June 11, 2010
Santiago, Chile

As I mentioned in yesterday’s subscribers-only letter, I’ve been to Chile numerous times, and I like it more each time I’m here. For this trip, which is unfortunately short, I wanted to survey the countryside to see the extent of the earthquake damage.

It’s easy to have already forgotten February’s 8.8 earthquake in Chile, roughly 500x stronger than Haiti’s.  That’s because there was scant media coverage, limited outpouring of international support, and no celebrity telethon.

While most of the world was fixated on Haiti, Chile got down to the business of picking itself up, dusting itself off, and putting itself back together… mostly by itself.

As I discussed yesterday, I think the manner in which Chileans got back to work and started functioning normally again is a real testament to how advanced and civilized this place is.  I’m absolutely convinced that the country has a very bright future.

I’ll be in Brazil later this weekend, taking in the World Cup games with some local friends and sorting out some immigration issues that I hope to be able to tell you about soon.

For now, let’s move on to this week’s questions.

First, Pat asks, “Simon, I am very interested in using a law firm outside US to start the process of internationalizing myself. I’ve run across several firms online that provide such services, but I’m curious to know whether they are legitimate.”

I’ve worked with a lot of these firms over the years, mostly because I wanted to test their integrity and competency. Some are certainly legitimate, while others are crooks. But here’s the honest truth about the whole thing-

Generally, when dealing with offshore service providers, whether they be lawyers, real estate agents, etc., the firms which come up in the top listings in Google are competent at search engine optimization, but little else.

They specialize in factory-style solutions, churning out cookie-cutter products and services that only scratch the surface of your situation.

The best offshore service providers out there keep a low profile and don’t really advertise, especially in mainstream venues. To get in the door, you have to know someone, and do a lot of homework on the ground. I’ve personally burned through dozens of offshore lawyers alone, just to be able to find the gems.

The last thing you should understand is that most of the law firms you’ll work with can’t provide the comprehensive services that you’re looking for. An attorney may be able to build a trust, but doesn’t know anything about foreign property.

Similarly, a foreign real estate agent may be able to find you a great property, but doesn’t know anything about second citizenship… and a passport facilitator doesn’t know anything about where to store your gold overseas.  And none of them understands the tax implications in your home country.

I’m currently working on a solution to this problem by pulling together several of my global contacts to provide comprehensive advisory services. This would be a single group that can give actionable advice across all areas of internationalization– property, banking, citizenship, etc. More to follow.

Next, Richard asks, “What do you think of Nevis versus Panama for incorporation?”

The most popular corporate entities of both jurisdictions offer similar benefits– neither jurisdiction taxes domestic corporations on foreign income, neither requires annual reporting, and both offer bearer share entities.

There are, however, substantial differences that you should be aware of– Nevis is a British common law jurisdiction. For most foreigners, this is much more comforting than Panama’s civil law system should you ever get dragged into court.

Also, US taxpayers should know that Panama is on the IRS ‘per se’ corporation list; Nevis is not. This means that a Panamanian SA will always be considered a corporation for US tax purposes.

Consequently, if you operate a Panamanian company that has US tax liability, the IRS will tax both the corporation and shareholders on profits. A Nevis company can elect to be taxed as a partnership, eliminating the double taxation.

If the company has no US tax liability, however, then this difference is of little significance.

Next, Barry writes, “Simon- regarding the social housing program you discussed in Panama, I’m concerned that the government will create artificial demand for housing and spur a bubble, similar to what happened in the US. Thoughts?”

You make an excellent point about governments’ ability to create bubbles. But the hard numbers in Panama make a very compelling case for supply and demand– quite simply, there are roughly 50,000 housing units needed for lower/middle class Panamanians.

Most banks and local developers are happy to ignore this market and focus on overpriced gringo projects. As such, the government is providing incentives to help close the gap.

Several years from now, there may be a bubble in this segment… but for now, I think Panama social housing is one of the strongest real estate opportunities in the western hemisphere.

To learn more, the best person to speak to about it is Ulrich Schwark, a German real estate professional in Panama who develops these properties. You can contact him here.

Lastly, I need to update you about the proposed tax changes in Uruguay. A few weeks ago, the Uruguayan government began discussing new legislation that would tax residents on their foreign assets and income– clearly a negative for anyone thinking about establishing Uruguayan residency.

