Tag Archive | "central bank"

International Business & Investing Expanded


There is expanded international business and opportunity because wage earners and retirees in most of the Western world are being set up. This can create great international business and investing opportunity for you.

ecuador-real-estate

In a moment see why this Ecuador property offers such good value.

Whether this “set up” is on purpose, or not, is a subject of lively contention… but the intention doesn’t really matter much.   The results… created innocently or intentionally will be the same.  Disaster for the middle class.  However opportunities in international business, investing and lifestyles mean that you do not have to share in the loss.

We can begin to understand this fact with three simple thoughts.

The first thought is that the US is currently experiencing deflation. You can see from this graph from the Bureau of Labor Statistics.

small-business-statistics

The December 2008 message Multi Currency Inflation at this site, asked the question… will there be inflation or deflation.

Now we know.

The second thought is that the deflationary forces are creating inflationary fundamentals like we have never seen before. The inflation stage is set. This is a formula that means disaster for most… but this does not have to apply to you.

One reader just wrote:  I’m thinking a ‘creative way’ to fix a problem and work through one’s passion will not handle the whole situation.  I hope I’m wrong and you have an even better idea. Medicine and doctors.  Savings stripped.  Destruction of people’s lives and stability.  All done with intention.

The dollar is  going down the toilet, and the best option I see the Fed and Government taking (for themselves, not for us) is to have a debit system.  The debit system would pay people, and would pay others from the people’s account.  People would no longer research to save taxes.  Their accounts would automatically be debited with whatever the government deems able to be taken.  The funds would filter through the Central Bank to be certain the funds are going only where the government it should go.

There is no more representative republic.  There is no more self determinism.  There are no more freedoms as you can be controlled through your debit card.  If government decides you are an ‘unworthy person’ they can easily take all of your nest egg.  If Congress can so thoroughly devastate us overnight one time, they can do it again.  I have a real hard time thinking about a creative way to generate income.  I trust not a congressman.  I certainly do not trust the current administration.  I don’t think they’re through with us.  Best Wishes to you Gary.

Many readers share thoughts like this. I know that so many of you are suffering. Yet I must say: economics will get worse. Fortunately they will then get better.

This leads us to the third thought… which is “the common person who will bear the brunt of the upcoming inflation.”

Yet you do not have to suffer.

A USA Today article “Wages could hit steepest plunge in 18 years
 by Dennis Cauchon and Paul Overberg” explains the problem. Here is an excerpt:  A bad economy and low inflation are starting to drag down wages for millions of everyday workers and freeze benefits for millions of retirees.
Average weekly wages have fallen 1.4% this year for private-sector workers through September, after adjusting for inflation, to $616.11, a USA TODAY analysis of Bureau of Labor Statistics data found. If that trend holds, it will mark the biggest annual decline in real wages since 1991.
“Wages are usually the last thing to deteriorate in a recession,” says economist Heidi Shierholz of the liberal Economic Policy Institute. “But it’s happening now, and wages are probably going to be held down for a long time.”

Yet falling income for wage earners and retirees is meeting huge potential inflation according to the October 16, 2009  New York Times article  “$1.4 Trillion Deficit Complicates Stimulus Plans” by Jackie Calmes.

Here is an excerpt: The Obama administration said Friday that the federal budget deficit for the fiscal year that just ended was $1.4 trillion, nearly a trillion dollars greater than the year before and the largest shortfall relative to the size of the economy since 1945.  The shortfall for the fiscal year 2009, which ended Sept. 30, translates to 10 percent of the economy.  Economists generally agree that annual deficits should not exceed 3 percent of the G.D.P., and that is the level President Obama had vowed to reach by the end of his first term in 2013.  At 10 percent of the gross domestic product, the 2009 deficit is the highest since the end of World War II, when it was 21.5 percent. At the same time, many Americans are demanding further help, confronting forecasts that job losses will not peak until mid-2010.  Representative John A. Boehner of Ohio, the Republican minority leader in the House, rejected that position. “It is irresponsible for Democrats to continue spending taxpayers’ money we don’t have to fund an agenda that would destroy the jobs we need to get our economy moving again,” Mr. Boehner said.

The problem looks even worse according to another October 16 2009 USA Today article entitled “Obama team makes it official: Budget deficit hits record. By a lot.” Excerpts say: The Obama administration has released new deficit numbers, and they are not pretty.  The deficit for Fiscal Year 2009, which ended Sept. 30, came in at a record $1.42 trillion, more than triple the record set just last year.  In addition, future deficits are currently projected to total $9.1 trillion in the coming decade.

Yet while the wage earner suffers… others are becoming rich according to an October 17, 2009 New York Tines article entitled
“Bailout Helps Fuel a New Era of Wall Street Wealth” by Graham Bowley.

Excerpts say:  Even as the economy continues to struggle, much of Wall Street is minting money, many Americans wonder how this can possibly be. How can some banks be prospering so soon after a financial collapse, even as legions of people worry about losing their jobs and their homes?
It may come as a surprise that one of the most powerful forces driving the resurgence on Wall Street is not the banks but Washington. Many of the steps that policy makers took last year to stabilize the financial system — reducing interest rates to near zero, bolstering big banks with taxpayer money, guaranteeing billions of dollars of financial institutions’ debts — helped set the stage for this new era of Wall Street wealth.  A year after the crisis struck, many of the industry’s behemoths — those institutions deemed too big to fail — are, in fact, getting bigger, not smaller.  Now, the industry has new tools at its disposal, courtesy of the government.  With interest rates so low, banks can borrow money cheaply and put those funds to work in lucrative ways, whether using the money to make loans to companies at higher rates, or to speculate in the markets. Fixed-income trading — an area that includes bonds and currencies — has been particularly profitable
.

Here is why you do not have to suffer and can profit like the big banks.

Messages at this site have repeatedly shown that four ways to beat inflation are to invest in equities, real estate, your own business and commodities.

Commodities are riskiest in the deflationary times.

Equities have skyrocketed this year… as have bonds treated like equities.

This is as an excerpt from a recent  update in our Multi Currency course shows that 61% of my liquid portfolio is in bonds!

Here is the excerpt:

As of October, my current liquid asset allocation is:

Equities

Jyske Invest  Turkey Equity Fund          TRY-EUR        1%

Jyske Invest  European Equity                EUR-                2%

Jyske Bank Share                                       DKK                 2%

Bank of Florida                                          US$                  1%

Total Equity Position                                               6%

Emerging Bonds

Jyske Invest Emerg Bonds Fund          EMCS              8%

EuroInvest Bank Bond                             TRY               4%
Brazil Government Bond                         BRL               8%
Hungary Government Bond                    HUF              6%

EMCS (emerging market currency spread)

Emerging Bonds Total                                         26%

Bonds

Jyske Invest Danish Bond Fund                DKK            14%

Jyske Invest  European  Bond Fund          EUR           12%

Caisse D’Amort Dette Bond                        EUR             5%

Jyske Invest Swedish  Bond Fund              SEK             4%

Total Bonds                                                                 35%

Cash

US$                                                                                      15%

GBP                                                                                       8%

EUR                                                                                      7%

CAD                                                                                      2%

NZD                                                                                     2%

Total Cash                                                                 34%

Our multi currency subscribers have been able to  fight the dismal economy just like the big banks.

