by Peter Macfarlane for The Q Wealth Report

The US Congress met in a rare weekend session to pass what The Daily Telegraph of London calls ”the most far-reaching rescue package for America’s financial system since Franklin Roosevelt’s New Deal.”

The ceiling on the US national debt has been lifted by a further $800 billion, giving the Treasury almost unlimited resources to prop up the world’s two biggest financial institutions: Fannie Mae and Freddie Mac. That amounts to about $2,666 for every US citizen.

Now when the world’s two biggest financial institutions are in trouble, you know that does not bode well for the global financial system. Commentator Ambrose Evans-Pritchard in The Daily Telegraph article went as far as to say, “This raises implicit concerns about the credit worthiness of the United States itself.”

A statement from French banking giant BNP Paribas says: “The epicentre of the financial market sell-off will switch from the US into Europe and Oceania. Most of Euroland has entered a recession. A synchronised global downturn is on the agenda.”

Catherine Austin Fitts of Solari Inc, Former Assistant Secretary of Housing in the Bush I government, wrote a letter to the Wall Street Journal saying that “creating a private company free to use federal credit to buy Congress and drain communities, pension funds and global investors is a bad idea indeed. However, it is not as bad an idea as bailing it out after it has finished making such a mess.”

So, things don’t exactly look good. But there are always ways for smart investors to generate wealth in turbulent times. That’s what my articles in The Q Wealth Report will be focusing on for the duration of the global crisis. For example, gold will go up! If you are interested in learning more about investments that are not exposed to the global financial crisis, sign up today for The Q Wealth Report.

If you don’t wish to sign up for the full paid membership yet, you can keep in touch with our ideas by signing up for our free email newsletter Q Bytes, and by adding this blog to your RSS newsreader.

by Peter Macfarlane for The Q Wealth Report

One thousand tons of reinforced concrete surround the vault, which is protected by the most sophisticated electronic security system. The building is guarded day and night.

Your personal safe is available five days a week, excluding public holidays. The sizes range from a height of 9 cm up to the size of a wardrobe. Extras such as secure transport boxes, copy machines, telephones and document shredders are at your convenience and disposal, as well as a furnished conference room you can rent for your meetings.

You can rent your safe completely anonymously. You don’t have to give a name…. just choose a password and you get two keys – one for you, and maybe one for a trusted friend or relative. The safe box centre is run by a private company, not a bank, so it is completely divorced from the international banking system. It’s been there, at the same address, for as long as I can remember, since the good old days when I used to travel to Vienna to do business with the old anonymous passbook bank accounts – the famous Sparbuch, and the Wertpapierbuch.

This place might be the ultimate safe haven where you can store valuable documents, precious metals like gold and silver, gemstones and anything else small and portable. And for residents of most countries, there is absolutely no requirement to declare assets like these on your tax return.

The place we are talking about is in Vienna, Austria, a stable, discreet country – one of the few countries on earth that has “eternal neutrality” written into its constitution. The safe deposit facility is run by Das Safe.

SAFE Wertfachvermietungsges.m.b.H.
Auerspergstrasse 1, A-1080 Wien, Austria
Tel.: +43-1-406 61 74, Fax: +43-1-408 49 76

Note: More tips like this are available to subscribers to The Q Wealth Report. If you would like further information on offshore banking matters, read our free article Two Secrets They Won’t Tell You About Offshore Bank and Brokerage Accounts.

Nobody is quite sure who is the Richest Man or Woman in the World. Smart rich people tend to downplay their wealth. But according to many estimates, the richest man in the world is Mexican telecommunications tycoon Carlos Slim Helú.

Carlos was born in Mexico City, Mexico in 1940, the son of an immigrant from Lebanon, who had arrived all alone and 14 years of age, with no capital, and speaking no Spanish. He was fleeing conscription into the army of the Ottoman Empire, which at the time drafted young men into its army at 15. Carlos Slim’s grandmother therefore sent her 14 year old son away, alone, to seek fortune in the new world.

Carlos Slim opened his first checking account and bought his first shares at the tender age of twelve.

Carlos Slim’s fortune has not been won without controversy. Many people accuse him of abusing government connections and monopoly power, especially in relation to his most important business, Telmex, which he acquired during a privatization in 1990.

