Offshore Asset Protection BLOG - Bob Bauman

U.S.A. in Deep the Hole

It's not bad enough that the wild deficit spending of the Bush administration has driven down the value of the dollar to record lows -- so low that the euro is fast replacing the dollar as the new world currency.

Now comes the serious imbalance in U.S. trade -- we're buying much more than we are selling -- and that imbalance now places America as the most imbalanced nation of 163 nations surveyed by the number crunchers at the CIA.

The "current account" of the balance of payments for each nation is the sum of the balance of trade, (exports minus imports of goods and services), net factor incomes (such as interest and dividends) and net transfer payments (such as foreign aid). Both government and private payments are included in the calculation. A current account surplus increases a country's net foreign assets by the corresponding amount, and a current account deficit does the reverse.

By that measure, the U.S. is deep in the hole.

The balance of trade is typically the most important part of the current account. This means that changes in the patterns of trade are key drivers in the current accounts of most of the world's economies. However, for the few countries with substantial overseas assets or liabilities, net factor payments may be significant. Together with net capital outflow, they are a major measure of how much a nation invests abroad or how much foreigners invest in that nation.

The latest current account CIA figures show 66 countries with a surplus, including China with a whopping surplus of  US$250 billion. Japan, Germany, Saudi Arabia and Russia all have surpluses of over or near $100 billion. Even Switzerland's current account plus balance is $64 billion.

At the very bottom of the 163 nation list is the poor old United States with a current account balance of minus -$811,500,000,000 

For more information see LINK: https://www.cia.gov/library/publications/the-world-factbook/rankorder/2187rank.html

U.K. Tax Haven Dead?

Yet another example of the beneficial impact of international tax competition may see a major shift of the wealthy from London to Switzerland and/or Monaco.

When the British Labour Party first won power in 1994 one of now Prime Minister Gordon Brown's pledges was to close the so-called "non-dom loophole" when Labour came to power.

The non-dom loophole refers to a provision in United Kingdom tax law that, until now, has made it a major tax haven, but with a different twist -- the U.K. gives major tax breaks to wealthy foreigners who actually make their home there. Under the law, anyone living in Britain and not born there simply can choose the non-domiciled tax status and thereby escape almost all income taxes. The tax break was originally formulated in 1799 to help British colonialists avoid tax on their overseas income.

That means scores of billionaires living there only pay tax on the relatively small amount of money they bring into the U.K. each year. They do not pay U.K. taxes on their much larger worldwide earnings. This has made London a tax haven for everyone from Russian oil tycoons to thousands of international investment and hedge fund bankers. The country now has 68 billionaires - three times as many as four years ago. Only three of its 10 richest people were born in Britain. A current estimate of 150,000 to 200,000 non-doms for 2007 is “entirely reasonable” says one expert.

Wealth Tax

But now the Labour Party, egged on by the so-called "Conservative" Party, is considering imposing an annual minimum tax on all foreigners in the U.K. who claim non-dom status -- a fee of £30,000 (US$62,000). Cato Institute tax expert Dan Mitchell suggests that higher U.K. taxes would result in a major shift of economic activity to Switzerland.

According to the The Times of London, lower tax  Switzerland would welcome the opportunity to make their system more attractive to the British financial services industry who well may want to move. The Labour proposal would exclude those who have lived in the U.K. for less than seven years. This is so a not to scare away the many hundreds of bright foreign bankers who come to the City for a few years and then go elsewhere. But experts says the new fee effectively raises the tax paid by a U.K. private equity or hedge fund manager on his investments from 10% to 18%.

The Labour Party pro-tax shift is attributed partly to embarrassments over millions in non-dom Labour political fund donations and the International Monetary Fund’s designation of London as a de facto tax haven.

But even talking tough on non-doms remains risky. Hedge fund managers have only to move to Zurich and the new tax may result in a big net loss to the Exchequer. “The Monaco property market is booming,” a leading real estate agent mused, referring to that tax haven for the wealthy. “These people already feel on safer ground there.”

Swiss Conservatives Win Big

ZURICH: Swiss politics is set to become even more conservative after the expected success of the Swiss People's Party (SVP) in Sunday's general election. The big SVP win will increase their seats in the parliament to a record number, as well as guarantee retention of the two SVP seats on the governing, seven member Federal Council.