The government has since clarified that it only intends to tax citizens, not residents. This still seems like a negative, in my opinion, since many expats want to move to Uruguay in order to obtain a second passport.

For now, the changes are just propositions and have not been ratified… so we can bring up the topic again once the new tax code is finalized.

May 28, 2010
Chicago, IL, USA

Chicago is a really beautiful city– one of my favorites in the United States, actually, along with Austin, TX and Sheridan, WY. But while I enjoy being back in the US as a tourist from time to time, I’m itching to get out of here.

The travel I’ve just scheduled is a bit insane. Next week, I’m traveling to New York for an Atlas 400 event. Immediately after, I head to Panama… then Chile, Brazil, Madrid, London, Norway, Lithuania, Lebanon, South Africa, Zimbabwe, Kenya, India, Pakistan… and more.

I’m looking forward to the travel and meeting up with old friends on the road. Most of all, I’m looking forward to bringing you even more boots on the ground insights, especially as we gear up for our new premium service.

More to follow on this upcoming trip soon. For now, let’s jump into this week’s questions.

First, Gene asks, “Simon, I do alright, but the majority of my money is tied up in retirement savings. I’m afraid of what’s happening in the stock market right now, and I’m thinking about buying gold instead. Do you think that gold is a good buy at this price, and can I do this with my IRA?”

Great question. I mentioned a few weeks ago that it’s really difficult to ‘value’ gold as an investment speculation. Unlike a company whose balance sheet and management can be probed, or real estate that generates income and agricultural yield, it’s impossible to determine the fair price for gold.

As a speculation, I have a tough time chasing anything that has enjoyed a huge run-up, though I do believe that gold is seeing some breakaway fundamental changes right now in the way that investors are perceiving risk.

That being said, as a means to hold and protect your savings, gold probably makes a lot more sense, regardless of the price level. I hold physical gold, and I don’t really care what the spot price is. Why? Because it holds its value in relation to ’stuff’ irrespective of the changes in paper currency.

This, after all, is the true nature of savings.

With your retirement savings, you can buy gold (and silver) through what my friend Terry Coxon calls an “Open Opportunity IRA”. This is a self-directed structure that puts you back in control of your own money and allows you to invest in just about anything, including most classes of bullion.

For US taxpayers, this Open Opportunity IRA is really a no-brainer for anyone with more than a few bucks in his retirement account… and if you haven’t already, I’d encourage you to give Terry Coxon’s book a try. It’s called Unleash your IRA, and he tells you exactly how to do it yourself.

For Canadians, the tax code now allows RRSP-ownership of certain gold coins. They must be of at least 995 purity and produced by the Royal Canadian Mint.

For Brits, the ISA retirement structure leaves few options for holding bullion.

Next, in response to my article about Uruguay no longer being a tax-free residency jurisdiction, ‘lf’ commented, “Unless Simon will come up with an idea how to get Martian passports, I doubt that a viable option really exists.”

I find this perspective troubling.

Countries change from time to time. It’s happened in the US, it’s happening now in China, it’s happened in Europe. Uruguay is no exception– they went from being a tax haven to jumping in bed with the OECD.

But to say that there are no viable options out there is simply an erroneous, defeatist attitude. Singapore is a great example– there are plenty of jobs and entrepreneurial opportunities available, the residency process is cheap and transparent, and you can become a citizen after 2 years.

I could cite several of other examples… but the larger point is that nothing is going to stay the same forever. You, your country, the environment, the society around you– all evolve and change over time.

The nice thing is that we can generally see major political changes coming years in advance. That gives us time to make preparations. Right now, you probably have a strong sense of the negative changes coming to the Western world, and that’s why we keep having these conversations.

Bob asks, “Simon, I was a bit confused about your article concerning Canadian citizenship. It seems more attractive to be a non-resident Canadian citizen. Is it possible to apply for this status directly without ever being a resident?”

No. You have to actually be physically present in Canada for 3 years out of a 4 year period. Then, and only then, can you apply for naturalization. If you take advantage of the offshore trust investor program, though, you can at least squeak by with a minimal tax burden.

Lastly, Jennifer asks, “Hi Simon. You haven’t mentioned anything about your sustainable community project in a while. Any update?”

Here’s the bottom line: I absolutely will develop a cost-effective, sustainable, offshore community where the amenities focus more on organic agriculture and livestock instead of golf courses and water parks.

