Tag Archive | "Bank of America;"

Ecuador & International Banking Update


Here is an important Ecuador & international banking update created by the wonderful world of mobility in which we live.

Our global mobility provides huge benefits… broadens our horizons and enriches mankind through global trade.   Yet being global also creates some problems… one of them is banking.

This site recently posted a message about Ecuador banks that began with, “I do not trust Ecuador Banks.”

This is not a slight on Ecuador.  This statement is a comment on the realities of trying to maintain control of one’s own wealth in an era where almost all governments are increasing control over money.

The banking article was followed by  another article stressing  the importance of diversification in Ecuador Diversified.

Here is a reminder of the importance of this information.  A couple of years ago I purchased a block of buildings in Ecuador planning to resell them.  I am according to plan selling them now and recently received a payment.

My attorney wrote this to me:

They deposited funds in my account last Wednesday to pay for the condo and asked me to send to you.  There is a 2% tax on money going out of Ecuador which was recently established, plus bank commissions.  I will wait for your instructions  to wire these funds to you.

There previously was a 1% tax but it has now been increased to two percent. This increase is not a big deal but a step in the wrong direction and a reminder that we should never trust any one country, currency or banking system.

I just sent our Ecuador Living subscribers an alert about one more Ecuador banking problem.  Ecuador Living subscribers click here.

Learn how to subscribe to Ecuador Living here.

Hence my mantra to have what I call a “Six Point Command Posture” which is to:

Live in one country
Bank in a second country
Invest in many countries
Earn in two or more countries
Use a company incorporated in a fifth country
Take a second residence

Where to Bank

Knowing where to bank is a growing problem… especially for Americans.  Non Americans should read this article any as you’ll see that you are not exempt from this problem either.

Americans are being crushed between a rock and a hard spot.

The Rock. Many US banks will no longer accept Americans residing overseas because they have a foreign address. This has been caused by the US Patriot Act.  Banks have to know their clients so they refuse to accept (or keep) clients with overseas addresses, even Americans who have banked with them for decades, but change their address.  The following banks have been sited as closing accounts with just 30 days notice of long term customers just because they took on a US address: Ameriprise, Bank of America; Bank of New Hampshire; Citibank; Citizens Bank; Edward Jones, St. Louis; E- Trade; Fidelity Investments; INGDirect; JPMorganChase; Morgan Stanley; National City Bank in Riverview, Michigan; Provident Bank, Maryland; Smith Barney; T. Rowe Price; USAA Federal Saving Bank; Vanguard mutual fund; Wachovia; Washington Mutual; Washington Mutual Investment, Spokane; WellsFargo; Zions Direct.

The Hard Spot. At the same time the IRS has created a set of regulations that discourage non US banks from accepting Americans.

Many Swiss and British based banks will no longer accept Americans.

Here’s an excerpt from a 13, June 2009 Telegraph article entitled “Lloyds Bank hit by Obama tax purge” by By Louise Armitstead:   Banking group drops American customers in UK ahead of costly proposals to stamp out tax evasion  Lloyds Banking Group is ditching American customers based in Britain pending a crackdown on international tax evasion planned by President Barack Obama.

This week American private client account-holders at Lloyds’s received letters informing them of an “important change in policy regarding clients who are resident, domiciled or linked to the United States by property or asset holdings”. They were told the bank had “no choice” but to “cease acting as your investment manager.”

One letter sent to Bank of Scotland’s portfolio management division, which is now part of Lloyds, said: “The USA has a mature regulatory environment governed by its Securities and Exchange Commission. These regulations mean that we are not licensed to manage portfolios for US clients.”

The letter added: “Unfortunately we cannot offer an equivalent service from within Lloyds Banking Group.” Clients have been advised to transfer their assets.

One recipient, who has lived in the UK for over 25 years, said: “After all this time, I’ve suddenly been told I must take my money elsewhere and I don’t understand why. Now I’m scared that other banks won’t take me on either.”

The Brits are no the only group shedding US account holders.