The People's Party took 28.8% of the vote in elections for the House of Representatives, up 2.1% from 2003 results. The People's Party gained the most votes among the four governing parties since 1919 and could win up to 62 of the 200 seats in the House.

This means that Switzerland wil remain the world's leading offshore financial haven and that Swiss banking secrecy remains secure. It also guarantees that Swiss relations with the European Union will not be any easier. The EU has been a major critic of Swiss financial privacy laws. The SVP, and the Swiss people as a whole, repeatedly have rejected demands for repeal of bank secrecy, a traditional attraction for foriegn investors worldlwide.

The election also serves as a rebuff to EU, French and German demands that Swiss cantons raise their comparatively lower corporate and individual income taxes. The low taxes have attracted many wealthy citizens and companies from high tax EU nations.

The Swiss campaign was dominated by Justice Minister Christoph Blocher, the SVP leader and his party's hard-line stance on immigrants and crime. The popular Blocher helped the SVP to another election win on Sunday by lending his face to the cause. "Support Blocher! Vote SVP!" read posters plastered around Switzerland in the run-up to the parliamentary election as the party used the 67-year-old's image to mobilize voters.

A self-made man and fan of Winston Churchill, Blocher is credited with having helped transform the SVP over the last 20 years from a party with mainly rural voters to a more mainstream, conservative-populist grouping. Along the way, he has won support by campaigning against bogus benefit claimants, foreign criminals, dishonest asylum seekers and demands from Switzerland's EU neighbors.

OECD Complains Again

Those Left leaning busybodies at the Organization for Economic and Community Development (OECD), ensconced in the tax-free luxury of their Paris ivory towers, are whining again about the few stalwart nations that still defend the right to enjoy financial privacy and banking secrecy. (In America financial privacy is dead and gone, killed by the unconstitutional PATRIOT Act).

The most recent OECD criticism, (their anti-tax haven sideshow has been going on now for over a decade), is aimed in part at the Republic of Panama's continuing (and very correct) refusal to violate its own national bank secrecy laws by exchanging tax information with other governments. (Panama has no tax information exchange treaties with any nation).

But Panama is in very good company when it comes to the OECD targets. This round of OECD yapping is aimed not just at Panama but also Switzerland, Austria, Liechtenstein and Singapore -- all equally respectable offshore financial centers -- all with strict financial privacy laws that the OECD bureaucrats hate -- not only because the OECD represents the major nations' tax collectors, but because these high tax nations pay the OECD's tax-free salaries.

The OECD claims that many offshore financial centers are "making progress in improving transparency and international co-operation to counter offshore tax evasion" but they insist that those who don't tow the OECD line still fall short of "international standards."

The OECD says "significant restrictions on access to bank information for tax purposes remain in three OECD countries (Austria, Luxembourg and Switzerland) and in a number of offshore financial centers (e.g Cyprus, Liechtenstein, Panama and Singapore)."

That should be a major hint as to where you should do your banking offshore -- if you want guaranteed financial privacy. Unfortunately, there are only a few nations that still guarantee financial privacy by law.

If you're looking for maximum privacy and legal tax avoidance, we can explain where these places are and how you can take advantage of them. Click here for some ideas on where to look.  http://www1.youreletters.com/t/1357788/2309209/831463/4533/

Air Andorra

The Principality of Andorra lies in a secluded valley between France and Spain, high in the Pyrenees, one of Europe's most impressive mountain ranges.

Since 1993 an independent parliamentary democracy, this little known tax haven with strict banking secrecy until recently was a secluded medieval principality ruled jointly by the president of France and a Spanish Catholic bishop. For a few in the know, this picturesque country, almost forgotten by the world, offers affordable, crime free and tax-free living.

Until now Andorra, an accident of geography, has been hours away by auto from the nearest airports in Barcelona, Spain or Toulouse, France. Much of the year the skiing is great, but roads might be snow covered. But this week the Andorran government announced plans for a new airport just fifteen minutes from the border with Spain that could boost the number of ski and other tourists. It also may very well increase the number of resident foreigners seeking tax freedom and financial privacy.

Andorra's lone airport is to be located in Seu d'Urgell, with first flights anticipated in 2010 or 2011. With a runway of 4,500 feet, not long enough for some medium range aircraft, most commercial air planes using the airport will be 60 to 80 seaters, plus private jets much favored by the wealthy who may now consider Andorra as a viable and more accessible tax haven.

