I’m taking a quick break in Miami to see friends and family before heading down south again to dive head first into a large, complicated, and very exciting business dealing… so next week I will be writing to you from Panama once again.

While I am in Panama I plan on putting the finishing touches on the Black Paper that I have mentioned before– this will be a “who’s who” list of banks, brokers, lawyers, agents, developers, etc. that I trust and have done business with in the past, as well as names of crooks who are dishonest in their dealings.

I’m working on this as fast as I can and will let you know when I have it ready to go. I plan on a limited release and may do a pre-reservation, so let me know if you’re interested.

I’ve had a great conversations with Christine Verone this morning (my China insider that you heard from on Wednesday).  The response for her boots on the ground insights was quite strong, so I’ve asked her to write another essay next week describing her take on Asia markets.

Given Christine’s phenomenal investing track record, I think you’ll find it quite insightful.

She also wanted me to emphasize that she is not a blind, overzealous China bull. You see these guys on TV frequently touting China’s uninterrupted economic ascent based on unverifiable ‘official’ government numbers. Most of them have never set foot on the continent.

Despite its promise, China certainly has major problems to deal with– pollution, water shortage, income gap, ethnic tension, intellectual property rights, Kim Jong-Il, too many dollars, and oh yeah, that totalitarian government.

It takes a real understanding of the region to be able to navigate these challenges and recognize the key triggers for investment success; that’s the benefit of having boots on the ground. More to follow.

Lastly for this week, I want to clarify a passage from Monday’s letter about Poland in which I questioned, “how could the Poles be complacent enough to not make preparations for the coming crisis?”

It was 1939. Hitler had already invaded Austria and Czechoslovakia and made no secret of targeting Poland next. With Nazi and Polish forces massed at the border preparing for combat, residents of Krakow were enjoying carefree summer days on the banks of the Vistula River.

Polish military commander Edward Rydz-Śmigły attended an open-air mass in the city, proclaiming of Hitler at the end of the sermon “If anyone thinks we love our Fatherland any less than he loves his Fatherland, then he’s in for a surprise.”

It was as if the German invasion was a foregone conclusion… and yet the citizens remained confident in their government and turned their attention to more pressing matters… like staying cool in the August heat.

Cracovians at leisure, summer 1939. source: Krakow Post

And so I wonder… how could such complacency possibly be achieved? At what temperature does the boiling frog finally jump out of the pot?

My guess is that the locals who found themselves staring down the wrong end of a German Karabiner 98 Kurz bolt action rifle a few months later probably wished that they had taken precautions well in advance by devising their own lifeboat strategy.

I’ve said before– I’m actually quite an optimistic person… grounded in realism, but optimistic. I do not spread unnecessary doom and gloom and believe that the headline “all the planes landed safely today” would be just fine.

That being said, given the level of risk we see around us on a daily basis, it seems like sheer lunacy to not begin taking basic precautions– protecting the family; staying healthy; finding alternate ways of generating income; safeguarding assets; maintaining purchasing power of savings; increasing personal privacy.

These are the critical topics of this letter that I try to stick to on a daily basis.  I’ve mentioned in the past that, in my opinion, the single best quick start book for anyone looking for initial answers is Mark Nestmann’s Lifeboat Strategy.

Once you have a firm grounding, I invite any and all questions to this forum and shall do my best to give you actionable solutions.

Travel mishaps occur from time to time… though the airline completely losing my reservation is a new one for me.

I was all set to leave Europe a few days ago when a rather unfortunate ‘booking oversight’ derailed my plans for spending the weekend in New York City.  In this case, I was ’stuck’ in Poland.

Not to worry– I realized at the airport that, despite having spent over a week here in the past month, I’ve hardly mentioned a word about Poland… so I decided to make the most of my extra time and dig around for some useful information to share.

Warsaw is the country’s largest city, it’s capital, and commercial hub… and it’s about as plain a city as can be. Soviet architectural influence (i.e. concrete shoe boxes) still dominate the cityscape, similar to other major cities that used to be behind the iron curtain like Minsk and Bratislava.

In Warsaw’s case, the city had to be rebuilt from scratch– 85% of it was demolished in World War II as a result of the German invasion in 1939, as well as reprisal for the Warsaw Uprising and Warsaw Ghetto Uprising towards the end of the war.

Frankly, I wouldn’t want to live in Warsaw for any period of time… it lacks beauty and cultural vibrance and is far too overrun with drunken sex tourists looking for red light apartment brothels.

For Poles, however, the city represents an island of stability in otherwise perilous economic waters. The troubles have largely sidestepped Poland due to its large market, production capacity, monetary independence, and domestic consumption.

There was never a wild asset price boom, uncontrolled credit expansion, or dependence on exports to drive growth.  In fact, Poland is widely expected to post positive, albeit infinitesimally small, GDP growth this year.

It shows.

Poles are still working, still investing, and still consuming.  You don’t see the telltale signs of bust anywhere– closed shops, liquidation notices, and endless ‘for sale’ property listings.

