to live in the other. In other words, Panamanians can acquire Italian residency, and Italians can acquire Panamanian residency.

How do you do this? If you’re an Italian citizen, head to Panama and talk to a local **reliable** immigration lawyer. If you need a referral, drop us a line and my assistant will get you in touch with someone. I don’t like to publish these things for Google to index.

May 12, 2010
Undisclosed Location

First of all, I really want to thank all the well-wishers who were kind enough to write me and wish me luck on my operation yesterday. Everything went off without a hitch, and I’m already feeling much better.

I will unfortunately need to stay in place for a few weeks while I recover and have a few follow-up visits, but I expect to get airborne again quite soon.

To be honest with you, the place I’d love to be the most right now is Greece. I think history is unfolding right in front of us, and I really want to see it with my boots on the ground.

I thought it was absolutely amazing when European leaders came to the table this week with almost $1 trillion to defend the euro against the market’s siege. Yet, by the end of the day after the initial euphoria had worn off, Europe’s support didn’t register so much as blip in the euro’s strength.

Specifically, after the announcement of the trillion dollar support package, the euro finally closed Monday afternoon at $1.27. Prior to the announcement before the weekend, the euro closed Friday at… $1.27. Not exactly much of a difference.

In other words, the market essentially laughed off the government’s trillion dollar pledge of support. Why? A few reasons-

First, no one really believes the European support truly exists, especially not in that magnitude;

Second, even if it did, investors now finally realize that these politicians are simply playing with their own worthless monopoly money;

Third, and most importantly, anyone with two brain cells to rub together recognizes that Europe’s economic woes cannot be contained with more paper money… and now the problem just became $1 trillion worse.

Battling back from an economic crisis requires hard work, savings, and minimal disruption from the government. There’s no magic pill, entitlement program, or paper money bomb that will suddenly make things better.

Instead, governments should be curtailing social benefits that encourage people to be lazy, while simultaneously stripping taxes to the bare bones in order to give entrepreneurs and investors the proper motivation to work hard, take risks, and hire employees.

These things are not happening, nor will they ever happen in the foreseeable future. And so, backed by Europe’s trillion dollar pledge, Greece will likely go back to business as usual… spending money that it doesn’t have, and making its problems exponentially worse.

Last summer, when I was in Europe, I wrote a short piece about the euro. At the time, I explained why it was overvalued (at around $1.43 back then) and that its fair market value should be in the range of $1.18 to $1.25 to achieve similar parity as the US dollar.

In the past, investors were desperate to dump their dollars, and the euro seemed like the most viable alternative. Investors paid a premium for the euro, bidding the price well beyond its fair market value to as much as $1.60.

Today, the euro is once again trading near its fair market value range that I estimated at $1.18 to $1.25. This is because the market no longer views the euro as a viable alternative to the dollar, hence it is not worth paying a substantial premium to fair market value.

Remember, due to the size of their respective bond markets and relative lack of capital controls, there are only three currencies in the world that have the capacity to absorb large institutional capital flows– the dollar, the yen, and the euro.

If you’re a small investor with a few million dollars, you can park that cash just about anywhere without affecting the exchange rate.

But if you’re a large institution with billions of dollars, only the dollar, yen, and euro can consistently absorb huge inflows/outflows of capital without drastically affecting the exchange rate.

For now, those capital flows are moving out of the euro and into the dollar. The reasons behind the ‘europremium’ are gone, so the purchasing power of the two currencies should be roughly the same.

As such, I would be uncomfortable having a short euro/long dollar position in this range unless there were a very clear signal that the euro’s collapse is imminent.

Since the PIGS have a trillion pieces of paper to burn through for the time being, I expect this won’t happen for some time.

Additionally, for the time being, I’m happy to maintain my short euro/long gold position (XAUEUR) as I continue to believe that institutional funds are starting to shun government bonds in favor of gold. This position has returned us 30% since I first mentioned it a few months ago.

March 12, 2010
Pattaya, Thailand

Greetings once again from the land of smiles.

First of all, I really appreciate all the responses after yesterday’s letter in which I announced that I will be speaking at the upcoming Casey Research Crisis and Opportunity Summit. I’m really looking forward to meeting with so many of you in Las Vegas.

For some reason, a few subscribers had difficulty with the link that gives more information about the event, so I want to re-post it here in case you’d like to join us:

http://www.caseyresearch.com/crpmkt/crpSolo.php?id=181

And with that, let’s move on to this week’s questions:

Stephen asks, “Simon – I don’t recall you mentioning the Seychelles as a potential offshore banking location? Any reasons not to incorporate there and/or open a bank account?”

Seychelles has a reasonably developed financial infrastructure and is a decent choice for offshore merchant processing… but I find it to be expensive to set up a company, and the due diligence requirements are fairly strict.

More importantly, though, I am generally mistrustful of very small countries that rely almost completely on their offshore industries. If the government has a string of bad years, they won’t think twice about imposing new taxes and fees on all the entities incorporated there.