Andorra has been transformed in the past 40 years from a poor European country with no real economy to a vibrant independent state, sought after by the wealthy for her tax haven status, and skiers for ski runs that match the best in Europe for facilities and ski holidays infrastructure.

Andorra, and the more famous Principality of Monaco, are Europe's leading tax havens, with residents enjoying the benefit of no income tax. Property prices in Andorra are less than a third of the price of Monaco's. Indeed Andorra is a tax haven -- no income, capital gains or inheritance taxes. No sales taxes or customs duties. There is a small  local residence tax charged in most "parishes," as the local government unit is called.

And perhaps soon we may be seeing the logo of "Air Andorra".

P.S. Are you fed up with how the U.S. penalizes you for working hard and making a larger income? Ready to seek your fortunes elsewhere? Click here for some more accommodating locations offshore.

Escape from America

In spite of the many disturbing trends in America about which I must write, (all too often it seems), I still have a modicum of hope that our nation will endure and prosper. But that won't happen without a clear recognition of our problems and a determined effort to address them.

Unfortunately, the current crop of American presidential wanabees doesn't bolster what may be my misplaced hope. While many still are willing to stay and fight the good fight, many Americans have had enough.

A 1999 U.S. State Department survey of its embassies and consulates suggested a total of 4.1 million Americans living overseas at that time. Every year about 250,000 U.S. citizens and resident aliens leave America to make a new home in some other nation. The U.S. Bureau of the Census in 2005 upped this estimate, guessing that over 350,000 US citizens and resident aliens would leave the United States permanently.

Many of these are wealthy people seeking to escape what they see as the excessive taxes and political tyranny of the United States government. And increasingly, much of this exodus is not only composed of of retirees -- but younger Americans.

John Gaver of Action America.org notes: "The problem is that increasingly, the wealthy perceive that they are under attack by their own government and they are taking the only rational option left open to them. They're taking their wealth and leaving."

Figures Don't Lie

Recent in-depth surveys (2006-2007) were done by the well known pollster, Zogby International, of adult Americans on the subject of possible relocation outside the United.States. With more than 115,000 respondents, the remarkable survey excluded anyone relocating offshore for less than two years, or because of requirements of the government, the military or their jobs. The Zogby results compared against the entire U.S. population (now about 303,116,000) are shocking. The numbers below are for households, not individuals:
• 1.6 million U.S. households have already decided to relocate offshore and are now moving in that direction. That figure remained stable over the year and a half during which seven surveys were conducted.
• Another 1.8 million households are seriously considering relocation and are likely to do it. Many have taken preliminary steps.
• 7.7 million households are "somewhat seriously" considering relocation and "may" do it.

• Nearly 3 million households are seriously considering the purchase of a vacation home or other property outside the U.S., and another 10 million are "somewhat" seriously considering it.

This means that almost 10% of U.S. households are considering leaving the country. Another 10% are considering living outside the country part time. This silent massive emigration is ignored by nearly every analyst. These would-be emigrant households plan to spend an average of $260,000 on the purchase or construction of a house, and at least $36,000 annually on living expenses outside the U.S. In total, they represent the emigration of hundreds of billions of dollars a year from the U.S. economy.

One eye-opening fact: the single largest group that already has made the decision to relocate offshore -- households where adults are 25 to 34 years old.

The Soaked Rich

One of the factors that is driving wealthy Americans to live offshore is the tax burden.

Yet the constant false drumbeat of class warfare U.S. politicians and their left-wing allies in the news media is that "rich" Americans do not pay their fair share of taxes. Only last week, would-be president Hillary Clinton proposed increasing estate and other taxes on wealthy Americans in order to transfer money to those persons who earn less, this loot to be used to set up government sponsored retirement accounts. The late U.S. Senator Huey P. Long of Louisiana used to call this sort of robbery of the "rich" to pay the "poor" his plan to "redistribute the wealth."

But this myth of the rich not paying their fair share is given the lie by figures just released by the Internal Revenue Service for 2005 (the most recent available) that show the top-earning 1% of U.S. taxpayers earned 21.20% of the income and paid 39.38% of the tax collected -- or almost double their share, based upon the income they earned.

In addition to paying double their share of taxes, there are other good reasons for this offshore exodus of the wealthy. Well-to-do Americans face frivolous lawsuits by the greedy, in ever growing numbers. They, like all Americans, have lost any semblance of privacy in their personal and business transactions. Their business dealings are saddled with onerous PATRIOT Act and Sarbanes-Oxley Act requirements that consume time and money. And they have little defense against having their property confiscated under civil forfeiture by the government money police.