You can learn how to enroll in our multi currency course here.

US dollar denominated real estate also offers extra value now.  The dollar has fallen which reduces the price of real estate. This is why I am heavily invested in US and Ecuador property.

Take this acreage and farm house as an example.  This offers great value because it is an investment in real estate… a business and commodities (food)

ecuador-real-estate

Here is the farm house.  From the front porch there are…

ecuador-real-estate

views of the acreage.

ecuador-real-estate

including…

ecuador-real-estate

animal pens…

ecuador-real-estate

crops…

ecuador-real-estate

storage area…

ecuador-real-estate

rental unit and…

ecuador-real-estate

small local canteen the owner operates.  This is a…

ecuador-real-estate

great value at $79,000 asking.

Ecuador Living subscribers have been sent a full report on this property.  Learn more about Ecuador Living here.

You can see the property (until it sells) above on our Imbabura real estate tours shown below.

The greatest asset of all is the ability to labor at what you love wherever you live. This brings everlasting wealth.

This is why we are providing a special three for one offer with our  course Tangled Web… How to Have an Internet Business

This course can help you create your own internet business.

Our emailed course “Tangled Webs We Weave – How to Have Your Own Web Based Business” is a continuing educational program.  You receive the first 28 lessons when you enroll and a new lesson every week or two.

This course teaches how to create a web based business and is developed from the ongoing experiences that we have from our successful and profitable internet business.

This course is well worth the enrollment fee of $299… but currently you also receive two additional courses FREE.

The other two courses are #1: International Business Made EZ, and #2: Self Fulfilled – How to be a Self Publisher.

These two courses have sold for $398 and thousands have paid this price. We add them to your course, at no added cost, as I believe they will help you develop a better business in these crucial times..

Even Better Get All three Courses Free

To make this offer even more compelling,  I am giving everyone who enrolls in all our seminars or tours for any one month, October, November or December, “Tangled Web… How to Have an Internet Business Course,”  “Self Fulfilled- How to be a Self Publisher” and “International Business Made EZ” free.

Inflation is coming and will hit wage earners and retirees hardest of all.  Yet you can succeed. We look forward to sharing ideas on how to succeed with real estate, multi currency bonds and equities and your own business.

Gary

Head south to Ecuador!

Here is the balance of our 2009 Ecuador real estate tour schedule…  plus Blaine Watson’s Beyond Logic and our last Ecuador Shaman Mingo of the year.

Nov. 9-10 Imbabura Real Estate Tour

Nov. 11-14 Ecuador Coastal Real Estate Tour

December 6-8 Blaine Watson’s  Beyond Logic & Shamanic Tour

December 9-10 Imbabura Real Estate Tour

December 11-13 Ecuador Coastal Real Estate Tour

Join us in 2010.   Attend more than one seminar and tour and save even more plus get the three emailed courses free.

Our multi seminar-tour discounts have grown!

See the 2010 winter schedule below.

2 seminar courses & tours

3 seminar courses & tours   $1199 $1,749

4 seminar courses & tours   $1,399 $2,149

5 seminar courses & tours  $1,599 $2,499

(Be sure to show in the comments section which courses and tours you are attending)

International Club attend up to 52 courses and tours in 2010 free.

ecuador-exports

Jan.   8-11     Ecuador Export Tour ($499) Couple $749
Jan. 13-14     Imbabura Real Estate Tour
Jan. 16-17     Coastal Real Estate Tour
Jan. 19-20    Quito-Mindo Real Estate Tour
Jan. 22-23    Cuenca Real Estate Tour

Feb. 11-14   Quantum Wealth Florida -International Investing & Internet Business, Mt. Dora, Florida ($749) Couple $999
Feb. 15-16   Travel to Quito and Andes
Feb  17-18   Imbabura Real Estate Tour
Feb. 20-21  Coastal Real Estate Tour
Feb. 23-24  Quito-Mindo Real Estate Tour
Feb. 26-27  Cuenca Real Estate Tour

Mar. 11-14     Super Thinking + Spanish Course, Mt. Dora, Florida ($749) Couple $999
Mar. 15-16    Travel to Quito and Andes
Mar. 17-18     Imbabura Real Estate Tour
Mar. 19-20    Cotacachi Shamanic Tour
Mar. 22-23    Coastal Real Estate Tour
Mar. 25-26    Cuenca Real Estate Tour

We have been conducting Ecuador real estate tours for a decade longer than any others.   Our success has grown because we do not accept commissions on Ecuador estate shown on these tours.   Our goal is to help you know how to find the best deals on  Ecuador real estate.

The pictures below show some of the property we’ll view on the Ecuador real estate tours.

Delegates see two and three bedroom Andean condos like this.

ecuador-real-estate

with views like this…

ecuador-real-estate

In the $50,000 range.

Large square footage, fixer upper’s like this…

ecuador-real-estate

with large gardens and …

ecuador-real-estate

this view are offered at…

ecuador-real-estate

$30,000… asking.

We see luxury townhouses at $75,000

ecuador-real-estate

We view mansions…

ecuador real estate

inside and…

ecuador real estate

out.

ecuador-real-estate

Gated communities are visited.

ecuador-shots

Coastal land, houses and condos on the beach… near the beach and with views are seen.

ecuador-real-estate

We see beach front penthouses with these views.

ecuador-real-estate

Ultimate luxury…

ecuador-real-estate

Ecuador beach properties are…

ecuador-real-estate

seen.

Plus rustic houses with…

ecuador-real-estate

perfect beach position are found.  I am told that a delegate purchased this house on our last tour.

ecuador-real-estate

Here it that rustic house, on the right of Merri and me walking the beach with a friend and our hound.

ecuador-real-estate

These brand new beach view condos are $89,000 (some of these units for sale are mine and are offered at $79,000 for Ecuador Living subscribers).

ecuador-real-estate

We see luxury condos but also rustic beach B&B opportunities like the one below at $60,000… asking.

ecuador-real-estate

We’ll even see commercial Ecuador real estate opportunity like this hotel… and

ecuador-real-estate

even this Ecuador golf course on a lake that is for sale with…

two restaurants.

P1030417

with 144 seats and…

P1030525

rental units on…

ECUADOR-PROPERTY

this lake.

P1030427

We hope to serve you well with Ecuador real estate.

Gary

Read the entire articles:  Wages could hit steepest plunge in 18 years

$1.4 Trillion Deficit Complicates Stimulus Plans

Obama team makes it official: Budget deficit hits record. By a lot

Bailout Helps Fuel a New Era of Wall Street Wealth  by Graham Bowley

Power of Global Investing Diversification


There is great power in global investing diversification.

Investment-diversification

Sunrise at our North Carolina farm.  We diversify because the sun always shines somewhere.

Pure capitalistic theory says that in the long run… a global economy is good for everyone….overall.

Technology gives us the ability to buy from those who serve us best, wherever they are  in the world.  Why should we buy poorer quality goods locally at a higher price when someone from elsewhere can serve us better and for less.

Plus if we produce something better than anyone else we should be able to sell our product or service anywhere in the world as well.

Floridians and Californians buy apples from Oregon and North Carolina.

Oregonians and North Carolinians buy oranges from Florida or California because these areas each have special advantages… excellent conditions to produce and deliver those fruits clear across a continent, better and for less.