Still, he must be doing something right, and it is worth reading through his 10 principles for success, published on his website:

1. Create an organizational structure with simple, minimal hierarchies; provide personal development and in-house training for executives; maintain flexibility and a rapid decision-making capability; leverage the advantages of a small company and use these to grow and excel.
2. Maintaining austerity in good times strengthens, profits and accelerates the development of the company, and averts the bitterly drastic adjustments in times of crisis.
3. Stay focused on modernization, growth, training, quality, simplification and the continuous improvement of production processes. Increase productivity and competitiveness, reduce costs and expenses by using global benchmarks.
4. Companies should never be limited by the size of the owner or manager. Do not be a big fish in a small pond. Minimize investment in non-productive assets.
5. There is no challenge that we cannot overcome by working together with clear objectives and knowing the tools we have at our disposal.
6. Money that leaves the company evaporates; this is why we reinvest profits.
7. Corporate creativity is not only applicable to business, but also to solving many of society’s problems. This is what we do through the Group’s Foundations.
8. Firm and patient optimism always yields its rewards.
9. All times are good time for those who know how to work and have the tools to do so.
10. Our premise is and has always been that we leave with nothing; that we can only do things while we are alive and that businessmen are creators of the wealth they temporarily manage.

Here at the Q Wealth Report, we’re a very international publication but we tend to focus a lot on the bad that the US government is doing. That’s no accident. The US is the world’s only superpower, and the US government does tend to stick its nose in a lot of places. We arre reminded of a quote from Richard Mayberry, “For two centuries, the US government’s foreign policy has never wavered from its habit of poking sharp sticks at rattlesnakes.”

Of course, there’s are other reasons. Although sometimes people might think we are US-bashers, we are certainly not. The US has a great constitution and some of the best people on earth. So we are naturally sad to see what is going on there and we will duly express our opposition to a lot of US government policy.

The latest stick the US government has been busy shaking is at a bear, not a rattlesnake – and not entirely without justification this time, either. Russia is a force to be reckoned with, much more so than it was even five years ago. The Russian government is unpredictable in the extreme, does not respect private property, and is highly corrupt. And, some would argue, Russia has never really forgiven America for winning the Cold War. The recently agreed missile defense system to be based on territory of the Czech Republic has infuriated Russia.

Russia has been quietly building up influence in Asia, and watching what is going on in the middle east, possibly preparing to make moves.

However, Russia is building up influence closer to home too, which should scare Americans, as if they don’t have enough problems at the moment. Time magazine this week runs an article asking if there will be a new Cold War in the Caribbean. It shows Venezuelan President Hugo Chavez on a trip to Russia, to buy more than $1 billion worth of military equipment.

Alongside the news reports of the trip, the Moscow newspaper Izvestia quoted high-level Russian military officials as suggesting that Russia might restart flying long-range bombers into Cuba. That, according to Time, prompted U.S. Air Force General Norton Schwartz, President Bush’s nominee for Air Force Chief of Staff, to tell a congressional confirmation hearing the next day that if the Russians were to base nuclear-capable bombers in Cuba, “I think we should stand strong and indicate that is something that crosses a threshold, crosses a red line.”

Time continues with some analysis:

The significance of the Izvestia bluster isn’t that the Russians could be coming again — Moscow’s Defense Minister later said any air force arrangement in Cuba would most likely involve stops for fuel rather than actual bases — but that they’ve returned to the idea of using the Caribbean to try to leverage Washington. The latest gestures may be designed as a warning to Washington that if it goes ahead with stationing a missile shield on Russia’s borders, Moscow could reciprocate in America’s backyard.

Certainly something to watch and think about. We’ll be doing just that.

by Peter Macfarlane for The Q Wealth Report

Going through a divorce is the most stressful time of our lives. But it’s a very common event, and many of us do it more than once.

Everybody is human and we all make mistakes. The important thing is to learn from our mistakes and get on with our lives. In this respect, surely if a couple have decided mutually that they want a divorce, the best thing to do is get it over as quickly as possible. Dragging out the process interminably just causes more stress and emotional heartache, not to mention financial worries for the couple, and a financial bonanza for the lawyers! Nonetheless, dragging out the process is what most legal systems do.

I was reminded of this recently by an Italian friend. Faced with a divorce process that was going to take at least two years at home, he moved to London. Having established legal residence in England and carrying out the process through the courts there, he managed to reduce the processing time to six months.

Still, if you and your soon to be ex have agreed to go your separate ways, there is a place you can do it in a day. Why do you think stars like Michael Jackson, Mariah Carey, Marc Anthony, Diana Ross all divorced in the Dominican Republic? Because it’s quick, simple and cheap.

Quickie divorces in the Dominican Republic just require that one of the parties goes there for a day. The decree is issued immediately.

Needless to say, this is not a way to solve complex cases where there are disputes. It is simply a way of getting the process done quickly, so that both individuals can move on to the next stage of their lives – by remarrying, for example.