We Can Help

The Sovereign Society exists to give advice and direction to those interested in "going offshore." With a decade of experience, we can offer a reliable road map to offshore freedom, including legal ways to protect assets, lower taxes, expand investments and how (and where) to move your residence and/or citizenship offshore.

If a move offshore interests you, whether older or younger, we can help.

Police State America

What would be your reaction if a uniformed member of the U.S. Army accompanied by military police arrived in your office and demanded to see your bank statements, financial records, emails and letters?

"This isn't a military dictatorship" you say, "That couldn't happen in America."

Yet it was revealed yesterday that the U.S. military has been doing exactly that, using so-called "national security letters" under powers claimed under the constitutionally questionable PATRIOT Act. The military has issued at least 270 of the letters since 2005, and about 500 in all since 2001 according to documents obtained through the Freedom of Information Act. The New York Times first disclosed the military’s use of these letters in January, and members of Congress and civil liberties groups criticized the practice on grounds that it conflicts with traditional laws against domestic law enforcement operations by the military.

"The Fourth Amendment protects against the government's effort to rummage broadly through the papers and documents of individuals without narrow and specific justifications," says Arthur Eisenberg, Legal Director of the New York Civil Liberties Union. "Yet the excessive secrecy surrounding the military's use of national security letters opens the door to abuse. Without oversight and accountability, there is nothing to stop the Defense Department from engaging in broad fishing expeditions. The expanded role of the military in domestic intelligence gathering is troubling," Goodman said. "These documents reveal that the military is gaining access to records here in the U.S. in secret and without any meaningful oversight. There are real concerns about the use of this intrusive surveillance power."

The military is just the latest government agency to be exposed as using these letters instead of a traditional search warrant.

The PATRIOT Act extended the power of government over personal and financial records of every kind. It also throws aside previous guarantees under the Fourth Amendment against unreasonable searches and seizures. The Act makes it far easier for the FBI, and apparently the military, to obtain a person's financial, medical, student or other records.

Fishing Expeditions

Under the Act the FBI is given broad authority to obtain financial, medical, business, book store and library records, supposedly in pursuit of terrorist activities. But courts have ruled that the Act is not limited to terrorism and can be used to investigate any crime.  The Act discards the traditional requirement of pre existing federal law, permitting access to records only after issuance of a court order or search warrant based on a finding of probable cause.

Section 215 of the Act allows the FBI to order any person or entity to turn over "any tangible things," so long as the FBI "specif[ies]" that the order is "for an authorized investigation . . . to protect against international terrorism or clandestine intelligence activities."

But instead of a normal probable cause search warrant, law enforcement authorities, and now the military, have no need to show a judge or magistrate that evidence of wrongdoing likely will be found. And the custodians who hold records being sought by the government are prohibited, under threat of criminal prosecution, from informing anyone that their records were seized.

This vastly expands FBI (and now military) powers to spy on all ordinary Americans.

Admitted Abuse

Documents obtained by the American Civil Liberties Union as part of a Freedom of Information lawsuit, show that the FBI has issued so many national security letters since October 2001 that the lists filled more than five pages of logs. What records those letters were aimed at is not known, because most of every log page was blacked out, supposedly for “security reasons.” The government then refused to provide further information on how the letters were used.

In 2007 then U.S. Attorney General Alberto Gonzalez failed to give the newly Democrat-controlled U.S. Senate Judiciary Committee accurate information about when he first learned of wholesale abuses by the FBI using national security letters. Gonzalez said he knew of no instances where the letters has been abused under the PATRIOT Act. Later FBI Director Robert Mueller admitted that there had been thousands of instances when FBI agents has misused the letters, but he passed it off as a misunderstanding, rather then willful violation of the law.

Unnecessary Power Grab

The truth is that the government really doesn’t need these enormous police powers.

Under the Constitution and laws it already has authority to investigate and prosecute anyone it has probable cause to believe has committed, or is planning to commit, a crime. It also has the authority to engage in surveillance of anyone whom it has probable cause to believe represents a foreign power or is a spy, whether or not the person is suspected of any crime. But in each case, until now, a search warrant must be obtained based on probable cause.