A July 12, 2009 USA Today article entitled “Some foreign banks drop U.S. clients because of UBS flap”  by Kevin McCoy explains how other banks have booted Americans as well.  An excerpt says: The closely watched Justice Department court fight to get the names of 52,000 suspected American tax evaders from Swiss banking giant UBS has prompted some other foreign banks to drop U.S. clients they once welcomed, tax experts said Monday.

Eager to avoid a similar struggle with federal prosecutors, banks including Credit Suisse and HSBC in recent weeks have notified American clients they must close their offshore accounts or transfer them to the institutions’ U.S.-based operations, where tax reporting requirements are far stricter.

“Overall, the international banking community, and particularly the offshore banking community, has been very friendly to American account holders,” said William Sharp, a tax law specialist at the Sharp Kemm law firm in Tampa. “That changed in the past couple of months as a result of the UBS case.”

The Dutch were early in dropping American clients.

ABN AMRO, a huge, Dutch based, international bank gave all clients  with U.S. passports within 30 days notice in 2008 and then closed their accounts because of the  high costs to comply with U.S. regulations.

Expect this problem to get worse! Beginning in 2010 stronger US reporting rules will force even more overseas banks to stop accepting Americans.  They simply cannot afford to fill all the obligations.

Americans should not feel totally alone…nor should non US investors feel totally safe from being shut out of a banking center.

According to the British Times Newspaper, Barclays Bank used the US anti-terror laws to shut down the personal bank accounts of British citizens who were working for Iranian owned businesses.

The bank enforced anti-Iran sanctions under the US Patriot Act.  Accounts of Iranian owned companies that operated completely legally in Britain were shut.  But Barclays went much further. They amazingly shut down accounts of directors of these companies and even more amazing they shut the personal accounts of ordinary staff members, including clerical officers, computer engineers and bank tellers, just because they worked for an Iranian owned company.

Here is an excerpt from a June June 6, 2008 Times of London article entitled, “Barclays bank rejects customers to comply with US terror law:”  Barclays began the account closures in February, shortly after reports from industry sources that US Treasury agents had been touring the City of London putting pressure on financial institutions to withdraw from any form of business that might have Iranian links.

One source told The Times that City banks had been warned that they would lose access to the US market if they continued to deal with Iranian businesses. Barclays has extensive business interests in the United States.

Case study: Cast out in the supermarket

Chris was doing the shopping in Tesco when Barclays rang to tell him that his bank account was being closed. Later that evening his wife was told that her Barclays account, which she had held for 25 years, was also being closed.

Chris, 46, works in IT for Bank Saderat, and his wife is in the accounts department of Melli Bank. Both institutions are Iranian-owned. “They said it was because of sanctions but I knew there were no British sanctions on the banks. I asked them if they were responding to US laws and they said they didn’t have to give me a reason,” he said.

The couple opened new accounts with one of Barclays’ rivals but they had difficulty transferring standing orders, especially Chris’s child-support payments. He said: “I know that UK banks are being pressured by America to stop all dealings with Iran but what impact will it have to shut an English bloke’s account with an English bank? The Iranians won’t give a monkey’s. What upsets me is the lack of respect Barclays have for their customers.”

This last comment hit me strongly… the lack of respect many of the big banks have for their clients.

This is one reason I have enjoyed banking with Jyske Bank in Denmark for more than 20 years.  Jyske is big and well managed enough to be very safe, but small enough to provide genuine care and attention to the individual.

This is why I was not surprised that a number of years ago, Jyske made the decision to spend a lot of time, energy and money to comply with US law so they could continue to serve US as well as non US investors around the world.

This shift though has created some confusion. For example a Reader from the Netherlands sent me this note:  Hello Gary, Since beginning of this year we are subscribed to your newsletter. In your articles we read that it is possible to go to Jyske Bank and start doing multi-currency for about 30,000 dollars. We were very enthusiastic about this philosophy and asked the Jyske Bank for information. However we were very surprised when we got information back including the message that we have to start with $150,000 euro. Can you help us and maybe clarify the misunderstanding about this starting amount?  Thank you very much in advance!