Russ asks, “Simon, I know you’re busy, but I have a quick question regarding GoldMoney.com.  Is this account something that must be reported to the IRS as a foreign financial account?”

That’s a great question… a lot of people have asked it, and the bottom line is that there is no clear guidance one way or the other.

On one hand, GoldMoney should not be regarded as a financial account because it exists outside of the banking system and deals strictly with precious metals, which are not regarded by the government as a monetary instrument.

On the other hand, the service is clearly designed to be a banking substitute, and as all administrative and storage facilities are overseas, it certainly could qualify.

Jim Turk, the founder of GoldMoney.com, is one of the people who thinks that it does not qualify as a foreign financial account. Your best bet is to talk to your accountant and decide how you want to proceed.

Robert asks, “My father is Italian and based on my lineage, I am entitled to Italian citizenship.  I have already done most of the leg work, aside from getting the required apostilles, but I have been hesitant to complete the process as I live and work here in the good ‘ole USA.  In your expertise, would you find this to be a good option for a second passport?”

Western European passports are extremely valuable for most people– they entitle the citizen to live and work anywhere in the EU, and they’re fantastic travel documents, even better than a US or Canadian passport.

With any second passport, though, there are a few things that you really need to watch out for:

First, military conscription is a very real issue in many countries, including Italy. I believe the maximum draft age in Italy is 25, which means that anyone who obtains Italian citizenship between the ages of 18 and 25 must serve briefly in the military.

Second, you should also watch out for tax consequences. At the moment, Italy does not tax worldwide income, but as the economic situation there continues to deteriorate, it is entirely possible that the Italian government may start taxing its expats.

Christina asks, “Simon you’ve written before about the marquee international hospitals in Thailand like Bumrungrad International. Do you have any experience with ‘tier 2′ hospitals? Is there a major step down in quality?

I recently had the pleasure of carting myself off to the emergency room here in Pattaya. I’ve been to the ER in many countries, including in the United States, and as I think anyone could attest, you spend more time waiting around the ER than being treated.

Here at Pattaya International Hospital, though, I was literally being treated within -seconds- of my arrival. As soon as I showed up, I was met in the parking lot by two nurses who took me straight to a bed in the back where they triaged me.

The doctor came within 5 minutes, and he spoke flawless English, having studied in Canada.  To me, this speed is a major differentiator in quality and one of the reasons I routinely tell people that, in case I get sick, I really hope that I’m in a country like Thailand.

That’s it for this week! Thanks for bearing with me while I recover.

March 10, 2010
Pattaya, Thailand

Yesterday I apparently declared a premature end to major combat operations against the virus that has invaded my body.  Maybe it was just the celebratory Mexican food I ate last night to commemorate the end of my 4-day sickness, but I now seem to be experiencing my own W-shaped recovery.

Always the optimist, though, I’m actually grateful for a few things; namely, I’ve been too consumed with the rugby match being played inside my cranium to pay much attention to the most recent socialist musings of European leaders– something that would ordinarily have me spitting fire at the magnitude of their arrogance.

Most glaringly, Greek Prime Minister George Papandreou has been on a bicontinental tour seeking political support to eliminate some forms of derivatives trading… all with the goal of preventing “unprincipled speculators” from making money by betting on a Greek default.

Rather than misdirecting his criticism at speculators, though, Papandreou should look no further than the nearest mirror to levy criticism.  As a legendary Greek political family, three different Papandreous have spent a combined 10-years as Prime Minister, so there has been ample opportunity to get spending under control.

To lay blame at “unprincipled speculators” as a chief cause of the Greek crisis is thus completely ignorant and hypocritical.  Not to mention, Papandreou should be courting speculators to buy his country’s debt, not vilifying them.

His biggest ally in Europe right now is German Chancellor Angela Merkel. As head of the continent’s largest economy, she is completely on board with the idea of banning credit default swaps (CDS) for the sake of speculation.

A CDS contract for sovereign debt is a bit like an insurance policy designed to protect the downside risk of a bondholder in case the country defaults. As you could imagine, the price of the CDS contract rises and falls based on the creditworthiness of the bond issuer.

As an example, an investor who owns a lot of Greek debt may want to enter into a CDS contract so that he will receive a payout if Greece defaults. As part of the deal he makes payments (like an insurance premium) to the CDS counterparty… who is… guess what? A speculator!

Without speculation, there would be no counterparty on the other end of the deal, and without these credit default swap insurance policies, no one would be willing to buy Greek debt because the risk would be too high.

Meanwhile, in the opposite corner of Europe, UK Prime Minister Gordon Brown gave a rather frantic speech today as he struggles to stay relevant in the upcoming election.

For the duration of his remarks, Brown defended his response to the financial crisis, indicating that the borrowing and printing of unprecedented volumes of money were the only sensible things to do given the situation, and insisting that he is the right man to lead his country through the recovery.

When you look at the data, though, despite all the money he has been borrowing, printing, and spending, it doesn’t seem to be doing the UK economy much good.

Ah, nevermind those “conflicting statistics,” Brown said. And as for the UK’s AAA credit rating, which is under serious scrutiny due to the country’s significant debt and deficit, Brown insists that his country will not be downgraded.