Considering that I’m heavily involved in 3 operating businesses, multiple other investments, and I still write this letter each day, I simply don’t have the bandwidth to give a real estate development my 100% effort at this time… and I refuse to attempt something that I can’t give 100% to.

Given the upcoming offshore conference that we’re planning, as well as the pending launch of a premium service, I suspect it will be at least another 9-12 months before I’m ready to make that sort of commitment.

I appreciate all the emails expressing interest in the project, and I want to be clear that once I can allocate the time, it will be a top priority.

May 27, 2010
Chicago, IL, USA

Uruguay is one of the countries that generally receives a lot of praise and positive commentary in the expatriate blogosphere. It’s often referred to as the “Switzerland of South America,” or compared directly to Paris… probably by people who have been to neither Switzerland nor Paris.

The truth is that Uruguay is a very pleasant country in many respects. It’s relatively clean, quiet, safe, and not very corrupt. Punta del Este, more specifically, is a great town with a hip and sometimes chaotic nightlife for a few months out of the year.

Other parts of the country can leave a bit to be desired… the poverty, blight, and disrepair are more noticeable, and a ridiculous array of taxes and high import duties ensures that only the wealthiest residents have access non-basic goods.

More importantly, though, Uruguay’s reputation as a tax haven and offshore financial center is completely undeserved. I’ve been saying this for a while, most recently on February 26th of this year. It appears that the government is now trying to put an end to the argument altogether.

It started in 2007 when the government imposed a personal income tax. Over the last few years, the country has laid down for the OECD, reducing its attractiveness as an offshore banking center.

Now, Uruguay’s left-leaning government, led by President Jose Mujica, recently unveiled draft legislation to tax all residents on their worldwide income, as well as a wealth tax on the $8 billion worth of assets that Uruguayan residents hold outside of the country.

As the vast majority of Uruguayans have no income or assets outside of the country, the new tax code changes only affect wealthy locals and foreign residents… a small minority in this country of 3 million people.

While the Uruguayan culture is typically not one of blood-sucking socialism at all costs, the enormous demographic gap between those with assets overseas (a small minority) and those without (the majority) suggests that the bill will likely become law.

In my book, this knocks Uruguay off the list of countries where someone should live as a declared resident. It may still be a great place to spend a lot of time, though it would be much more advantageous to do this as a perpetual tourist.

Specifically, one could establish permanent residence in a place like Panama or the Bahamas, then live in Uruguay as a tourist. US, Canadian, and EU citizens are allowed to stay in the country for 90-days at a time; once the 90-days are up, you can hop a 1-hour flight to Buenos Aires, spend the weekend, and fly back to Uruguay.

It’s unclear right now whether Uruguay’s new measures create a tax liability on the worldwide income of non-resident Uruguayan citizens; if not, an Uruguayan passport may still be a reasonable document to acquire… as long as the applicant doesn’t plan on living in the country.

For example, one could travel to Uruguay, establish permanent residence, pay the taxes for 3-years, acquire Uruguayan citizenship, then leave the country for good.

Overall though, I think there are much better options– Paraguay, Brazil, Chile, and even Belgium.

More to follow.

March 3, 2010
Pattaya, Thailand

One of reasons that a lot of people are hesitant about making a move overseas is because they’re concerned about being isolated. The world can be a cruel place, especially to newbies.

Sure there are the nomads out there who want to be left alone with their little slice of paradise in the middle of nowhere… but most people crave some human interaction from time to time, especially from like-minded souls.

I’m one of those people. I enjoy the company of interesting, like-minded, and well-rounded individuals.  This is the chief reason that I’ve encouraged kindred readers to join us in the private Atlas 400 group, whose next gathering is coming up next month in Panama. I’ll be there.

On the subject of social interaction, I think Panama is one of the easier places in the world to meet people, both foreign and local. Despite Panama being a Spanish speaking country, the English language is absolutely pervasive, particularly in Panama City and Boquete.

It’s easy to meet anyone, and with the exception of a handful of elitist gringos who think too highly of themselves for having lived in the country for so long, most people are actually quite friendly and welcoming.

As a rule of thumb, the more ‘international’ a city is on a per-capita basis, the easier it will be to meet like-minded, English-speaking expats who are at your level.  Panama City has about 50,000 expats and roughly 1 million locals.  Boquete has a population of about 20,000 with at least 5,000 expats.