While destroying our liberty and privacy these broad new police powers aren’t likely to increase our national security or safety. But they surely have destroyed our rights under the U.S. Constitution.

If there every was a good argument for moving some or all of your cash, assets and business records offshore, out of reach of the FBI (and now, of the U.S. military police), this is it.
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For more information about how the PATRIOT Act impacts your life and business, and how to defend against it, click here:

http://web-purchases.com/190SPATY/W190H722/

Left Targets Switzerland

Start out with the natural prejudice that the world's leftist elite has against wealth (except their own), add the outrage of welfare state tax collectors who hate financial privacy and bank secrecy (which they wrongly equate with tax evasion), then throw in a large dash of international envy -- and you can understand why Switzerland is always under siege in the left-wing dominated world news media.

The latest anti-Swiss media campaign started weeks ago with the approach of the Swiss national parliamentary elections to be held on Oct. 21st. The anti-Swiss outcry is being led by the usual suspects, self-appointed representatives of the United Nations, the European Union, and Amnesty International.

What has upset these do-gooders is a campaign theme being used by the Swiss Peoples Party (SPP), the largest of several national political parties. The theme addresses a major Swiss domestic concern, the huge influx in recent years of foreigners into the nation. The theme is expressed in what the Left sees as a controversial campaign poster showing three white sheep kicking a black sheep off a Swiss flag above the slogan, "For more security."

The poster is the creation of the anti-immigration SPP, which in three decades has grown from a small group to the party with the largest number of seats -- 55 of the 200 -- in parliament's lower house, the National Council, and a major player in the coalition government. Indeed, opinion polls show the SPP again leading the other parties in the run up to the election.

Chain Saw Reporting

As if the United States did not have any problems of its own with illegal immigration and crimes committed by unlawful immigrants, The Washington Post wins the prize for sensationalized reporting on Switzerland. It published a truly horrific story about a 37-year-old black Angolan man living in Zurich who was attacked and seriously injured by chain saw wielding thugs shouting racial epithets. The article suggests wrongly that many other Swiss people would do the same thing, given the chance.

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The Alternative to Burying Your Assets in Your Backyard

If you're interested in protecting your assets, there are several things you can do.

You can bury your money in your backyard or under your mattress. You can put your money in a domestic bank or money market account, and earn a paltry interest.

You can invest in the so-called "safe" investments that your broker recommended on the NYSE (that supposedly produce meager 10% a year for a diversified domestic stock portfolio).

Or you can house your wealth in an offshore region, for superior investments, access to the hottest emerging markets, iron-clad asset protection and financial privacy.

The choice is yours. Click Here to learn more about the offshore option.

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Last week, counter-demonstrators threw rocks and bottles at Swiss People's Party protesters during a political rally at the national parliament building. Police fired tear gas to break up the melee. A UN "fact-finder" on racial intolerance, accused the SPP and its campaign posters of "advocating racist and xenophobic ideas."  "That's nonsense," says Ulrich Schluer, an SPP legislator, newspaper editor and creator of the sheep campaign. "It's not against race. It's against people who break laws. People are fed up." (Sounds like Bill O'Reilly on the Fox TV network).

The SPP has initiated and won national referendums making it tougher for foreigners to enter Switzerland and obtain citizenship and easier to deport immigrants. Switzerland now has some of the strictest naturalization laws in Europe.

Enough Is Enough

Switzerland's population is now about 7.5 million, up by 750,000 since 1990. It generously has opened its borders to refugees from many nations and now has one of Europe’s highest percentages of foreigners living within its borders, many of them workers from Spain, Portugal, Italy, and parts of the former Yugoslavia. More than 20% (1.4 million) of Swiss inhabitants are foreign nationals, and the SPP argues that a disproportionate number are lawbreakers. Many drug dealers are foreign, and according to federal statistics, about 70% of the prison population is non-Swiss.

In recent years, there has been a growing resistance to immigration and granting citizenship. Some cantons (provinces) now require a public referendum on whether to admit applicants and many individuals have been rejected in these votes, as the law permits.

In the best of all worlds, no one should support racism. But Switzerland probably is no better or worse than other European nations (or the United States) when it comes to trying to deal with a massive influx of foreign persons. At the very least, every nation has the right to protect its citizens from criminal activity, regardless of who the culprits may be.

But you can bet that much of the current anti-Swiss media uproar is just another phase in the left's continuing anti-Swiss campaign. And you can also be certain the very independent Swiss will go their own way -- without the need for advice from outsiders.