Global market advantages can be based on geography, infrastructure, skills sets, labor costs etc.

The theory of globalization is good but the process is not smooth. Globalization creates unemployment in many places and distorts many economies in the short term.  This usually pushes the process into the political arena and gets governments involved.  Governments often act based on political considerations rather than for good, long term economic reasons.

Plus business if given a chance… does not always encourage a free economy either.  Give big business a monopoly and they’ll tie up free trade even faster and much more efficiently than a government.

There is little, as businesses or investors, that we can do do to change these facts.

We are usually better off to adapt and take advantage of whatever situation exists instead.

This is what creates power in diversification.

Investment-diversification

Sunrise at our Ecuador hacienda.

The sun always shines somewhere. When our business and investments are diversified, we just have a better chance that our investments and business will be somewhere where there the business climate is sunny.

For example… a recent message Ecuador Beats Inflation looked at excerpts from a recent AOL.Money article by Jim Kuhnhenn entitled “White House Projects $9 Trillion Deficit”: In a chilling forecast, the White House is predicting a 10-year federal deficit of $9 trillion — more than the sum of all previous deficits since America’s founding. And it says by the next decade’s end the national debt will equal three-quarters of the entire U.S. economy.  But before President Barack Obama can do much about it, he’ll have to weather recession aftershocks including unemployment that his advisers said Tuesday is still heading for 10 percent.  Overall, White House and congressional budget analysts said in a brace of new estimates that the economy will shrink by 2.5 to 2.8 percent this year even as it begins to climb out of the recession. Those estimates reflect this year’s deeper-than-expected economic plunge.

Yet at the same time a Wall Street Journal article entitled “Ecuador Inflation To End ’09 Below 4%”  By Mercedes Alvaro shows that Ecuador’s economy is growing.
Here is an excerpt: QUITO (Dow Jones)–Ecuador’s inflation rate will end 2009 below 4% and the economy will grow close to 2% this year, President Rafael Correa said Wednesday.

“The annualized inflation will be below 4%,” Correa said late Wednesday in a radio and TV address. “There is not recession. Ecuador will have a growth of about 2%.”  “We have faced the biggest world crisis successfully,” Correa added. Early Wednesday the central bank said the Ecuadorian economy overall is poised to expand 1% in 2009.  Ecuador’s gross domestic product grew 6.52% in 2008 while inflation reached 8.83%.  According to central bank data, Ecuador’s liquid international reserves stood at $4.0 billion as of Aug. 21.  Last week, the central bank president, Carlos Vallejo, said that the government will repatriate in the coming days some $300 million of Ecuador’s liquid reserves invested abroad.  Ecuador’s liquid international reserves include public-sector deposits with the central bank, revenues from oil exports, loans from multilateral lenders and minimum reserve requirements from private banks.  In May, the central bank established a liquidity requirement forcing private banks to keep at least 45% of their assets and investments in Ecuador to draw back cash and boost domestic liquidity.

Investment-diversification

Sunrise on…

Investment-diversification

Sunrise over Mount Imbabura.

Because I am diversified in Ecuador, Georgia, Florida and North Carolina, in 2007, I was selling Florida property at the top of the market.  I was buying Ecuador real estate with those returns. Now that Florida  is down and Ecuador real estate has risen,  I am selling Ecuador real estate and buying in Florida.

A huge portion of all profits in business and investing come from timing.  Most commodity, stock and real estate markets go through ups and downs.  If you plan your investments and liquidity so you sell only at favorable times, global investing diversification enhances your chances of always having assets someplace where there is a seller’s market.

Investment-diversification

Sunrise shot from our hotel Meson de las Flores.

So when you think Ecuador… or Mexico or Panama… or wherever…. also thing diversification.  The sun always shines somewhere and your changes of financial suntans increase when you diversify.

Gary

The greatest asset of all is the ability to labor at what you love wherever you live. This brings everlasting wealth.

This is why we are providing a special three for one offer with our  course Tangled Web… How to Have an Internet Business

This course can help you create your own internet business.

Our emailed course “Tangled Webs We Weave – How to Have Your Own Web Based Business” is a continuing educational program.  You receive the first 28 lessons when you enroll and a new lesson every week or two.

This course teaches how to create a web based business and is developed from the ongoing experiences that we have from our successful and profitable internet business.

This course is well worth the enrollment fee of $299… but currently you also receive two additional courses FREE.

The other two courses are #1: International Business Made EZ, and #2: Self Fulfilled – How to be a Self Publisher.

These two courses have sold for $398 and thousands have paid this price. We add them to your course, at no added cost, as I believe they will help you develop a better business in these crucial times..

Even Better Get All three Courses Free

To make this offer even more compelling,  I am giving everyone who enrolls in our North Carolina or Ecuador International Business & Investing seminar in October or November all three courses, “Tangled Web… How to Have an Internet Business Course,”  “Self Fulfilled- How to be a Self Publisher” and “International Business Made EZ” free.

internet-business-idea We always conduct our autumn North Carolina course on the first weekend of October… the best time to enjoy  the leaf change.

Join us with Jyske Bank and my webmaster David Cross in West Jefferson North Carolina. Learn more about global investing, & how to have an international business at the seminar.

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

ecuador-tours

You’ll see views like this on your way to West Jefferson for the October seminar.

Or head south to Ecuador!

ecuador-tours

October 16-18 Ecuador Southern coastal tour ONLY FOUR SPACES LEFT

Oct. 21-24 Ecuador Import Export Tour

Oct. 25-26 Imbabura Real Estate Tour

ecuador-hotel

In Cotacachi the weather is always spring like.  Here is the village plaza near our hotel Meson de las Flores.

Join us with Peter Laub of Jyske Global Asset Management in Ecuador. Learn more about global investing, how to have an international business at the seminar.

Nov. 6-8 IBEZ Ecuador Seminar

ecuador-hotel

Let our friendly staff at Meson de las Flores serve you.

Nov. 9-10 Imbabura Real Estate Tour

Nov. 11-14 Ecuador Coastal Real Estate Tour

ecuador-hotel

This shorts weather photo was taken from our beach penthouse in February.

Join us in the mountains and at the sea.  Attend more than one seminar and tour and save even more plus get the three emailed courses free.

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 entire article Ecuador Inflation To End ’09 Below 4%

Brazil Multi Currency Opportunity


See how my multi currency course subscribers have been able to gain up to 50% in Brazil during 2009.

Many readers at this site know me best as Mr. Ecuador.  However recently some of our subscribers have enjoyed the biggest profits as multi currency investors in Brazil.

Though Merri and I have been investing, living and working in Ecuador for over a dozen years now, our greatest expertise is as multi currency investors as we are in our 41st year.

See below how multi currency investing brought us to Ecuador and how your interest in Ecuador can now bring you a free subscription to our multi currency course as I present a survivors guide to currency and market turmoil.

Those interested in Ecuador do not have to change currencies when they travel here because Ecuador’s currency is the US dollar.

This means they need to learn how to make your money go up as the US dollar and stock markets go up and down…

The US dollar has fallen… badly against major currencies like the yen, euro and Swiss franc for 37 years.  You can see this long term, steady decline of the US dollar in this chart from Grandfather.com.

multi-currency-debt

One reason for this fall is the growing debt in the USA.