How does he know? Apparently his gut told him. Or maybe his cat. Because he sure as hell didn’t ask Fitch, one of the groups responsible for the UK’s ratings.

Ironically, Fitch’s head of sovereign ratings recently said: “Britain had seen the most rapid rise in the ratio of public debt to gross domestic product (GDP) of any AAA-rated country. . . Why the UK thinks it has more time than other countries [before being downgraded], we’re not sure.”

Like most career politicians, Brown is completely clueless, yet concerned only about being reelected.  This is truly sickening, but unfortunately all too common.

So what are the investment implications of Gordon Brown continuing to ravage his economy, and Merkel handicapping European market liquidity?

For starters, I believe this will result in capital flight.  Of the major currencies in the world that can actually absorb huge capital flows, the dollar is, believe it or not, the least ugly one at the moment, so there will likely be some continued dollar strength against the pound and euro.

Not to mention, a stronger dollar would be most welcome by Europe’s exporters.

As the dollar is, however, fundamentally weak, I would expect the European currencies to post an even larger decline against the strongest Asia-Pacific currencies, as well as precious metals (a position I first recommended in December).

Lastly, I don’t think that any of this news is good news for European equities, and I personally plan on taking a large short position in those markets with some protective options.

To be clear, I will make a lot of money on these investments if Europe continues down this path of destruction… and I suppose that makes me an “unprincipled speculator” too.

Burgers make better economic indicators than official statistics ever could.

As I travel, I typically perform an informal price study of my own basket of consumer goods– a loaf of bread, a pack of cigarettes, a liter of petrol, and a handful of… non-family friendly wares.

This is the type of information that is most valuable for me because, everything else equal, goods of similar quality should cost the same around the world.

Unfortunately, Heisenberg was correct when he postulated that I am not capable of being in multiple places at exactly the same time… which is why I get excited whenever the Economist releases a new iteration of its Big Mac Index.

The Big Mac Index compares worldwide prices, converted into dollars, of the McDonald’s signature sandwich.  It is an excellent, though certainly not conclusive, indicator of whether a nation’s currency is undervalued or overvalued.

The most recent release from July 16th confirms absolutely what I am seeing on the ground here in Europe: the Eurozone is seriously overvalued…by roughly 30% according to the index.

In other words, the burger will set you back $4.62 based on the current euro/dollar exchange rate, 30% more than the $3.57 paid in the US.

This would suggest, in theory, that the euro should fall from $1.42 to $1.08 in order to achieve parity with the dollar’s purchasing power.

Admittedly, there are some flaws in the index.

Europe is, and always has been, more expensive than the United States– taxes, regulation, and employer contributions are out of control… though I suspect the United States will catch up shortly.  These obligations drive up natural price equilibrium and pollute purchasing power parity.

My own experiences suggest that government influence adds 10% to prices in Europe, meaning that the euro’s range should be between $1.18 to $1.25.  At its present valuation, the euro is terribly overpriced.

More on this later.

Right now I am in Budapest, one of my favorite cities in the world… Budapest has an amazing mix of culture, beauty, and elegance, with just a hint of sordidness so that it’s not too stuffy. Not to mention it’s every bit as nice as Paris at a significant discount.

I was last here in December when the Hungarian forint was trading at 230 per US dollar.  At the time, Budapest was the cheapest ‘nice’ city in the world… this was based on an artificially low, panic-induced exchange rate that I knew couldn’t last.

It didn’t.

Despite being on the brink of economic collapse, Hungary’s forint has gained to 195 per US dollar, an 18% increase; that, plus a small dose of inflation, has reduced Budapest’s price appeal for dollar consumers and investors.  Prices are still reasonable, but certainly not ‘cheap’.

In fact, I would say that in terms of cost of living competitiveness, the ship has sailed for the entire European Union, at least for now.  There are certainly a few exceptions– parts of Poland, Bulgaria, and Lithuania to a degree.

Fortunately, I expect this to change in the future. The entire continent is anchored on the euro, and that currency is dead man walking… for all of the problems in the United States absolutely pale in comparison to old Europe’s economic and fiscal woes.

Italy, Greece, and Spain in particular are in such financial turmoil, their only solution is the oldie but goodie political tactic of inflating the currency by printing more of it. Barrack Obama is giving a clinic as we speak.

In order for these countries to have full monetary flexibility, they would have to break apart from the Eurozone. The resulting loss of confidence would send the currency spiraling into a historical footnote.

Even monetary disruptions in countries that have pegged their currencies, but not yet fully adopted the euro (… Latvia, for example) have the power to shake confidence in the unified currency.

The likelihood of just one of these events occurring (Italy or Greece dropping the euro, Latvia devaluing, etc.) is effectively 100%– and this is low hanging fruit in my book.

I have an idea to safely profit from the euro’s demise, but I would like to hear from you first, as always… especially if you have an alternative assessment on the euro’s future.

In the meantime, I believe that Asia and Latin America currently present the best cost of living value, and I will be focusing on these regions in future missives.