For more information about Switzerland as an offshore financial haven, click here:
http://web-purchases.com/190STHOW/W190H723/

Another View on Nicaragua

We received a response to my comment of yesterday (Stay Away from Nicaragua, Oct. 8) and the writer, an American real estate agent in Nicaragua, makes some points worth considering as follows: 

We can't argue with much of what you say here. It's an unfortunate situation that most Nicaraguans did not vote for. But here's another perspective: all of this could repreent a window of opportunity...if you can stomach the elevated political risk. The fact is, Nicaragua was on the verge of being heralded widely -- globally -- as the “next Costa Rica” and the “next Panama” in the world press before Daniel Ortega's presidential victory earlier this year.

Our hope is that as real estate prices continue to escalate in both Costa Rica and Panama and Ortega approaches the end of his five-year presidential term, that'll happen again. Ortega 2.0 can't be Ortega 1.0 -- if he wanted to. He has even less support now -- including less support among his own Sandinistas -- then he did after the election, and he was elected as a minority president to begin with. He faces a hostile legislature that has opposed him on a number of significant issues. Nicaragua is more dependent financially than it has ever been on the U.S. and the European Union. It will never receive as much support from Chavez, Iran or Cuba as it does from the U.S. and the European Union in both government aid and private investment -- and most Nicaraguans know this.

It is our view (and yes, hope) that apprehension created by Ortega's minority government has opened a window of opportunity for smart, forward-looking investors with a five- to ten-year time horizon to get in “before the herd” -- before the end of Ortega's term and before what we anticipate will be the resumption of the real estate investment boom that preceded Ortega's presidential election victory.

We have seen estimates from global real estate analyses earlier this year that Nicaragua as a whole may be as much as 68% undervalued, given its level of economic freedom and its business climate (as measured by the Wall Street Journal Index of Economic Freedom). In other words, adjusting statistically for what Nicaragua offers investors compared to other countries – as far as property rights, tax burden, transparency, government spending (as a share of the economy), inflation, trade, labor, financial and business regulation policy -- Nicaragua is only 32% of the average cost of countries offering similar business climate characteristics.

This isn't to take anything away from what you've said. We are not apologizing for Ortega. We're only providing broader long-term perspective. We only wish to point out that Nicaragua now may represent the same investment opportunity that Mexico in 1994, Argentina in 2001 and Eastern Europe in the early 1990's represented -- that Nicaragua itself represented in the early 1990's -- during and after political and financial crises in those regions. Those crises eventually gave way to fantastic real estate booms.

And the political risk in Nicaragua now may be far less than it was back in the early 1980's. Ortega just doesn't have as much support now as he did back then -- nowhere near it. Wishful thinking on our part? Maybe. Just some food for thought. For all the political heartburn, it's still a beautiful country with a beautiful people -- a great place to live with enormous untapped investment potential.

Stay Away from Nicaragua

Because we owe a duty to our members and readers, over ten years of our existence we at the the Sovereign Society have devised a reliable system to evaluate offshore jurisdictions and their acceptability. Among the factors we consider concerning a tax haven or offshore financial center are government and political stability, the judicial system, available legal entities such as trusts, financial privacy laws and taxes.

All of the other factors become meaningless, however, if the government of the country in question lacks stability in general, or worse, is openly hostile to free market economics and the freedom and liberties of foreigners who do business there.

Which brings me to the currently sorry state of affairs in Nicaragua -- where the radical leftist government has become openly hostile to capitalism and and property rights.  It never has been a tax haven, but it has become a retirement destination for foreigners, includng many Americans.

Back from the Dead

Before he made a miraculous return to power last year as president in a rigged election with less than 38% of the votes cast, José Daniel Ortega Saavedra was a washed up extreme leftist who, during his previous term as president (1985-90) had dragged Nicaragua into the Communist orbit of Cuba's Fidel Castro. His first term was characterized by Communist policies, seizure of private property, economic suffering, repression of internal dissent, hostility towards the United States, and armed domestic rebellion against his government by the U.S.-backed Contras.

For many years he has been a leader in the leftist Sandinista National Liberation Front (FSLN). He was defeated in 1990 (and twice more afterwards)  because of his extreme views in a country that is far more conservative. During his five-year tenure numerous private estates, businesses and properties were confiscated for their personal benefit by Ortega and other Sandinista bullies and never returned to their rightful owners.