Now this debt is even worse. Here is a picture from USA Today that shows how the US public debt  has just grown 12%.

ecuador-tickets

Even minor currencies such as the Colombian peso, and Brazilian real have risen steadily versus the US dollar… 25%, 50% since the early 2000s and more.

Until.. in 2008, the greenback suddenly zoomed up… as stock markets collapsed around the world. Now the dollar is falling again.

Sideways motion like this destroys most investors.

Yet there is a way to earn even in these worst times…by learning how to spot value…that turns turmoil and currency shifts into profit.

This is not just a problem for Americans either. The dollar’s downfall affects currencies all over the world and creates global economic turmoil. For the modern economy to operate in its current fashion some reserve currency is required.

Yet what currency would you choose…the Chinese yuan…the euro…gold, oil? Would you trust your life savings to speculate on that?

Of three things we can be sure.

First, The US dollar will fall more…much more.

Second, there will be confusion. Many…in fact most uninformed investors will lose…a lot.

Third there will be inflation…worldwide due to the excessive spending in the current global financial bailout.

Smart investors who know how to spot value in multi currency portfolios at some of the world’s safest banks have already earned 57%…120% …263% so even with the doom and gloom, they are still ahead.

More important these same investors have learned how to survive through turmoil.

My name is Gary Scott. I have been writing and publishing information about the falling greenback and how to earn from it though international investing for over forty years (since May 1968 to be exact).

Fortunately I stumbled across multi currency investing at an early stage and wrote a book about this clear back in the 1970s when the US dollar was first beginning to erode.

Since that time my books and reports have helped hundreds of thousands of investors find hot areas of value in every decade.

In the 1970s we helped our readers  find investments in gold & silver as well as investments  in the currencies of Japan, Germany, Switzerland, England, Australia and Hong Kong.

In the 1980s, the Tigers, Taiwan, Singapore Malaysia and South Korea, & Turkey were the places where our readers gained value.

The 1990s saw South America (which led me to Ecuador) as the place to invest.

The early 2000s offered great value in China, India and Eastern Europe.

We have helped readers find good value real estate throughout this time, first in Hong Kong, then London, Switzerland,  Isle of Man, Dominican Republic and now Ecuador as well as in Small Town USA.

We have also helped readers bet against the US dollar throughout these decades which as the chart above shows has worked well.

Finally in the early 200os we began helping readers find good value green investments.

I would like to offer you a valuable real time emailed course that teaches how to invest in multi currency portfolios plus how to sometimes use leverage in these portfolios to create extra profits.

Sleepy Safe Portfolios Can Earn Over 100% Per Year

Multi currency investing does not require any fast trading techniques.  Multi currency portfolios are normally slow and sleepy investments…not currency contracts or futures speculations.  Most multi currency positions are aimed with a five year horizon…pretty sleepy compared to people who trade currencies (an entirely different and far riskier technique).  For most of us, slow and sleepy means SAFE!

Yet multi currency portfolios can be really profitable as well.

How sleepy and how safe?

Let’s look first at sleepy.

In 2006 we created an Asian multi currency portfolio consisting of just five award winning mutual funds.

We did not touch the entire portfolio for an entire year. Then after one year we made just five changes…dropping two mutual funds and adding three other mutual funds. Then we did not make another single change. That’s pretty sleepy, choosing a handful of mutual funds and making only five changes in two years.

How safe?

The portfolio was chosen with the help of one of the world’s safest banks and the mutual funds were held at that bank at all times.

Okay. Here is the big question. How profitable?

In the first year (2006) this portfolio rose 114.16%. Then we made the five changes mentioned (two funds dropped and three added). In 2007 this portfolio rose 122.62%. 2008 was a disaster year which we will look at in a moment.  But when your portfolio is over 200% in two years, it takes a lot of disaster to lose.

Suppose we get more specific.

That safe bank is a Danish bank. That’s good because in recent years Denmark has been rated by Standard & Poor’s as one of the safest country in the world in which to bank

The bank is Jyske Bank…well established with a history of over 100 years. Jyske is Denmark ’s second largest bank, with 450,000 clients in Denmark and over 30,000 abroad.

Jyske Bank has over 23 billion euros in assets and also happens to be one of the leading currency traders in the world. The Danes have always been big currency traders because as a small naval country surrounded by England, Sweden, Finland, Russia, Germany, Norway and other countries…they have always had to deal in many currencies.

This historically gained expertise means that unlike most banks (that trade only eight hours a day) Jyske maintains a 24 hour global currency and commodity dealer service. Many other large banks use Jyske to handle their off hour currency positions. This means that Jyske is huge when it comes to multi currency activity. In fact their turnover reaches $50 billion dollars a day.

Let’s address this issue of safety in more detail. Normally this is a pretty moot point. Right now everyone is concerned. Is a bank safe or not? I like Jyske from a bank safety point of view because there are three bank safety points, from the top down.

Bank Safety Point #1: A recent Yahoo Canada article shows a survey by the World Economic Forum listed five safest countries in which to bank.

Canada
Sweden
Luxembourg
Australia
Denmark

So Denmark is a safe place to bank. Now let’s look at Jyske Bank’s safety rating.

Bank Safety Point #2: Jyske Bank is Denmark’s second largest bank.
On October 10 2008, Moody’s affirmed Jyske Bank’s long-term Aa2 rating stable rating. This decision came despite the deteriorated economic prospects in Denmark, particularly in respect of the property market.

Bank Safety Point #3: Also on Friday 10 October 2008, the Danish Parliament passed a bill that secured all deposits and unsecured claims against losses in Danish financial institutions.
The rating of the Kingdom of Denmark is Aaa/AAA with Moody’s and Standard & Poor’s respectively.

That’s safe!

I happen to know Jyske Bank because I began using them (as my bank) over 20 years ago. They are one of the few banks that offers a special multi currency portfolio service for investors from almost anywhere in the world.

I was one of the first writers and publishers to begin writing about multi currency investing. Jyske bank was one of the first banks to offer a multi currency portfolio service…and they were my bank.

Not surprising we got together and have created a strategic alliance that can help you learn how to create multi currency portfolios that suit you.

My multi currency course helps readers learn how to find good value and develop multi currency portfolios that suit their specific circumstances.

Before I explain how you can use this course, let’s look at both the up and down side of these high performing portfolios?

The course provides two levels of education. Part one gives readers an extensive beginner’s guide to developing multi currency portfolios.

Part two is unusual and neat.  Part two educates in real time. We create multi currency portfolios and track them real time.  The education comes from dissecting and discussing the portfolio results.  This is a totally novel way to learn…real time from real portfolios created by some of the best investment managers in the world as these portfolios rise or fall in the market place…in the here and now.

Jyske Bank assists by providing all the portfolio details.   Our symbiotic relationship allows me to combine my experience with this bank’s incredible knowledge, real time capability and expertise so course subscribers can learn in a most practical way from some of the greatest multi currency experts in the world.

Here is our educational performance over the past few years.

We created five portfolios for educational purposes on November 1, 2005. One of the five multi currency portfolios was the Asian Emerging Multi Currency Portfolio. The portfolio started with a $100,000 investment and a $200,000 loan in Japanese yen (more on the loans in a moment).

This gave us $300,000 to invest in this portfolio.