The services and minimums required by Jyske Bank Private Bank (JBPB) for non US investors differs from those offered by Jyske Global Asset Management (JGAM) who serves US investors.

Jyske Global Asset Management (JGAM) offers Americans managed accounts, advisory accounts and IRA services to US clients.

JGAM’s managed accounts provide Americans with access to international investments in all currencies, traded on all stock exchanges.

There are two levels of managed accounts for US investors:

Mutual Fund Managed Accounts, $50,000 to $200,000.  Accounts from $50-200,000 are mainly  invested in mutual funds and ETF`s in order to get the appropriate diversification.

Individual Investment Managed Accounts from $200,000 up are mainly invested in individual securities as trading costs are not prohibitive for this size of account.

There are two forms of advisory accounts for US investors.

Advisory Accounts for US Residents.  Accounts for US residents are available and provide access to investments in currencies, commodities and US listed securities.

Advisory Accounts for Americans who are resident outside the US.   US citizens who are resident outside the US (proof of residence is required) have access to investments in currencies, commodities and all international investments in all currencies, traded on all stock exchanges.

The minimum required to start an advisory account is $25,000.

Because the minimum annual fee is  $1,000 JGAM recommends an initial deposit of minimum $50,000.

IRA accounts are managed accounts with more conservative investments than those in a normal  managed account.  IRA accounts require a minimum investment of $50,000.

Jyske Bank Private Bank offers the following services to non US investors.

Non US Clients can open accounts with minimum deposit of Euro 150,000 (approximately 220,000 USD), or equivalent in another currency.

JBPB works with six profiles:

Income profile. A low-risk profile, invested in currency accounts (cash) and/or traditional bonds.

Stable profile. A low-risk profile, invested in bonds (incl. high- yielding bonds), a small equity part.

Balanced profile. A medium-risk profile, invested in equities and bonds (main emphasis on bonds).

Dynamic profile. A medium-risk profile, invested in equities and bonds (main emphasis on equities).

Growth profile. A high-risk profile, invested mainly in equities and a lesser share in bonds.

Aggressive profile. A high-risk profile, invested almost exclusively in equities.

There are six managed strategy funds (available only in Euro) for investors who want managed services with minimum deposits of US$ 220,000. These six funds are based on the principles of asset allocation and match the investment profiles above so all investors can attain risk diversification, risk management with even a limited investment.

There is a full Discretionary Portfolio Management service for investors who want managed services with US$ 350,000 and above. This service is also based on the six strategies above. Jyske Bank will invest and manage the clients portfolio in close cooperation with the Bank´s experts and their network of international partners. These strategies are offered in EUR, USD, GBP, DKK and SEK.

Investors, who do not want managed services, and have accounts of US$ 220,000 or more, can wish to engage in an active dialogue with their advisers and be very involved in the decision-making process. based on the client’s investment profile. They can invest in currency accounts in a large number of currencies, all tradeable equities and bonds, mutual funds and commodities.

Here is one huge feature I like very much about both JBPB and JGAM…  No Jyske employees in  management, advisory services or any employee receives any kind of bonus pay. This eliminates any temptation for hidden agendas to exist.  Employees have no incentive give any advice or take any action that is not in the client’s best interest.

Technology has given great mobility to our wealth. This mobility is good for the individual and the global economy… but governments do not like this as they wish to control our finances.  The tension created by this struggle between the individual and the collective has created a never ending thrust and counter thrust of regulations and adaptions to these rules.  It is harder to maintain a diversified global portfolio than it used to be… but the effort is still worthwhile.

Gary

The greatest asset of all is the ability to earn wherever you live, which brings everlasting wealth.

This is why we offer our course Tangled Web… How to Have an Internet Business.

A clear mind and healthy body are also a vital assets… plus a second language is a powerful diversification tool.

This is why I am giving everyone who enrolls in our North Carolina or Ecuador International Business & Investing seminar in October or November our “Tangled Web… How to Have an Internet Business Course” (offered at $299) free.

Here are comments from a reader about the way we help:  Thank you for your inspiration and information outlining foreign banking and retirement.  Your comments and suggestions are welcome for planning the steps to evaluate the early stages of living abroad.