El Pacto - Dirty Deal

In 2006 Ortega worked a back room deal between the FSLN and the Constitutional Liberal Party headed by José Arnoldo Alemán Lacayo, president from 1997 to 2002. In 2003 Aleman was convicted and sentenced to a 20-year prison term for crimes including money laundering, embezzlement and corruption. The corrupt  alliance of two of Nicaragua's major parties distributed power between the PLC and FSLN.

"El Pacto," as it is known in Nicaragua, personally benefited Ortega and Alemán greatly. One of the key provisions of the deal was agreement to keep Aleman out of jail and, importantly, to rig the elections laws for Ortega by lowering the percentage necessary to win a presidential election from 45% to 35%. In the 2006 elections Ortega's squeaked by with 37.99% of the votes cast.

In his first week as President, Ortega met with and praised Iranian President Mahmoud Ahmadinejad. The two toured slums in Managua. Ortega told the press that the "revolutions of Iran and Nicaragua are almost twin revolutions...since both revolutions are about justice, liberty, self-determination, and the struggle against imperialism." He was visited by Venezuela's radical president Hugo Chavez, and Ortega again embraced Fidel Castro as his hero.

More Property Seizures

Worse, from the point of view of possible foreign investors in Nicaragua Ortega, who has aligned himself with Iran and Venezuela, seized an Exxon Mobil Corp. oil facility. In a recent United Nations diatribe claimed that the "genocide perpetrated by global capitalism'' was responsible for "destruction, death and poverty.'' In his UN speech Ortega defended Iran and North Korea's development of nuclear power. "The enemy continues to be the same,'' he said. "and it's called global capitalist imperialism."

In the past two months Ortega's government seized an Exxon fuel storage terminal and also scrapped government contracts with a business owned by an opposition party leader.

As far as foreign investors are concerned, Ortega is returning to his Sandinista roots. Yields on the nation's debt have risen to the highest in Latin America. The increase marks a turnaround from earlier this year, when the former Sandinista guerrilla leader said he would improve relations with the U.S. Now, investors are growing concerned that Ortega is returning his 1980s policies, when the country defaulted and inflation topped 14,000 percent.

History Repeats

Land grabs were part of Ortega's socialist policies in the past. He restricted trading, boosted public spending and took over banks and supermarkets. Then president Ronald Reagan, who called Ortega "a little dictator,'' ordered a blockade of Nicaragua and funded the Contra rebels. The economy fell into recession, gross domestic product per capita fell by more than a third and debt rose to more than five times GDP.

Investors are concerned that nearly a billion in government bonds won't be repaid when they start coming due in 2008. "It's paper with zero value,'' says Marlon Gutierrez, an anti-Ortega activist in Miami who said his family lost 1,000 acres to the Sandinistas in the 1980s. "`Nobody wants to put money in our country.''

And for very good reasons!

* There are far better offshore places to invest your hard earned cash. For more information, click here.

New Dominican Republic Residents Law

Following the example of Panama and Belize, the Dominican Republic has just enacted  a new law aimed at attracting foreign  residence with a fast track residency system, especially aimed at foreign retirees.

With the approval and publication of Law 171-07 on Foreign Retirees, the Dominican Republic bills itself as "a paradise for people wanting to retire to an idyllic setting."

The new law promises a fast tracked residency program with simplified paperwork, all to be done within 45 days. It also allows the import of duty-free household goods and a host of tax breaks including reductions on motor vehicle taxes, exemption on transfer taxes for the first purchase of local real estate, a 50% reduction on taxes on mortgages, a 50% reduction on the annual property tax, exemption on taxes on dividends and interest, and a 50% reduction on capital gains taxes.

Local real estate developers praised the new law. Jose Luis Asilis, the president of the Metro Group, called for an international campaign to publicize the news overseas. Asilis told a meeting that Europeans and Americans can "live in the Dominican Republic like kings on a fraction of what they receive in pensions." The minimum monthly income required under the new law is US$1,500 for retirees with a government or private pension and US$2,000 in verified income from all others.

The text of the new law can be found at LINK: http://freddymiranda.blogspot.com/

Try The Bermuda Angle

In the nearly ten years of the existence of the Sovereign Society I personally have encountered numerous instances in which American-based lawyers, bankers, investment and retirement advisors and stock brokers literally have lied to them when their U.S. clients suggested they wished to engage in offshore financial activity.