Amount

Currency

Investment

75,000

Rupee

Jyske Invest Indian Equity Mutual Fund

75,000

Yuan

Jyske Invest Chinese Equity Mutual Fund

75,000

Yen

Jyske Invest Japanese Equity Mutual Fund

75,000

Multiple

Jyske Invest Emerging Market Bond Fund

Investments Total Value 300,000.00

Invested $100,000

Loan $200,000 100.00% JPY at 1.63%

Loan cost for one year $3,260.

This portfolio diversified into bonds and equities throughout Asia ..very multi currency.

Chinese yuan, Indian rupee, Japanese yen and more.

Twelve months later the portfolio was worth $417,420. Paying off the loan cost $203,260 leaving $214,160 or $114,160 (114.16% profit) on the $100,000 originally invested.

On November 1, 2006 we made the five changes mentioned above. We dropped the Japanese equities and emerging market bond mutual funds and added an Eastern European, Far Eastern and Turkey equity mutual funds. This is how the rearranged portfolio stood.

Amount

Currency

Investment

75,000

Rupee

Jyske Invest Indian Equity Mutual Fund

75,000

Yuan

Jyske Invest Chinese Equity Mutual Fund

75,000

EUR

Jyske Invest Eastern European Equities

50,000

Asian

Jyske Invest Far Eastern Equities

25,000

Lira

Jyske Invest Turkish Equities

Investments Total Value 300,000.00

Invested $100,000

Loan $200,000 100.00% Czech Koruna at 3.875%

Loan cost for one year $7,750.

As promised this portfolio only had five changes. We swapped the Japanese equity fund for a Eastern European equity fund and dropped the bond fund replacing it with a Far Eastern and Turkey equity fund.

May I, at this point, interject a note about Jyske Invest fund managers. They are a Danish firm and are the investment management affiliate of Jyske Bank. This rock solid organization uses a good value system have been rated #1 by Morningstar. They use this value system to select shares in their mutual funds and we place these funds in our multi currency portfolios because they are strictly regulated by the Danish government and have such an excellent record…because they focus on finding value, not market timing.

So how did this new updated portfolio do? From November 1, 2006 to October 31, 2007 the fund rose in value from $300,000 to $430,370. The loan payoff of $207,750 leaves a profit of $222,620 or a rise of 122.62%.

There you have it, a safe sleepy portfolio created at and held in one of the world’s safest banks. With only three trades in two years the performance has been up 114.16% in year one and up 122.62% in year two.

I am sure that when looking at performance like that you are thinking “how did the other portfolios do?” Good question and your suspicions are correct…some of the other portfolios did not rise this much.

Yet believe it or not some portfolios did even better.

For example the 2007 Green Portfolio consisted of six shares and rose 266.30%!

Here is the exact performance of all five portfolios for the last two years.

2006 Portfolio

US Dollar Long

9.04%

US Dollar Short

10.43%

US Dollar Hedge

11.46%

Emerging Market

42.93%

Asia Emerging Market

114.16%

2007 Portfolios

Dollar Neutral

38.67%

Dollar Short

48.19%

Swiss Samba

53.32%

Asia Emerging Market

122.62%

Green

266.30%

You can imagine with performance like this attracted quite a bit of attention…and it did.  However these high returns are not the important benefit you gain with our multi currency course.

Our course does not recommend nor manage portfolios.  We did not suggest that any single reader invest in any of these portfolios. The portfolios are educational and designed to help readers work with their own investment manager to create their own multi currency portfolio that suits their own special, individual needs.

Our multi currency investment course helps readers learn how to manage their manager… nothing more.

Yet this is incredibly valuable because Jyske Bank can provide a stable and safe institution for those who wish to employ a multi currency strategy.

The course helps guide readers so they can direct any investment adviser or investment manager who understands how to invest in more than one currency.

The course also helps you manage risk. The incredible portfolio performance above was achieved because the portfolios were leveraged using a tactic we call a multi currency sandwich. Investors borrow low and invest in yielding or growth portfolios. The portfolios used loans in Japanese yen and Swiss francs to magnify profits in good times.

The course teaches how these loans can magnify losses in bad times as well.

For example look at the performance of the leveraged portfolios we created to study from November 2007 through September 2008.

2008 Portfolios

Infrastructure Portfolio

-112%

Blue Chip Portfolio

-79%

Danish Health Portfolio

-92%

Asia Emerging Market

-73%

Green

-56%

Leverage in 2008 caused the portfolios to lose badly…in one instance the total portfolio was lost!

The multi currency course is useful because it helps investors not to expect rising markets all the time.

The power of studying markets real time, as they unfold, wards off false expectations.

The course helps subscribers learn how to look ahead and act rather that react (after the fact when it is too late).

The sad fact is…we all have to become multi currency investors.  Trusting your fate to any one currency now can destroy your purchasing power.    Every investor needs to know what to do!

The course helps spot when to leverage good times and when to retract for the bad.  he idea is to cash in when the going is good and then withdraw.

For example in early August 2007…well before the market crash….our study of the market began to show increased risk.  Our first warning lesson said:  “We have enjoyed two years of enormous growth.  Periods of high growth are normally followed by periods of low growth.”

August 17, 2007 a lesson said: “The numbers are close enough that we could be entering the fourth sub cycle down (similar to 1976 to 1978). If so expect a sustained drop in markets for two to three years.”

On September 21, 2007, a lesson said: “equity markets dropped again violently last month. Now these markets have recovered again. Yet this may be a last gasp party.”

An October 14, 2007 lesson stated:  “We never know for sure when an upwards cycle will stall. Fundamentals look good for a bright 2008 in emerging and equity markets, but this can change quickly so to give our readers a better perspective, this year we are reducing leverage and adding a sixth portfolio with no leverage to study”.

The October 15, 2007 lesson reviewed how leveraged investments rise and fell faster than investments without leverage.

The lesson on Oct 26, 2007  saved many investors as it was entitled Leveraged Investments Gone.  Just before markets started to head south this lesson warned: “I have had only about 10% of my portfolio leveraged. Compare this to 200% for the Green Portfolio (which is up 265% this year). Now I have none.

So a lot of my portfolio investments are basically in a multi currency portfolio of bonds…mostly in pounds, Swedish and Danish kroner. The equities I hold are mainly in Europe and I do not leverage equities…especially after markets have risen so much. Periods of high returns are normally followed by periods of low returns. These facts, plus my belief that numerous economic woes are rising and my recollection of Oct 1987 leave me wanting to reduce risk in my equity portfolio. So now I have eliminated all my leverage.”

The next lesson warned again: “Okay it’s time to turn the burner down.”

A November 8, 2007 Black Friday lesson reviewed  all the warnings above again and more.

The course also helps readers find ways to spot unusual distortions that profit even in bad times.

For example  lessons  on April 18 and April 27 2009 looked at the benefit of investing in Brazilian currency bonds.

This lesson led to a quick profit.

Here is an excerpt from our June 12, 2009 lesson:

Based on these ideas and those presented in the April 18 and April 27 lessons we looked at why Brazilian bonds made good sense in the LONG TERM.

Sometimes we get lucky though in the short term… as we have now.

Brazilian bonds have made a sudden jump up!   Those who have invested in them have made as much as 50% (in US dollar terms) this year.

Yet the distortion we’ll review below shows how there is even more dollar denominated profit potential ahead.