Sept. 17-21 Ecuador Super Thinking + Spanish Course

Sept. 23-24 Imbabura Real Estate Tour

Sept. 25-28 Ecuador Coastal Real Estate Tour

Join us with Jyske. Learn more about global investing, how to have an international business and diversification in Ecuador at the seminar.

Oct. 9-11 IBEZ North Carolina with our webmaster  David Cross & Thomas Fischer of JGAM

October 16-18 Ecuador Southern coastal tour (early sign up before Sept. 1, $499 per person).

Oct. 21-24 Ecuador Import Export Tour

Oct. 25-26 Imbabura Real Estate Tour

Nov. 6-8 IBEZ Ecuador Seminar

Nov. 9-10 Imbabura Real Estate Tour

Nov. 11-14 Ecuador Coastal Real Estate Tour

Attend any two Ecuador seminar or tours in a calendar month…$949 for one.  $1,349 for two.

Attend any three Ecuador courses or tours in a calendar month…$1,199 for one.  $1,799

Read the full articles:

Lloyds Bank hit by Obama tax purge

Some foreign banks drop U.S. clients because of UBS flap

Barclays bank rejects customers to comply with US terror law

The American Dream Goes South at Florida Investment Seminar


I’ll focus on how the American dream is heading south at JGAM’s multi currency seminar in Florida this May.

If looked at one way… the American dream is dead. Let’s ramble through economic history for a moment to see why.

In the early 1980s the US had a challenge… a severe recession from July 1981 to November 1982.  Inflation was high so the Fed  slowed the rate of growth of the money supply and raised interest rates. The federal funds rate rose to 20% by June 1981. The prime interest rate, at the time a highly important economic measure, eventually reached 21.5% in June 1982. Businesses went broke by the drove… 50 percent over the previous year.  Especially hard hit were farmers and real estate developers.

The recession was the most serious recession since the Great Depression.

This was tough but inflation eased and the economy rebounded.  Growth took off again… real growth without bad inflation because the real estate overhang and subsequent bankruptcy of the Savings & Loan industry was dealt with by the Resolution Trust Corporation.

RTC liquidated via auction and a massive sell off to private business, the real estate that had been assets of savings and loan associations that were insolvent.

The US government had the sense then not to try and control these assets.  Entrepreneurs bought the assets for pennies on the dollar and turned the property into viable deals in ways that no government agency ever could.

Japan then had a serious recession and the same opportunity.  There was a real estate and stock bubble in Japan in the 1980s.   Then in 1989 there was a massive withdrawal of confidence. Investment collapsed, causing the Nikkei index to fall more than 60 percent.

The Japanese government however decided that it could provide a fix. the Japanese felt they could not let big Japanese businesses go broke.  Between 1992 and 1995, Japan tried six spending programs totaling 65.5 trillion yen. They cut  taxes in 1994. In 1998 they cut taxes again and launched stimulus packages worth more than 40 trillion yen.,  A year later… another stimulus program. In 2000 11 trillion yen more was spent to stimulate the economy.

Over a decade the Japanese government provided 10 stimulus packages worth more than a 100 trillion yen.   The main result was to ruin the Japanese government’s credit with public debt that exceeds 100 percent of GDP. This is the highest percent of debt of all major nations.

Any other results?  Here is evidence… the main Japanese stock index the Nikkei 225 from 1989 till 2009.  Japanese society is indebted for life and the stock exchange has fallen from over 35,000 to  7,600 in 20 years.

Wow that really worked well… so

power-investing

now the US government has decided to do the same thing.

Last week the government  offered another $30 billion in funds to A.I.G. insurance.  This is the fourth round of aid to the American International Group. The government already owns nearly 80 percent of the insurer’s holding company. How much more can they buy?

This sounds like a good investment since the insurance giant was about to report a $62 billion loss after the government has already given a $60 billion loan, a $40 billion purchase of preferred shares and purchased $50 billion of the company’s toxic assets.

Behind this, the government has invested $50 billion in Citigroup… $45 billion in Bank of America.  The Us auto bailout could cost another 100 billion. More on that in a later message.