By contrast, as city like Shanghai has 300,000 expats and 17 million Chinese people, most of whom do not speak English.  You get the idea.

I’ve honestly found both Phuket and Pattaya, Thailand, which are fairly small cities of about 100,000 each, to be among the most international cities in the world on a per-capita basis.

Here in Pattaya, for example, I have gotten to know people from 6-continents– a Russian movie producer, a French investment banker, a Norwegian surgeon, Canadian entrepreneurs, a retired Australian footballer, an Indonesian factory owner, Yemeni medical tourists, Sudanese vagabonds, and a lovely topless sunbather from Peru.

In fact, Pattaya is the only place in the world that I have been to where on a single block you can see a dry cleaner’s sign in Arabic, a restaurant shingle in German, a real estate billboard in Russian, a newspaper kiosk in Thai, a travel agency in Mandarin Chinese, and a Go-Go bar promotion in English. It’s really amazing.

Just recently I was having lunch in an Arabic restaurant owned and operated by former Iraqi soldiers of the elite Republican Guard. When I looked around and saw Russians, Europeans, Africans, Arabs, and a handful of Jewish tourists eating large meze plates, I thought that I must have stumbled upon the center of the universe… or some strange version of MLK’s dream.

In these sorts of ultra-international locales, breaking the ice is as simple as asking the question, “where are you from?” Be prepared for long answers.

Other places that you may want to consider are Singapore, Hong Kong, Qatar, Capetown, Dubai (though it’s a bit pretentious), Georgetown (Malaysia), Punta del Este (Uruguay), Hanoi (Vietnam), Colima (Mexico), Medellin (Colombia), Cuenca (Ecuador), and just about any mid-sized city in Brazil (Natal, Florianópolis).

February 26, 2010
Bangkok, Thailand

It’s “Judgment Day” in Thailand. I wrote about this on Monday– a Thai high court will rule today on the disposition of ousted former PM Thaksin Shinawatra’s frozen assets valued at several billion dollars.

According to the mainstream media, the entire country is supposed to erupt in chaotic and violent protests today. Even BloombergTV, which I normally respect, has been running sensationalized stock footage of fires, vandalism, and Thai soldiers shooting semi-automatic weapons in the street.

Without doubt, there will certainly be renewed political turmoil in time… this happens in Thailand about every other Thursday, and they present great buying opportunities. But the reality of the situation on the ground here is anything but chaos. Thais are going on about their everyday business, and today is like any other day.

It just goes to show how unreliable a lot of information out there can be.

On to the questions for this week–

Axel and Daniela ask: “Simon, what do you know of the Uruguayan economy and financial system– how much is the peso pegged to the dollar/dependent on it? Are there any problems owning/buying/selling gold?”

Uruguay has a small economy that is highly dependent on foreign trade for most consumer and industrial goods. The country has some level of agricultural independence, but generally has to import just about everything else, from hair spray to televisions to refined fossil fuels.

Its largest trading partner by far is Brazil, and in the long run, the Uruguayan peso’s performance will more closely match that of the Brazilian real, not the US dollar.

There are a couple of unfortunate things about Uruguay, though– first, they tax the hell out of anything deemed a ‘luxury good,’ which is usually most imports that are not everyday items. Cars, consumer electronics, shoes, etc. cost two to three times as much as you would pay in North America.

Second, they stupidly imposed an income tax recently that essentially eliminated the country as a reasonable financial center.

Third, the Uruguayan government does force you to declare gold upon entering the country, and any sizeable amount will be taxed.

Jein asks: “Simon, I’ve been considering the Swiss National Bank’s move to sell Swiss francs recently against the dollar and yen. Is this a hedging technique to get ahead of the markets, or do the Swiss see the slowing of US M2 money supply endangering equity markets and causing a carry unwind?”

Switzerland has repeatedly demonstrated that it will intervene in the currency markets to prevent a rapid appreciation of the franc vs. the euro; given the euro’s recent fall against the dollar and yen, I think the SNB is selling francs as a hedge to offset the rapidly declining euro.

I’ve recently gone long the euro against the franc because I expect the SNB will continue to intervene and offset the franc’s rise against the euro. This should cause a further decline in the value of the franc against the dollar.