Last week the Brazilian central bank lowered key interest rates to 9.25%.  This will likely send the price of  Brazilian real denominated bonds up.

The central bank has stated that there could be more rate cuts, but they will be smaller.

This is positive news plus Brazilian inflation has declined to 5.2% from 5.53% in April 2009.

When you take into account the high interest of the real, the rise in value of bonds and the rise of the real you can see the potential.

Brazilian real bonds have risen nearly 30% since the beginning of the year…  in terms of Euro!

This is where there is another huge distortion.  The real has not risen anywhere near this much versus the dollar.

The charts from finance.yahoo.com below show the distortion.

In the last three months the US dollar has dropped from $1 = 2.30 BRL to $1 = $1.97 (- 14.3%) versus the Brazilian real as this chart shows.

brazil-distortion

In the last three months the euro has dropped from 1 euro = 3.05BRL to 1 euro = 2.60 BRL (-13.5%).   This correlation of the euro and dollar would seem normal except…

brazil-distortion

as the chart below shows, the euro has risen from $1 euro = $1.28 to 1 euro =$1.40 a 9.27% rise versus the US dollar.

brazil-distortion

In addition the Brazilian central bank has had to intervene several times in recent months to avoid the Brazilian real being too strong against the euro.

Traditionally the real has had a strong correlation with the dollar but the recent weakening of the buck versus the dollar has not spilled over into the Brazilian real.

In other words. The real is up against the euro almost 10% more than against the dollar.  This is called a cross rate distortion and means that one of two things is likely to happen.  The dollar will rise versus the euro or  the dollar will fall versus the Brazilian real.

Given the fundamental US fiscal weaknesses that could push the dollar down, I am bullish on the real rising more versus the dollar and this makes me bullish about Brazilian real denominated bonds.

Always remember the basic rule though is to never speculate more than you can afford to lose.   A US dollar – Brazilian real sandwich is worth discussing with your portfolio manager or adviser now but could creates losses as well as profits.

I have not leveraged my Brazilian bond investment. Based on this data I instructed JGAM to increase me Brazilian bond holdings.

If you are using Jyske Bank, and are a non US citizen or resident, or a US citizen living abroad, you can simply have the bank purchase Brazilian bonds and lend you the funds (within the bank’s loan to asset restrictions).   Non US citizens contact Rene Mathys for more details at mathys@jbpb.dk

US citizens should contact Thomas Fischer at fischer@jgam.com

If you are a US citizen resident in the US and have an advisory account with JGAM, they may not be able to buy Brazilian bonds for you.  They could  buy the US traded ETF “The WisdomTree Dreyfus Brazilian Real Fund.” (BZF)

These three lessons (April and June 2009) helped many readers cash in on an unusual value!

I would like to invite you to enroll in our multi currency investment course and to also receive a nine lesson report that covers basics and fundamentals of  multi currency investing.

This nine lesson report has been read by tens of thousands of investors over the years.   This report sells on its own as a survivor’s hand guide to currency turmoil for $79.  I’ll email it to you free when you enroll in our online course.

The course is emailed to you regularly and studies stock, bond and currency markets worldwide, real time, as they unfold.

I believe, from the response of tens of thousands of readers over the last 20 years, that you will gain enormously from the course.

Our course helps you learn  why and where to invest and learn why and how currencies and interest rates rise and or fall.

The initial nine lesson report I’ll email you free also shows how to calculate and manage leveraged risk and how to decide if and when to leverage or not.

Is this course for you?

Everyone needs to know how to have multi currency diversification. But in case this course does not help you, we provide a 30 day “completely satisfied or your money back” guarantee that we have offered our hundreds of thousands of readers for more than 20 years.

Our Multi Currency Educational Service is a mere $175 for a very long and educational year! Won’t you share this exciting world of wealth accumulation with us and our readers around the world? Multi Currency Educational Service

Gary Scott

Multi Currency Portfolios Course. Subscribe

Or enjoy this multi currency course for a year free!  Here is how you can save $175.

We enhance our emailed courses with regular international investing and business seminars that I conduct in coordination with Jyske Bank and Jyske Global Asset Management.

Here I am at our last seminar in Naples Florida (may 2009).

multi-currency-debt

The speakers at the Naples seminar discussed prospects for the economic future.  Left to right: Samuel Rachlin,  Rich Checkan, Steve Blumenthal, Joe Cox, John Mauldin, Gary Scott, Lars Stouge. Thomas Fischer Moderating.

The 115 delegates reported that they really gained from listening to what we had to say and…

brazilian-bond-distortion

talking among themselves during the coffee brakes and at meals.

brazilian-bond-distortion

One benefit of these seminars is talking to an overseas banker.  Here I am at the Naples  seminar  with my Jyske account executive Anders Nielsen.

brazilian-bond-distortion

Thomas Fischer of Jyske Global Asset Management will join us for the July North Carolina seminar.

I invite you to attend this July course. If you enroll between now and July 1st, I’ll also enroll you in  our emailed multi currency course free. You save $175.

Enroll in our July 24-26 International Investing and Business Made EZ course here

Here is Thomas speaking to our delegates at a previous course.

brazilian-bond-distortion

Enroll in our emailed Multi Currency Portfolios Course for $175  here.  Subscribe

Save $175!  Receive the emailed course free when you Enroll in our July 24-26 International Investing and Business Made EZ course here

Here is what a few others from around the world have said about our services and reports on international investing.

“ Gary , I am a long time subscriber in various media, and while cleaning out my files today I found some old ‘Gary A. Scotts World Reports’. In particular, the April 1988 issue provided the info that made me over a million dollars. Just wanted to say a belated ‘thank you’ and please continue the excellent work. Warm regards,”

From an Unknown Reader

“Dear Gary, I would like to give thanks to you for introducing me to Jyske Bank two years ago.

“I have been a long-time client of Merrill Lynch, but am in the process of re-evaluating my relationship with the largest brokerage company in the world. My problem is that when I compare Merrill to Jyske, Jyske outshines Merrill (or other major U.S. brokerage firms) in most categories as follows:

“1) Even though Jyske is much smaller, it has a much more global perspective which is critical in an evermore global investment environment.

“2) In order to maximize their own individual revenue, the brokers at Merrill prefer to outsource the day-to-day management of their accounts to various fund managers and hence, ‘manage the managers’. In contrast, I can call my Account Manager at Jyske and he can discuss every aspect of my account in detail with me.

“3) I attribute this difference in #2 to the fact that Jyske’s employees are not compensation driven, but instead are focused on satisfying their customers. That is why Jyske’s clients stay with the Bank on average for 12 years, which is phenomenal by Wall Street standards.

“4) Jyske’s security is far more stringent than that of Merrill’s. In addition to the standard account code and password, to pass through Jyske’s security one has to enter a Key Card number and also a randomly-generated 4-digit number from said Key Card.

“5) Having an account offshore allows me to sleep better given the anxious times we live in. Since I report the existence of the account and pay all taxes due, I am fully compliant with the law. However, such an account gives me and my family a ‘financial life boat’ should events in our own country ever get out of hand.

“As Dorothy Parker once said, ‘You can lead a horse to water, but you can’t make them THINK’. Jyske is a thinking person’s bank. My only complaint is the time zone difference since I live in California . However, since I am an early riser and my Account Manager is very responsive to my emails, this problem is very small relative to the HUGE benefits.