If you are interested in finding out more, there’s a publication called the International VIP Express Divorce Kit you can buy online, and get the process underway immediately using the forms included. More information is at www.vipdivorce.com

The kit also answers basic questions like “is it legal?”. The answer is yes, but there are certain points you need to be aware of and they are clearly made, with details of real cases and legal rulings from the USA, the UK and elsewhere.

By the way, besides the Dominican Republic, the kit also covers unilateral divorces in Haiti, which allow you to obtain a legal divorce decree if your partner has disappeared. And it includes warnings about why Mexican quickie divorces are no longer valid, and why Guam is only useful for US military divorces. Check it out.

What happens when Private Property is no longer a right? That’s the question asked by John Loeffler, host of a weekly syndicated US talk radio show, in a recent article that we highly recommend to Q Wealth readers.

Socialism, says Loeffler, “is the mechanism which transforms government from its noble role as a protector into a predator.”  He explains the three steps of Socialism, starting with stage one, an unrealistic offer of Something for Nothing that is generally accepted by citizens.  Step 2 is where things start to unwind in a Silent War between government and citizens.

In the latter part of Stage 2:

…the war kicks into gear as the dragon responds to the rising opposition and imposes a growing panoply of laws and regulations with increasing fines, penalties and prison sentences.  To block the rampant flouting of law, the dragon wants to monitor everything the citizens do in order to assure that plunder shall be paid, all in the name of the rule of law, public order and morality.  Civil rights break down, all in the name of morality and public security.  <snip>

As the security of property ownership declines, investments flee and the economic environment becomes unstable, no one wants to invest where earnings will be heavily taxed, or even the possibility of direct confiscation on the allegation of having violated a plethora of unknowable, unobservable laws.  Doing business is just too dangerous.

In Stage 3, The Day of Wrath and Mourning, “Faith in government dissolves along with faith in the currency.  Widespread flouting of law is common and tax payments quit.  If it gets bad enough, crime flourishes, both organized and random. The domestic economy collapses into a depression and the currency just collapses.”

Today’s America, says Loeffler, ”is truly at an economic and moral crossroad, having already started into Stage Two of the sad road to socialism.  Whether or not we plow through all three stages remains to be seen.”

What will happen next? We highly recommend you read the full article, but at the end, the writer offers a ray of hope:  ”It is here where Americans in times past have always shown themselves most noble.”

We’ll certainly be looking back on this article in Panama City the week after the US elections, at Recipes for Success, the Q Wealth Event about preserving and improving your wealth and health. More details of the event are here.

http://www.financialsense.com/editorials/loeffler/2008/0718.html

Yesterday Q Wealth Experts Jacques Haeringer and Paul Rosenberg were interviewed on Pierre Wolfe’s Americas Dining and Travel show on the Business Talk Radio network. They talked about Recipes for Success in Panama, living and retiring abroad, and overseas investment opportunities. Download the radio show here: http://archives.warpradio.com/btr/AmericasDining/062216.MP3

“There will be more bank failures.” That’s the view of John Bovenzi, the U.S. banking official running the failed IndyMac Bank, in Pasadena, California. Consumers should expect to see more bank failures as defaulted mortgage loans shake out of the system, and should take steps to protect their money, he was quoted as saying Monday by Reuters.

After those dire predictions, the official did try to put a more positive spin on things by saying that the forthcoming failures would be limited to small banks. Let’s hope he is right, because there are very grave doubts about whether the FDIC could bail out a Citibank or Bank of America.

But, with IndyMac the fifth US bank to fail this year, it’s worth remembering that not all US bank deposits are FDIC insired. As many US investors have found out, insurance only covers the first $100,000 of deposits.

Reuters reported (our emphasis):

The FDIC was returning up to 50 percent of funds over the $100,000 limit to some depositors Monday, he said. FDIC froze the remainder of those funds and handed out receivership certificates to account holders Monday until claims experts determine how much of that money is insured.

The certificates entitle IndyMac depositors to receive more of their frozen funds as the FDIC sells off the bank’s assets. They will likely have to wait at least several months, if not years, as the FDIC resolves IndyMac’s fate.

Sad tales from normal, middle class investors abound.

“I didn’t think anything like this would happen,” said retired teacher Charles Tengeri from Pasadena, who was first to emerge from the branch after withdrawing $171,000 — about two-thirds of his life savings. “I withdrew as much as I could. I know it’s going to take a little time.”