This is all taking place as the US economy spirals down at an accelerated pace.

Yet the current administration is basing its spending on calculations that suggest vigorous rates of economic growth in years to come.

They have suggested this economic growth will come in 2010.

I wonder?

There seems to  a disconnect between the Federal projections and fiscal reality.   Current conditions are not yet at the level of the 1980s, when unemployment exceeded 10 percent, but they could be soon.

Moody’s chief economist now places the odds of “a mild depression” at 25 percent. In that view, the unemployment rate would reach 10.5 percent by the end of 2011 — up from 7.6 percent at the end of January — average home prices would fall 20 percent on top of the 27 percent they have plunged already, and losses in the financial system would more than triple, to $3.7 trillion.

Yet President Obama calls this a “once in a generation” opportunity and proposed a 10-year budget that overhauls health care, arrests global warming and expands the federal role in education.

How to pay for it?   Tax more corporations and the wealthiest taxpayers.

Wrong!  Higher tax will simply kill business or drive it abroad.  What a  good idea to chase away the last of the success.

The President said  he would shrink annual deficits.  His explanation is that he will increase revenue from rich individuals and polluting industries, reduce war costs and assume a good rate of economic growth by 2010.

The rich will stop working or leave the US.  The polluters will move to Mexico or China or wherever.   The high rate of economic growth will not appear.  Stopping the war will help… but not enough.

Technology means that politicians can no longer ignore the global market and tax its citizens to death.

Take for example what is happening in Ecuador.  Remittances sent by  Ecuadorians who work abroad fell 22 percent in the last quarter of 2008.

$643.9 million was sent from October to December 2008. This is $181.7 million less than in Oct.to Dec.2007.

A similar drop was experienced in the third quarter of 2008 and is caused by the global financial crisis and especially the economic slowdown in the United States, where it is estimated 1.5 million Ecuadorians live and work.

The U.S. employment rate has crashed especially in manufacturing and construction which employ a large number of Ecuadorians.

The same is true in  Spain – where 600,000 Ecuadorians live. this is the second-leading destination for Ecuadorians.

This means that there are more Ecuadorians to serve for less in Ecuador.  This forces the Ecuador cost of living down down.

So if you are an American who is about to be super taxed… where would you choose to live?  Our farm manager sent us this note recently, “We had 4 inches of snow in China Grove.”

multi-currency-florida-course

Would you rather live there and pay more tax or…

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enjoy open air dining as Merri and are doing here in our Cotacachi hotel courtyard with Dan Prescher and Suzan Haskins or…

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would you rather enjoy a mountain train ride as these…

multi-currency-investing-florida-course new Cotacachi residents are doing…  passing through green mountains  and blue skies.  Getting a sun burn.

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The is the train from Ibarra to Salinas Ecuador.  Would you rather be taxed extra to be in this pool or…

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be here on Ecuador’s coast with tax advantages?

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Which view will the rich prefer?  This in the US or…

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this… especially if this San Clemente Ecuador ocean view costs much, much less?

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Where would I prefer to walk with my hound?  Here in sub zero temperatures or

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here in Cotacachi Ecuador…especially if I am taxed less and the cost of living is much lower and government interference in my life is less?

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Technology and the global market gives us as individuals enormous power to live where and as we choose that politicians can no longer ignore.

The government’s attitude to increase taxes on those who work hard could turn the existing brain drain from the US into a brain torrent.

In short there are many reasons I see that suggest the economic mess will  last for years in the US,  just as it has in Japan.

Recently, Warren Buffett wrote in his company’s annual report that “the economy will be in shambles, throughout 2009, and, for that matter, probably well beyond.”

This is not the picture we expect of the American dream.  However the picture is not bad for all.  Not all Italians became poor when Rome fell.  Italy is still a great place to live.  There are still millions of Japanese who have thrived over the past 15 years of Japanese recession.  The end of the America dream does not have to be the end of your dream.

In the US we can expect the rich to get richer… the poor poorer.   We can see why from our study of Power Distance Index.  We looked at PDI, and what it is, in a recent message about JGAM’s multi currency seminar.