“Again, many thanks for introducing me to Jyske Bank. Given the ‘dumbing down’ that occurs in the popular media today, your ezine and its recommendations are ever more important. Please continue your good work to enlighten your readership.

“Warm regards,”

C.M. CALIFORNIA Businessman

“I was so overwhelmed with information I received I had to spend several days reading, sorting and filing it! I have decided to move my modest investment capital overseas.”

B.W. MONTREAL CANADA Professor

“Send me your report on safe banks lending at 7% for redeposit at 13% or more.” B.V. ADDIS ABADA ETHIOPIA Economic Commission United Nations

“A number of new and significant contacts were made. It would be extremely helpful if you could supply us with WORLD REPORTS.” I.M. TORONTO , CANADA Banker

“You are as good as your word which is rare these days. I look forward to attending one of your seminars.” C.K. GENEVA , SWITZERLAND Banker

“In spite of my marketing experience, your information really got me going!” M. C. LONDON, ENGLAND Marketing Consultant

“Thanks for the three reports. They are very interesting and should find many readers here in Japan .” M.A. Tokyo , JAPAN Computer Programmer

“I would like to say how much I enjoyed the information I received.” A.B. Providenciales TURKS & CAICOS Accountant

“First let me say how much we enjoyed the investment seminar.” W.J. SAUDI ARABIA Oil Engineer

“Once again thanks for all the great information.” G.K. PERTH , AUSTRALIA Insurance Executive

“Your letter of November 8th warned me to beware of the market just a week before the 120 point crash on November 15th!” T.G. N. CAROLINA Pilot”

Won’t you join us as we learn from our Multi Currency Educational Service? Just a mere $175 for a full 12 months of valuable, wealth building education.

Enroll in our emailed Multi Currency Portfolios Course for $175  here.  Subscribe

Save $175!  Receive the emailed course free when you Enroll in our July 24-26 International Investing and Business Made EZ course here

Ecuador Bond Default


Today, December 15, 2009, we’ll know for sure if Ecuador has defaulted on some of its bonds. Ecuador’s President Rafael Correa threatened to do this once before…and did not.

This time I believe he will.

This will be good…for many…because despite the default, Ecuador’s sun will not go away.

Ecuador-bond-default

Nor will the beauty of Ecuador’s mountains like this one we climbed.

Ecuador-bond-default

Nor will it stop the smiles of Ecuador’s happy people like these potato farmers we met on the hike.

Ecuador-bond-default

Nor will the hard working energy of the crafts people in town like Otavalo (shown here) cease.

Ecuador-bond-default

Nor the richness of the land like this Intag forest go away.

Ecuador-bond-default

Nor will the wonder of the longevity valleys like this Intag plain end.Ecuador-bond-default

Ecuador’s bond default may create profits in two ways….one in the global bond market. The other gain will be in Ecuador.

Many readers have sent me a link to last week’s Bloomberg December 12, 2009 article by Stephan Kueffner which says:

Correa Defaults on Ecuador Bonds, Seeks Restructuring.  Ecuadorean President Rafael Correa halted payment on foreign bonds he calls “illegal” and “illegitimate,” putting the South American country in default for a second time in a decade.

The government won’t make a $30.6 million interest payment by Dec. 15, when a month long grace period expires, Correa told reporters in his office in Guayaquil. The $510 million bonds due in 2012 plunged to 23 cents on the dollar from 31 yesterday and 97.5 cents three months ago.

“I have given the order that interest payments not be made,” Correa said. “The country is in default.”

Though Ecuador is a small country, the size of France, with about 11 million people, its bond default may slow the recovery of the bond market during this global economic downturn.

Latin Bonds already have strong yields.  Look at the high yields on medium term denominated in US euro and US dollars!

Currency   Bond                Country             Yield

EUR     8.5  24/09/2012     BRAZIL             7.49%

EUR     7.375 03/02/2015   BRAZIL            8.38%

EUR     11.5   31/05/2011   COLOMBIA      8.17%

EUR     5.375 10/06/2013   MEXICO           7.28%

EUR         7.5  14/10/2014  PERU               9.02%

USD        10.25 17/06/2013 BRAZIL           6.24%

USD     8.25 22/12/2014      COLOMBIA     7.42%

USD     9.875  06/02/2015    PERU             7.57%

Ecuador owes about $10 billion to bondholders, multilateral lenders and other countries…not a lot by global standards…but  Ecuador’s bond default could cause a ripple down in Latin bonds and create even higher yields.  If so, I’ll buy some today.

The bonds and yields above are from Jyske Bank’s bond list of last Friday. These are indications not recommendations.    You can get up-to-date bond information from:

US investors at Jyske Global Asset Management.  Contact Thomas Fischer at fischer@jgam.com

Non US Investors at Jyske Bank. Contact  Rene Mathys at mathys@jbpb.dk

The next opportunity is in Ecuador. Many readers have asked questions like:

Ecuador is defaulting on its bonds. Any problems because of this? Is this good or bad?

This is a question much like, “Is the US federal $800 billion bail out, good or bad?”

The answer is yes and no.

First, remember that Ecuador defaulted on bonds once before in 1999.   Everything fell apart. Bank’s shut down. The country ran out of gas.  Times were terrible.

The country remained a great place to live. The cost of living collapsed. Help was easy to get. You could buy real estate for a song. So the answer to “Is this good or bad?” depends on who you are, how much money you have and where it is invested.

The Bloomberg article points out that Correa says of the default:

“I couldn’t allow the continued payment of a debt that by all measures is immoral and illegitimate,” Correa said. “It is now time to bring in justice and dignity.”

A debt commission Correa formed last year said in a 172 page report in November that the global bonds due in 2012 and 2030 “show serious signs of illegality,” including issuance without proper government authorization. Correa invoked the 30- day grace period on the interest payment last month, saying he wanted to analyze the commission’s findings.

Correa, 45, said the government will present a restructuring proposal in coming days. “We want creditors to recoup part of their money,” he said.

Personally I think this is true, but is the wrong approach.  I have long been a defender of Correa.  He is much like Barrack Obama, young, smart, energetic, from a poor background, who worked his way to the top with a mandate made possible by minorities….based on promises that probably cannot be kept.

He is trying to make improvements..but can he?

Obama cannot change the previous American debt and some of that US debt, in my opinion, is as immoral and illegitimate as can be.  If previous Ecuadorian politicians broke the law and created incorrect loans…Correa and the people of Ecuador should punish them.  They should recoup what they can from those people…but to punish lenders will simply stop lenders from lending to Ecuador.   This will hurt the nation, long term, as a whole.

The Bloomberg article goes on to say:

“Ecuador is moving further into isolation,” said Vicente Albornoz, head of the Cordes research institute in Quito. “The hardliners in the government won.”

“Ecuador is a serial defaulter,” said Arturo Porzecanski, an international finance professor at American University in Washington. “They defaulted in the 1980s, 1990s and this decade. A lot of other countries have had one or two defaults, but Ecuador tops them all.”