For an even deeper perspective, I hopped in the car and drove to Krakow; the journey takes a painful 5-hours across congested side-roads, but the government is in the process of building a high-speed freeway to link the two major cities.

Unlike Warsaw, Krakow wasn’t hit during the war and retains its old-world charm.  Nestled between Carpathian and Tatra mountains, the surrounding landscape consists of rolling hills, green fields, and distant mountain views… very complementary of the architecture.

Krakow’s main city square is alive with bustle. Restaurants were packed and the streets were filled with tourists, both Polish and international… indicative of Poland’s price competitiveness as well as the available disposable income of Poles.

I also noticed something in Krakow that I had not seen in quite some time: job postings. Several multinationals, including Google, have moved to town and are hiring… not huge numbers, but there are jobs available, especially for new college graduates.

This observation is in line with Poland’s official figures which report unemployment at around 8%, lower than the EU average of 9.5%.

Living costs in the area seemed quite reasonable to me at 3 Polish Zloty per dollar– staple grocery costs are 10% to 20% less than in the United States, and even high end consumer electronics like flat screen televisions and laptops are cost competitive with the west.

Moreover, a nice 2 bedroom flat in Krakow can cost less than $1,000 per month… very reasonable.

Overall my impressions of Polish costs make me very bullish on the Zloty, but I will need to do more research before buying. I recognize that the government is coming under some budgetary pressure, though this is in line with nearly every other world government.

I should also mention that I took time to visit the Auschwitz museum, about 70-km from Krakow… it was well worth the extra effort and certainly filled my head with philosophical musings.

Walking around the blocks where untold thousands died at the hands of brainwashed German oppressors, I wondered how does a government instill so much fear that it can turn an ordinary man into a murderous thug?

And 70-years ago to the day, surrounded marauding by German forces on three sides, how could the Poles be complacent enough to not make preparations for the coming crisis?

I wondered… what was their breaking point?

Poland– it’s a beautiful, inexpensive country with a stable economy, gorgeous women, and fantastic food… so what am I doing here exactly?

Looking for citizenship.

The country has been dominated, broken apart, and put back together so many times, Poland actually has multiple nationality laws on the books for former migrants, refugees, and their descendants to reclaim citizenship.  The government recognizes that many Poles were coerced to give up their citizenship, or they fled the country as a victim of circumstance.

The 1962 Nationality Law unequivocally states that citizenship cannot be lost involuntarily… so the government carries on as if millions of Poles between 1920 and 1958 had never left and their progeny had been born as natural citizens of the country.

It’s a fairly straight-forward process, but you have to prove your roots. Notice, I did not say ‘easy’.  Just because your grandfather was Polish or your last name ends in ’ski’ does not mean you will automatically be confirmed.

The first thing you need to do is figure out where your ancestors came from; earlier in its history, this could have included parts of modern day Ukraine, Belarus, Russia, Lithuania, and Poland. The man-made lines on the map aren’t exactly permanent.

The most important thing is that your ancestors were citizens during a time when Poland actually existed as a country… remember, it has been wiped off the map multiple times, so this can be a bit tricky. Fortunately they keep good records.

If your ancestors came from modern-day Poland, you will be able to find the official records with the Wojewoda, or provincial government of where they were born.  Once you have the documents in hand, a consul verifies the evidence and an application is made with the Wojewoda for confirmation of citizenship.

You can do the leg work yourself, but there are legal professionals who specialize in naturalization and can handle the application if you think you have a case.  Leave me a comment if you’re interested and I can point you in the right direction.

Polish language proficiency is not required for citizenship… and quite honestly, it’s not necessary in order to spend much time here.  English prevalence is quite strong among the locals, especially in Warsaw where I sit.  And as European capitals go, Warsaw is probably the cheapest among the developed cities.

For a place as modern as Warsaw, I’ve been amazed at the bevy of four and five star hotels for less than 70 euros/night (about $100). I suggest the Jan III Sobieski, Polonia Palace, or Hotel Rialto for anyone who makes the trip out.  LOT, the national carrier sells the business class seat for about $3,000 from New York, economy for as little as $500.

If you don’t have Polish in your blood and are yearning for another passport, fear not. I have mentioned before in this missive that I’m working on what I believe will be the most comprehensive report ever created on obtaining a second passport.

Most of the things on the internet about second passports (and asset protection for that matter) are garbage. I’m creating a specific, detailed, actionable report for people who are actually serious about doing something.

I’ll be honest though, I’m more than a little conflicted about releasing this thing.  I’ve already had more than enough hate mail flung my way from people accusing me of ‘ruining it’ for the real expats out there.

Unfortunately, they may be right in this case– if too many people see this second passport information, some of the better loopholes could be closed… and that’s not good for anyone.

The best solution I can think of is to keep the price high and limit the release in a finite window of opportunity so that only the most serious people who want to take action will come forward. More on this in the coming weeks, but I’d like to hear your thoughts in the meantime.