Recently I wrote about a Merrill Lynch agent who falsely told a client that she should not convert her IRA into an offshore retirement account, greatly exaggerating the tax costs that would ensue. He simply did not want to lose her business to a foreign firm. Most domestic American lawyers whose clients suggest an offshore asset protection trust are barraged with untrue horror tales about anti-money laundering laws and the PATRIOT Act curtailing offshore activity, usually with the added threat that the IRS will audit you if you dare to go offshore.

Ask a U.S. insurance or annuity agent about an offshore life insurance policy or annuity as a tax-deferred investment vehicle, and you will likely get similar dissimulation. And certainly American bankers want to keep funds in their hot hands rather then see it transferred abroad. Indeed, this puts bankers in league with the IRS and plaintiff's lawyers who want your money where they can get their hands on it.

Cry Babies

There is a strong parallel to this anti-offshore prejudice in parts of the American corporate world. Its greedy voice was heard last week in a contrived U.S. Senate hearings on what can reasonably be seen as a non-problem. Some of America's largest insurance companies urged the Senate Finance Committee to change tax laws and rules that enable some of their competitors to avoid billions of dollars in federal taxes by sending money to their affiliates in Bermuda and other tax havens. (These complaining companies could avail themselves of these same tax breaks if they so chose).

At issue are long standing U.S. tax code provisions that allow insurance premiums to be shifted from the United States to offshore affiliates, in the form of payments for re-insurance, which reduces U.S. taxes and allows the proceeds to be invested tax free, increasing the profit to parent companies. Re-insurance is essential to keep insurance companies on a sound financial basis in times of major catastrophes.

Start with the fact that  U.S. corporate taxes at 35% are some of the highest in the world; add to that the double tax -- income taxes on dividends paid to stockholders, all of these taxes adding to the costs to consumers. By comparison, if a company can legally transfer its funds to Bermuda by buying needed re-insurance, there is no tax at all on the funds or the profits from their reinvestment and the payments are deductible business expenses.

The United States tax treaty with Bermuda allows insurance companies based on the island to deduct from their American taxes premiums that their subsidiaries in the United States collect from American customers and send back to the headquarters abroad. In Bermuda and other tax havens, the money is invested tax free.

Bermuda's zero tax rate has lured many insurance companies to incorporate there after moving away from high-tax countries like the U.K. U.S. insurance companies have done this by incorporating affiliates there since the 1970s. Since Hurricane Katrina and the 9-11 terror attacks, $25 billion in insurance claims have been delivered from Bermuda to American policy holders. Perhaps even more impressive, $100 billion dollars of U.S. capital is invested in Bermuda; the overwhelming majority of that money is a result of the insurance and re-insurance industry.

U.S. insurers like Liberty Mutual, Hartford and Chubb claim they cannot easily capitalize on the tax law. So they want Congress to close what they see as a loophole so they can compete with Bermuda-based rivals like Ace, XL and Arch. The Bermuda based American insurance affiliates are in fact simply using the U.S. code provisions as they are allowed to. They say the tax law is a valuable tool for attracting foreign investment to the United States and should not be changed.

Indeed the $100 billion in foreign investments are far more important to the American economy than any taxes forgone in the transactions. A strong insurance industry in Bermuda helps the United States economy by providing coverage that is otherwise scarce for catastrophes like Hurricane Katrina. A change in the tax law would mean higher insurance prices for many Americans.

Americans and U.S. businesses paid $499 billion for property and casualty insurance in 2006, nearly 4 cents out of each dollar of the gross national product. Apparently U.S. insurance companies want us to pay even more.

Unholy Alliance

Unfortunately, a coalition of high-tax, leftist Democrats and pro-big business, isolationist Republicans in Congress are seriously considering changing the tax law to block tax breaks for insurance companies who go offshore. This all ties in with the global war again tax competition and against tax havens; indeed several bills now pending on Congress would seriously impair the rights of every American to invest, trade, bank and do business offshore.

In an age of great economic growth prompted by globalism this sort of Neanderthal non-economics has no place in a rational world. But who ever heard of rational thinking in the U.S. Congress -- and those cry baby big insurance companies make very big political contributions.

P.S. If you’re looking for the right offshore professional who will answer your questions (and give you the straight answers), click here to visit our Council of Experts page for contact information. http://www.sovereignsociety.com/login.php?nid=731