Correa, who holds a doctorate in economics from the University of Illinois at Urbana-Champaign, has said he will not sacrifice spending on health and education to pay the debt. Ecuador’s foreign obligations are equal to 21 percent of its $44 billion gross domestic product. Argentina’s debt, by comparison, was equivalent to 150 percent of its GDP when it defaulted in 2001, according to Goldman Sachs Group Inc.

Oil, which has plunged 67 percent since July amid the global financial crisis, accounts for about 60 percent of Ecuador’s exports. Finance Minister, Maria Elsa Viteri, said on Nov. 18 the country’s fiscal accounts remain “strong and healthy.” Ecuador had $5.65 billion in cash reserves as of Dec. 5, according to the Central Bank.

The default was triggered by the combination of the decline in oil with “a ridiculous ideology,” said Claudio Loser, the former director of the International Monetary fund’s Western Hemisphere department, who now is a scholar at the Inter- American Dialogue. “The financial need wasn’t so great that it was forced to declare a default,” Loser said.

The South American country has defaulted six times since it separated from Gran Colombia in 1830, according to “Debt Defaults and Lessons from a Decade of Crises,” a book published in 2007 by Federico Sturzenegger and Jeromin Zettelmeyer.

“It’s a final blow to external investors, and particularly any energy investors that may have retained interest or had future plans to attempt an investment in Ecuador,” said Enrique Alvarez, head of Latin America fixed-income research at IDEAglobal Inc. in New York.

I believe this default will hurt Ecuador’s overall economy…and help expats who live and invest there in small ways. When economic conditions drop, prices become lower. Labor is easier to find. Everyone is more willing to serve and work hard…if you have money.

Merri and I were living in Ecuador when the sucre collapsed falling from 3,000 sucres per dollar to 24,000 sucres per dollar. This roller coaster reduced the cost of food, clothing, shelter, staff, everything local. Wages were down. Bargains were everywhere!

Merri and I were loved because we stayed. We spent. We provided jobs.

Life can actually be better in hard times…especially if you have your income and investments OUT of the depressed country.

There is a caveat. If conditions deteriorate too far, law and order can break down.  Short term this will make Ecuador’s life better. They won’t have the loan to repay…but long term, as they become more isolated from the global economy, this will hurt.

Ecuadorians are basically friendly, non violent people so I do not have any great concern about this. This is based on experience. I have lived in places where people were not quite as easy going, like Hong Kong in the 1960s when there were riots and bombing in the streets.

My belief if that Ecuador will remain a great place to be…especially for now.

Gary

Join us at a course in Cotacachi or on Ecuador’s coast this winter.

Here is our latest group inspecting the hotel,which is one block from the Ecuador’s Pacific.

ecuador-real-estate-risk

We’ll view this hotel if it has not sold. It has a huge front porch.

ecuador-real-estate-risk

Large second floor veranda with ocean views.

ecuador-real-estate-risk

Beautiful flowered front yard.

ecuador-real-estate-risk

The building is really rough and needs work…but over 8,000 square feet of building. The asking price is $60,000.

We have sent our Ecuador Living paid subscribers more details on this building on this Ecuador hotel for sale. If you subscribe, you can have this report. See how to subscribe to Ecuador Living here.

Join us for our next Spanish course ad real estate tours.

Join us at a course in Cotacachi or on Ecuador’s coast this winter.

Jan. 16-21 Ecuador Spanish Course
Jan. 22-23 Imbabura Real Estate Tour
Jan. 24-27 Coastal Real Estate Tour

Feb. 13-15 International Business & Investing Made EZ
Feb. 16-17 Imbabura Real Estate Tour

March 8-9 Imbabura Real Estate Tour
March 10-15 Ecuador Export Expedition
March 16-19 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

Better still join us all year in Ecuador! See our entire schedule of 27 courses, tours, mingos and expeditions we’ll conduct in 2009 and how to attend as many of them as you like FREE.

The course fee includes meeting at Quito airport (day before the
course)…transportation (by group bus) to Cotacachi and back to Quito.
Course fee does not include air are. accommodations, food or individual
transportation.

Multi Currency Strategy


A multi currency strategy is important now because extensive research on seasonality shows that basically in all major equity markets, nearly all returns are achieved from the beginning of November through the end of May. This means we are approaching the best time when equities will rise.

However a year ago, a global financial crisis began. So before we jump headlong into more security investments we need to ask, “What happens now?”

This week we will look at the strategic multi currency economic outlook developed by Jyske Bank’s strategy and research team.

The most important part of investing is to create a realistic match of your portfolio to your own wants, needs and desires.

Next, you need to invest in good value.

An overview of global economics is vital to help you spot good value.

I review my personal portfolio and how I have responded to the crisis of the last year and what I am planning ahead for subscribers of our Multi Currency Course.

Jyske’s report begins:

“It has now been a year since the international financial crisis really took off. The Fed as well as the European Central Bank have had to render assistance in the form of additional liquidity, and there is still a shortage of liquidity today – a year later.

At this point in time – a year after the onset of the crisis – the economic slowdown and the high commodity prices (particularly the oil price) have added to the financial crisis and the global economy is still facing big challenges.

What about the current situation? Well, it can be said that fear of low growth has now replaced the fear of high inflation. This development has taken place after the oil price fell by more than 20% from the peak in mid-July while at the same time we are being inundated with poor economic data for Europe, the UK, Japan, while the emerging markets are also seeing a somewhat weakening development.

What are the forces behind the global economic slowdown in addition to the weak US economy?

Global shocks = Global effects

Drastically rising food and energy prices have put a damper on the consumers’ purchasing power globally and reduced growth by 50% relative to the level in 2007. At the same time, the companies’ earnings are under pressure due to rising commodity prices and wages.

The reaction on the part of the authorities:

Despite the housing-market crisis, financial crisis, oil crisis at full blast in the US, it seems that the US economy saw stronger growth in H1 than the Japanese as well as European counterparts. An important reason for that is that the US authorities did all they could to avoid a slowdown in growth. The Central Bank lowered its interest rate markedly to 2%, and tax relief in the amount of USD 100bn were granted. Europe has seen an interest-rate hike and no easing on the part of the authorities.

Prepared for the worst:

A new development was that already at the beginning of 2008, the US companies seemed to have begun reducing inventories and cutting labour costs in preparation of the bad times ahead. Apparently they were better prepared than the companies in Europe and Asia, which will have to make deeper cuts in production to adapt to the new weaker demand.

Investment Conclusion:

A general theme for investors is positioning for continued weakening of growth outside the US. Therefore, among other things, we now see a markedly stronger dollar as the trend has been reversed. That we prefer US equities to European ones and that European bond yields will fall towards the US level.

On the whole we keep the risk unchanged in the portfolio by maintaining neutral weight for equities. Our considerations with respect to the future are that we will rather prefer to increase the proportion of equities than to reduce it.

This autumn, equities may be boosted by the lower inflation level. Moreover, the many global investors have reduced their holdings considerably. They may gain some appetite for equities when they see the favourable effect from the lower oil prices.

However, the challenges for the equity market is that slow growth will spread from the US to the rest of the world and put pressure on the companies’ earnings and, moreover, the financial crisis is still not over.

Tomorrow’s message by looking at each analysis by Jyske of each currency zone.

Until then, good global investing!

Gary

Join me and with Thomas Fischer from Jyske Bank at our upcoming international investing course in North Carolina. International Investing and Business Made EZ North Carolina October 3-5