There is more about Power Distance Index at http://www.clearlycultural.com which says:

Hofstede’s Power Distance Index measures the extent to which the less powerful members of organizations and institutions (like the family) accept and expect that power is distributed unequally. This represents inequality (more versus less), but defined from below, not from above. It suggests that a society’s level of inequality is endorsed by the followers as much as by the leaders.

For example, Germany has a 35 on the cultural scale of Hofstede’s analysis. Compared to Arab countries where the power distance is very high (80) and Austria where it very low (11), Germany is somewhat in the middle. Germany does not have a large gap between the wealthy and the poor, but have a strong belief in equality for each citizen. Germans have the opportunity to rise in society.

On the other hand, the power distance in the United States scores a 40 on the cultural scale. The United States exhibits a more unequal distribution of wealth compared to German society. As the years go by it seems that the distance between the ‘have’ and ‘have-nots’ grows larger and larger.

The trick then is to not accept the PDI from the lower end. Let me explain.

Excerpts from 2007 article by a Stefan Bach , Giacomo Corneo  and Viktor Steiner at www.voxeu.org entitled German income inequality outlines an idea.  The article says:

Paul Krugman frequently mentions that America’s super rich make the 19th Century wealthy look poor. “We know what John D. Rockefeller, the richest man in Gilded Age America, made in 1894 … $1.25 million, almost 7,000 times the average per capita income in the United States at the time.” Krugman wrote. ”But that makes him a mere piker by modern standards … James Simons, a hedge fund manager, took home $1.7 billion, more than 38,000 times the average income.”

Surely such extremes cannot happen on Continental Europe with its social market economics and social solidarity. The authors of Policy Insight No. 4 shows that although income inequality in Germany is a long way from reaching US proportions, the trend is in that direction. Germany rich are getting richer, and its super-rich are getting super-richer.

In other words as a society progresses, those with power get richer while the majority of  the population become poorer.

Note above that power is determined  from below, not from above. It suggests that a society’s level of inequality is endorsed by the followers as much as by the leaders.”

Power is an illusion that keeps most investors and business people depressed while a few gain from this social falsification.

The internet destroys this illusion. The web gives us all power!  Today we have as much opportunity as the rich to gain from the changes that this economic correction will bring.

This is why Merri, our webmaster and I have created a new course on how to build a web business with a webmaster.  More on this in a moment.

First what you can do as an investor or with your own business.

One answer we saw above is to live in a better lower cost environment like Ecuador.

Another answer is to be a multi currency investor. Despite America’s government spending , the dollar has been gaining, particularly against European currencies. The euro slipped to under $1.26, nearing a two-year low and down from a high of almost $1.60. This is caused as fearful investors jump into 10-year Treasury bonds… which have been shown to be terrible long term investments.   All the US government spending means that the US dollar will fall. But against what?

The euro is not a trustworthy currency now. A March 1, 2009 New York Times article by Steven Erlanger and Stephen Castle entitled “Growing Economic Crisis Threatens the Idea of One Europe” explains why.  Here is an excerpt from that article:

The leaders of the European Union gathered Sunday in Brussels in an emergency summit meeting that seemed to highlight the very worries it was designed to calm: that the world economic crisis has unleashed forces threatening to split Europe into rival camps.

With uncertain leadership and few powerful collective institutions, the European Union is struggling with the strains this crisis has inevitably produced among 27 countries with uneven levels of development.

Whether Europe can reach across constituencies to create consensus, however, has been an open, and suddenly pressing, question.

“The European Union will now have to prove whether it is just a fair-weather union or has a real joint political destiny,” said Stefan Kornelius, the foreign editor of the German newspaper Süddeutsche Zeitung. “We always said you can’t really have a currency union without a political union, and we don’t have one. There is no joint fiscal policy, no joint tax policy, no joint policy on which industries to subsidize or not. And none of the leaders is strong enough to pull the others out of the mud.”

Thomas Klau, Paris director of the European Council on Foreign Relations, an independent research and advocacy group, said, “This crisis affects the political union that backs the euro and of course the E.U. as a whole, and solidarity is at the heart of the debate.”