Ellen asks: “Simon, if one is eligible for a Polish passport, which is an EU country, doesn’t that mean the person is automatically eligible for another EU passport, i.e. s/he would automatically be eligible for French or Italian citizenship?”

No. Citizenship does not transfer across the EU, only residency. In other words, as long as the EU/Schengen area continues to exist, a Polish citizen has the right to live and work anywhere in the European Union… but as a Polish citizen.

A Polish citizen could realistically establish permanent residence in another European country like France or Italy, and eventually become eligible for citizenship there after 7-10 years.

Frankly, I think that if you’re eligible for Polish citizenship, you should not even think about ‘old Europe.’ Poland is one of the strongest economies in Europe by far, and I think it will stay that way for quite some time. Poland is the future. Italy is the past.

Dee asks: “Greetings, Simon. What are your thoughts on purchasing natural colored diamonds as a means of wealth protection, asset accumulation and privacy?”

I don’t like diamonds for wealth preservation. Technology already exists that can create a chemical replication, which completely eliminates the stone’s scarcity in my book. All that remains is the sex appeal from clever marketing.

I also find diamonds to be too politically contentious with all the chanting about African slave mines. It’s just not worth it. Gold and silver are much more reliable stores of value. No one is going to spray paint your fur coat for owning some Krugerrands.

Mike asks: “Simon, I understand that Moody’s is set to raise Panama’s country rating to investment grade within the next 3 months. What effect do you believe this will have on the local economy and will it give real estate prices a ramp up?”

Honestly, not much. Moody’s is a relic of the old financial system, and the only people who still pay them any attention are institutional investors that still believe in the Tooth Fairy. A Moody’s upgrade will make it easier for Panama to raise cheap capital through a sovereign debt issue, that’s about it.

At this time, the country doesn’t have plans to raise any additional debt, though it may capitalize on cheaper money to refinance existing, higher interest debt, which would save a few bucks for its budget.

Panama’s economy has many opportunities for small to medium sized investors, but with only a $19 billion GDP, it’s simply too small to absorb capital flows from large institutions. Consequently, there really won’t be much of an economic effect from a Moody’s upgrade.

That’s all for this week. We’ll talk again on Monday.

Seriously… isn’t it time the investment community stopped listening to the rating agencies?

Moody’s, Fitch, and S&P– these are the usual suspects who completely missed the boat on the US sub-prime debacle.  Back in 2005, they gave pristine credit ratings to risky mortgage portfolios stuffed full of borrowers who are notorious for not paying.

The recent debt crisis in Dubai underscores their irrelevance once again.

As I discussed earlier this week, Dubai’s flagship holding company announced that it had run out of cash and put a temporary stalemate on all debt payments.  The announcement sent markets reeling and once again caught the rating agencies with their pants down.  

It’s mystifying how these three groups, each with a long tradition of getting it completely wrong, are still considered relevant by the financial community.

Meanwhile, amid Comrade Bernanke’s reconfirmation hearings, the job summit, the estate tax extension, and the Afghanistan rollout, it has been quite a week. 

These four events underscore some significant problems that are faced the United States: reckless monetary policy, inappropriate fiscal stimulus, a government budget crisis, and a disastrous war effort.  

As I mentioned in this week’s letter on the conflict in Afghanistan, though, nothing will actually be accomplished other than more summits, hearings, and motivational speeches. 

Sure, it would be nice to affect the system, but is it really worth spending one’s life fighting against a corrupt bureaucracy? Especially when so many ‘fellow citizens’ embrace the status quo, and most others are too uninformed to care? Ssssh… American Idol is on.

I’ve spent a great deal of time setting up a system that keeps me largely free of these headaches.  I still close my eyes and shake my head on occasion, but it’s mostly like watching a bad sitcom. With a multiple flags approach, you have the ability to pick up the remote and change the channel.

On the subject, I received several questions from a letter I wrote earlier this week, outlining my top picks for Asia and Latin America (Chile, Panama, Colombia; and Malaysia, Philippines, and China). 

The biggest question– why weren’t Uruguay and Thailand included on the list?

Thailand is a fantastic country, and I will be spending more time there next year. The problem is that it is difficult to reside in Thailand for the short-term and long-term.

Neighboring Malaysia gives 90-day, extendable tourist visas upon entry; Thailand is good for 15 to 30. Malaysia makes it easy to establish residency; Thailand only issues 100 permanent residency permits each year. 