“I have $360,000 in this bank, and I was misled by this bank,” said Robert Clark, a Glendale resident. “I gave the names of my mother, my sister and my brother on the account so I thought I would be insured. I don’t know what to do. I really don’t know what to do.”

Do you believe this couldn’t happen to you?

Q Wealth Report’s banking expert Peter Macfarlane has been stating for several years that the US banking system is unsafe and unsound. It is your editors’ view that you would be well advised to keep a substantial portion of your assets NOT in US dollars and NOT exposed to US banking risk. For further advice, see Peter’s regular articles in The Q Wealth Report or visit his personal blog at www.petermacfarlane.net

by Peter Macfarlane

Despite Benjamin Franklin’s wise advice that those who would give up liberty for security deserve neither, the public seems more than happy to trade a little liberty for the rhetoric of greater security. That at least was the conclusion of The Economist in a recent article entitled Mary Poppins and Magna Carta based on a survey carried out in June by YouGov PLC.

Successive governments have conned us that by giving up just a little more freedom each time they ask, we somehow increase our collective security. This has been going on for decades now, and the effects really are becoming noticeable – especially to people like me who live offshore and just visit ”onshore” Big Brother countries on rare occasions.

As restrictive new laws are brought in, uses for them tend to multiply fast. For example, in March this year it emerged that local councils in the UK had been using surveillance powers intended for deployment against terrorists and serious criminals, to spy on people trying to game the school-admissions system.

As David Davis, the British Member of Parliament who recently resigned his seat to make his point, says:

The government presents these issues as Faustian trade-offs between security and liberty. The reality is that draconian measures rarely make us safer and often jeopardise security. That is not a trade-off. It is a con…

British premier Gordon Brown has indeed done just this. He claims that new authoritarian powers for the state are “guarantors of liberty.” Should we believe him? Should we believe George W. Bush when he claims that the USA PATRIOT Act guarantees our liberty?

For a start, says David Davis, look at the British national ID card scheme. Not to mention its overseas equivalents such as America’s REAL ID Act, that effectively seeks to create a USA national ID card by standardising state ID cards. There is no convincing evidence that terrorists are using fake identities – the September 11^th hijackers used their own, legally obtained US IDs to board the planes, and the national ID card schemes already in place in Germany and Spain did nothing to prevent terrorist plots there either.

The ID cards common in European countries, however, are much less dangerous to our liberties than those proposed by Blair, Brown and their cronies. Traditional ID cards use a limited amount of data which remains broadly in control of the card bearer. They are not “swiped” by terminals linked to a national database wherever you go, while the British ID card will be.

Promises that sensitive personal data will be carefully protected also look rather limp. Last November, CDs containing 25 million child-benefit records were reported lost. On June 12th a civil servant was suspended after top-secret papers about terrorism were found on a train; on the same day another set of documents—this time on financial fraud—turned up on a different train! Five days later it emerged that a laptop stolen from the office of a cabinet minister may have contained confidential documents, violating data-protection rules.

Yet, the British public, according to The Economist/YouGov survey, trust the government a lot more than private firms with their personal data. Odd… since more than half of British consumers have signed up voluntarily for supermarket loyalty schemes which track their purchasing habits down to the last bar of soap.

Privacy is a basic human right, and you should think very carefully every time you are asked for personal information. Give out personal information on a strict “need to know” basis. If a few companies don’t want to do business with you that way, or try to bribe you with a free toaster, just live without their services. In the long run you’ll be glad you did.

To finish, here’s another thought from Ben Franklin that seems very appropriate to our themes of freedom, wealth and privacy: “Sell not virtue to purchase wealth, nor Liberty to purchase power.“

by Frank Suess and Scott Schamber writing from the Swiss mountains!

The television show Big Brother has taken off all around the world, as now many countries, including many of ours here in Europe, continue to spawn off of the original concept. Apparently, peaking into the lives of people has become a staple in many of our pop cultures. But why should this intrusion on the everyday-Joe’s life be so popular only with the general public…?

We’re going to change the spotlight from our “friend” Easy Money over to his offspring: “Big Brother”. Some also call him Sam. Although in other places around the world he might be known as Charles, Ludwig or Giovanni. All of them have very similar stories. You want to know their stories and their behavioral patterns in order to know what lies ahead.

We’ve tried to give you an idea in the latest issue of our newsletter. To view our current newsletter, you can click on the following link: http://www.bfi-consulting.com/index.php?id=51

Editor’s Note: Frank and Scott of BFI Consulting in Switzerland are regular contributors to The Q Wealth Report. You can sign up free for their excellent newsletter directly from their website, linked above. Highly recommended!