“All of that is in doubt if the cornerstone of the E.U. — its internal market, economic union and solidarity — is in question,” said Ronald D. Asmus, a former State Department official who runs the Brussels office of the German Marshall Fund.

If the the euro is a good currency for diversification, which currencies are?

Our multi currency course helps you learn how to diversify into safe currencies.  Our studies currently suggest that the Danish, Swedish, Norwegian kroner and Canadian dollar make sense. For example beginning in March the Swedish kroner hit a new record low. The Eastern European problems are having an adverse impact on the Swedish banks.   Also the Norwegian currency is a good technical buy.

You can join us to understand why these currencies make sense by subscribing to our on line multi currency course.

You can also join us for a currency review at JGAM’s Naples Florida investment course May 29 to 31, 2009.  This course is $499 ($750 for two) but free to those who have subscribed to our on line multi currency course.

Another way you can attend JGAM Florida seminar free is to subscribe to our course on how to have a web based business.   You can enroll in this special course for $299 and attend the JGAM course in Naples free.

Here is a special offer on this course “Tangled Web – How to Have a Web Business“.

Or join us for an upcoming course in North Carolina or Ecuador.

Gary

Future 2009 courses

May 29-31  JGAM Multi Currency investment Seminar Naples Florida

June 12-14 Shamanic Mingo Tour
June 16-17 Imbabura Real Estate Tour
June 18-21 Ecuador Coastal Real Estate Tour

July 3-6 Ecuador Import Export Expedition
July 8-9 Imbabura Real Estate Tour
July 10-13 Ecuador Coastal Real Estate Tour

July 24-26 IBEZ North Carolina

Sept. 17-21 Ecuador Spanish Course
Sept. 23-24 Imbabura Real Estate Tour
Sept. 25-28 Ecuador Coastal Real Estate Tour

Oct. 9-11 IBEZ North Carolina

Oct. 21-24 Ecuador Import Export Expedition

Nov. 6-8 IBEZ Ecuador
Nov. 9-10 Imbabura Real Estate Tour
Nov. 11-14 Ecuador Coastal Real Estate Tour

Attend any two Ecuador courses or tours in a calendar month…$949 for one.  $1,349 for two.

Attend any three Ecuador courses or tours in a calendar month…$1,199 for one.  $1,799 for two

Cotacachi Mayor’s House


Recent messages looked at how Merri and I search for Cotacachi real estate.

The road paving we have been tracking is now done.

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In two directions…

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in less than two weeks.

We keep our eyes open every day and the search pays off.

Today, near Primavera II condos…

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Around the corner from Cotacachi’s Mayor’s house (which is for sale) …

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we spotted two old houses for sale.  This one is $25,000.

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and this, $36,000.

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These fixer uppers have huge lots, in the center of the village. They may be real sleepers.  We’ll see as we’ll inspect them on our Imbaburra real estate tour that begins tomorrow.

You can gain Cotacachi real estate information and Ecuador real estate contacts as an Ecuador Living subscriber. See details here.

Speaking of sleepers, this excerpt from today’s password protected multi currency course shows why European shares may be sleepers as well.

Here is the excerpt:

This multi currency update has three portions. First we see anther inflation indicator. Second we update our search for value. Third we end with some answers to questions from lesson one of our new updated primer course.

Recent inflationary events include the support by US authorities of Bank of America with a guarantee of liquidity and capital. B of A faces losses of up to $118 billion dollars.

The government gets shares in the bank worth $20 billion.  In other words the government stumps up about $88 billion (that it does not have).  This is inflation.

Citibank in trouble as well.

Jyske Global Asset Management wrote in its last market update three days ago:

Fears of further credit losses and rumours of another large US bank being nationalized dragged the international stock market down this week. The New Year rally last week is already forgotten, and investors are anticipating new lows in 2009.

Citigroup Inc. posted an $8.29 billion loss, only a few days after the announcement of their plans to sell the control of Smith Barney to rival Morgan Stanley.