The property market in Thailand is also quite cumbersome, with significant restrictions on foreign ownership and a lot of sharks who will take advantage of foreigners.

Overall Thailand is a wonderful place, and there are ways around these challenges. But comparing price and hassle, I think Malaysia is a better value.

Uruguay is also great country and would probably be #4 on my list.  I wouldn’t dissuade anyone from buying property or living there. In terms of value, available services, and lifestyle, though, I would pick Chile, Panama, or Colombia, mostly because Uruguay can be exceptionally sleepy.

And although I did not mention it in the original letter, I really like Ecuador as well.
The country is poor… very poor, but its local agriculture is spectacular– “all natural” is the only way they know how to produce.

This is of vital importance to me; I’m very careful about what I put in my body and think that the poison and hormone-filled foods in North America significantly contribute to poor health… and health, after all, is our most important asset.

We’re fortunate that world class physicians are available in places like Panama and Thailand for the price of a steak dinner, but as someone who has a natural aversion to doctors and hospitals, I tend to focus more on staying healthy.  To me, this has a lot to do with food.

Aside from Ecuador, I’ve also noticed that Laos, Chile, New Zealand, and surprisingly China have a vast stock of organic and all-natural food products.  Meanwhile I’m highly suspect of foods in Buenos Aires and Eastern Europe, especially at restaurants.

Of course, the hardest place to have a restaurant meal that isn’t served with a side of poison is in the US– probably the impact of corporate chains.

I recently bought an e-book though, for the whopping price of $29.95, that is the most comprehensive guide I’ve ever seen for all-natural restaurants in the US.  I was really impressed, especially given the price– about 200 pages of listings, reviews, and pricing of just about every place you would want to eat, coast-to-coast.

If you travel frequently or just want to eat some good, poison-free food, you should check it out…  as far as I can tell, the information simply isn’t available anywhere else– www.healthyeatshere.com

Please begrudge me the quote from V for Vendetta,  but I’m really starting to worry about what’s going on in the United Kingdom.

On Wednesday I wrote about the UK’s “Interception Modernisation Programme.” New rules under the program require wireless companies and internet service providers to archive phone records, web history, and emails for a period of 12 months, and to make that data available to 600+ government agencies without a warrant.

Naturally, the erosion of privacy was absolutely shocking, and I was sickened… at least until the next day when I read an even more disturbing story, also out of the UK.

Now the British government has announced that it is going to maintain DNA profiles of innocent people for ‘only’ six years. 

You see, this is actually a shift in policy. Since being established in 1995, the government has built up it’s “National DNA Database” to over 4.7 million people, and it grows by 30,000 per month. This is about 7.6% of the population. Oh yeah, and it costs British taxpayers about $100 million/year.

How did the database get so large? The UK’s Criminal Justice Act of 2003 authorized DNA samples to be taken by police on everyone they arrest or detain… you don’t even have to be charged with a crime.

Without any consent whatsoever, police can take oral swabs, footwear impressions, fingerprints, and in some cases blood, urine, semen, and dental impressions.

Until now, the British government has maintained DNA profiles indefinitely, even for people who had been found innocent and released from police custody without ever having been charged. 

In a historic case, the European Court of Human Rights recently ruled that Britain’s policy of keeping the DNA data indefinitely was a clear violation of human rights… so on Wednesday, the British government announced that it would discard innocents’ DNA profiles after 6 years.

The great irony with both the DNA compromise and the Interception Modernisation Programme is that they were announced right around the same time that European leaders were collectively celebrating the end of communist tyranny and the secret police.

Naturally, the British government doesn’t consider keeping DNA records to be remotely totalitarian; rather, authorities maintain that the information helps the war on crime and terrorism.

According to the government’s statistics, 6,504 rape and murder crime scenes over the last 8-years have had DNA evidence matching a profile in the national database.  Apparently this is supposed to make people rest easy.

Personally, I’m left wondering about the other 4.7 million DNA profiles that weren’t involved in these crimes. I’m also left wondering how many of the 6,504 profile matches just coincidentally happened to be near the crime scene but were not involved with any criminal act…?

The scariest part is the following line I copied from the government’s website– 
“Maintaining and developing the [DNA] database is one of the government’s top priorities.”

I almost passed out when I read it.