Sales at U.S. retailers dropped in December for the sixth consecutive month (first time since 1992) and the most in three years.

S&P cut Greece’s long-term credit rating to A- with a stable outlook, due to its public and private debt and the budget deficit. The downgrade makes Greece the lowest rated country in the Euro zone.

Market participators are now speculating whether a Euro exit may become an option for some members of the Euro-bloc, analysts view Greece as the weakest economy within the Euro zone.

The European Central Bank (ECB) Thursday cut the Euro zone interest rate to the lowest level in more than 3 years.

As expected the main policy rate was cut by a half percentage point to 2%. The Danish Central bank followed the ECB with an even bigger cut of 75 basis pts to 3%.

#1: Falling interest rates are indicators for increased activity in share markets.

#2: Combine this with the fact that stock funds saw huge redemptions in 2008.

#3: Add in the next fact that international equity funds were among the most redeemed losing about a fourth of their total assets in 2008.

U.S. stock funds only had redemptions of about 10% of their assets.  Bond funds on the other hand experienced positive flows in 2008.

This increases my enthusiasm for international shares…especially in Europe.

Low interest rates plus markets that are oversold plus inflation all bode well for shares.

There are four ways to fight inflation; real estate, your own business, commodities and equities.   So depressed international equities in an atmosphere of low interest rates spells opportunity.

These three factors are the elements that create value because value investors are generally bucking the trend.

This is why last year my biggest equity position was in the Jyske Invest European Equity fund.  I picked a fund that was invested mostly in markets that Michael Keppler of Keppler Asset Mangement viewed as having the best value.

Keppler has changed some of his rankings this month so let’s review the change and see if my position still makes sense.

Let’s look at the geographical breakdown of the Jyske Invest European Equities fund I hold now.

This fund has departed quite a lot from the synchronicity it enjoyed with Keppler’s top values when I invested two years ago.  The fund’s portfolio is spread here now:

UK  24%
Germany 16%
Switzerland 13%
France 12%
Spain 7%
Netherlands 4.5%
Sweden 4%
Spain 4%
Finland 3%
Italy      2%
Greece 2%
Denmark 1.5%
Norway 1.5%
Luxembourg .5%
Ireland  0.5%
Austria 0.5%

The fund’s managers report says:

There are prospects of uncertainty in 2009. The world economy is struggling
and the optimism has turned into pessimism. Central banks and  governments have been busy introducing rescue packages and  interest-rate cuts. The help has been offered, but is it sufficient and when will it begin to show an effect? We
expect that 2009 will bring wide swings in the equity market. A lasting upturn is not likely to be just around  the corner. We are still looking at a longer period characterised by uncertainty before the optimists outnumber the pessimists.

For the fund we prefer cheap shares with prospects of earnings growth. That type of shares has historically yielded the best returns.

Though this fund no longer has the same value synchronicity with Keppler that it previously had, I’ll continue to hold this as I plan to increase my equity position. I can balance this fund’s holdings to better match Keppler’s rankings by adding Hong Kong, Singapore, Italian and other funds or ETFs.

You can learn more about Keppler’s market updates and the ETFs we use in our multi currency portfolio as a multi currency susbcriber.

Until next update, good global investing

Gary

Join Merri, me and Peter Laub of Jyske Global Asset Management at OUR INTERNATIONAL INVESTING & BUSINESS COURSE IN ECUADOR. We review economic conditions, Ecuador real estate, my entire portfolio plus investing and business ideas for the months ahead.

Gary

Your own business is a  good way to secure purchasing power. This is why Merri, our webmaster and I decided to create a new course on how to build a web business with a webmaster.  There is a special offer on this new course that expired to the general public last Tuesday…but is still available to you.  See the offer here.

Get this course FREE if you join us in Ecuador this February.

Feb 9-11 Beyond Logic Keys to More Wealth & Better Health

Feb. 13-15 International Business & Investing Made EZ

Feb. 16-17 Imbabura Real Estate Tour

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Or join Merri, me and Thomas Fischer of Jyske Global Asset Management, July 24-26, 2009 in North Carolina for International Investing and Business Made EZ