Yes, I recognize that there are people out there who believe that, “hey, if you have nothing to hide, why are you so concerned about the government monitoring your emails or maintaining your DNA records?”

This ‘nothing to hide, nothing to fear’ argument is flawed for two key reasons.

First, it means that the individual agrees to a ‘guilty until proven innocent’ paradigm; in this case, you may have nothing to hide, but you are agreeing that the government will assume your guilt until it goes through your private affairs to prove innocence.

Second, it is the mother of slippery slopes. In a span of three days, the British government has announced its electronic surveillance program, and now an insipid response to the European Court of Human Rights for its DNA database standards.

What will it be tomorrow for the Brits– a national ID card? Oh wait, that’s in the works already.

Look, I’m an incredibly positive and optimistic person, but these clowns are really going down a dangerous path… rather than spend an entire letter decrying the British government’s complete disregard for civil liberties, however, I will leave you with a few suggestions.

If you’re looking for privacy, stick to smaller countries that would never cough up so much money for complicated DNA databases. Panama comes to mind. Croatia. The Philippines. Chile. Moldova. Tanzania. Ecuador. Mongolia. Uruguay. 

I will be discussing these in more detail, and next week try to write something up about PGP and email security as I promised on Wednesday.

Of course, I’d like to hear from you about your own experiences.

I love Uruguay… it is, without a doubt, one of my top five choices in Latin America– the country is clean, beautiful, and cheap, full of great wine and friendly people. But if you’re considering the country as a place to live, work, or do business, there are definitely a few things you need to know:

First, Uruguay is NOT a financial center. It achieved a reputation over the years as a tax haven full of private, secret bank accounts. Not true. Sure it was a great place for wealthy Argentines to stash their cash, but frankly your 3-year old’s Piggy bank is probably safer than most Argentine banks.

By comparison, Uruguay’s banks seemed extraordinarily stable… and because it is so close to Buenos Aires, Uruguay became the natural offshore financial center for Argentina.

There was a time when Uruguay had some level of banking secrecy and no personal income tax. This has all changed, most recently because Uruguay was temporarily placed on the OECD’s banking blacklist earlier this year.

Their Finance Minister literally jumped through hoops to have this scourge removed, and when the ‘blacklist’ label was dropped, any remaining semblance of bank secrecy went with it.

Ironically, despite no longer having any significant benefit, many banks in Uruguay refuse to work with US citizens. You will run into this a lot at many private banks– so if you are looking to open a personal account there, try Banco Republica: it’s a government-owned bank with government-backed deposit insurance, and they accept US customers.

The second thing you need to understand is that Uruguay is not a tropical paradise. Sure it’s a lovely place, but there are definitely four seasons there– it’s not Costa Rica or even Brazil where you can expect balmy weather year-round.

Third, you have to be prepared to enter a time warp… though a lot of people are drawn to the old-timey feel of Montevideo; the entire country is so quiet and sleepy, it seems as if you were living in the 1950s.

Fourth- Punta del Este is a vibrant, happening place… for about 3 months out of the year. From December through February, Punta swells as thousands upon thousands of visitors from around the world descend on this small town to party all night and roast all day.

The nightclubs are nonstop, the restaurants are packed, and the beaches are littered with European models and FashionTV shoots.

For the other nine months, Punta is about as happening as an average town in rural Iowa… and pursuant to point #2 above, these are the months where the weather is slightly less than spectacular.

Fifth– Staple items like groceries are noticeably cheaper in Uruguay, at least 10% to 30% less than what you would pay in North America, Europe, or Australia. But if you’re in the mood to go shopping for clothes, cars, electronics, or just about anything that has to be imported, get ready for sticker shock.

The Uruguayan government imposes stiff luxury taxes and duties on imported goods, and this includes most products beyond basic staples.

For example, rundown cars that you wouldn’t consider paying more than $5,000 for in North America might cost $10,000 to $20,000 in Uruguay; and a shiny new computer at the Punta del Este Apple store will set you back almost twice what you would pay in the US.

You can get around the stiff automobile prices by first purchasing and registering a vehicle in another country, then driving it into Uruguay as a ‘tourist’. This is a prime example of the multiple flags theory that I discuss frequently– having your assets registered in one country and living in another.

Overall, you should consider Uruguay if you fall into the internationalist, hermit, or retiree expat categories.

If you have any other personal experiences from Uruguay or specific questions, I would love to hear them.