As we’ve seen this week, more and more things are happening around the world – things that should not make us feel particulary comfortable.

The US and the UK have embarked on another major offensive in Afghanistan, with Britain announcing the loss of the highest ranking officer killed in action since the Falklands War.

Meanwhile as bank doors closed across America yesterday night for the fourth of July holiday weekend, the FDIC got busy.  Founders Bank of Worth, IL, was the seventh US bank to be shut down last night, the 52nd this year. Earlier in the night the FDIC had already closed down Millenium State Bank of Texas, First National Bank of Danville, Elizabeth State Bank, Rock River Bank, First State Bank of Winchester, and John Warner Bank. BankImplode.com has the details.

Also this week Feds arrested the founders of Liberty Dollar, a currency they alleged set out to ‘compete’ with the lawful currency of the USA.

Whilst the above certainly doesn’t reinforce confidence in any talk of ‘green shoots’ or even of the survival of the dollar in the short to medium term, at least we can take comfort in the fact that it’s not just the USA that’s against currency competition… China too officially banned this week the use of so-called virtual currency for real world transactions. The Register has the full details of that one. China, of course, controls the US dollar anyway.

The Register has some well-informed readers and the comments section at the bottom of that article is worth reading. We like this comment, simple and to the point:  “All money is virtual, a concept that too few people understand.”  Another reader is “surprised they [the Chinese government] are being quite so restrained over it all. Liberty Dollar and eGold have been raided (the former loosing lots of precious metal to the feds in the process) and criminal charges brought against their owners in the US for daring to offer a stable alternative to fiat national currencies.”

Meanwhile you’ve got to admire the brass of our public health officials who all gathered in Cancun this week to talk about Swine flu. According to a Yahoo news article filed by Associated Press World Health Officials Tackle Swine Flu Challenges, “Mexican officials wanted the meeting held in the Caribbean resort city of Cancun – where tourism has plunged – to highlight the country’s success in controlling its epidemic with a five-day national shutdown of schools and businesses in May.”

The UK, according to the above article, is expecting to have 100,000 cases of Swine flu daily by the end of August, though they admit that many of the people who are infected won’t even know it.  “It seems like a lot of mathematical modeling and not too much common sense,” said John Oxford, a professor of virology at St. Bart’s and Royal London Hospital, is quoted as saying in the Yahoo/AP article. Still, it’s enough justification for the UK to buy 60 million doses of Tamiflu with taxpayers’ money.

With that, we will leave our American cousins with best wishes for their holiday weekend and try to forget about economic woes to enjoy a few days with family. And belated greetings for Canada Day!

It probably won’t have escaped you that, although we are a global wealth building and wealth management newsletter with our roots in the United Kingdom,  in recent years we have developed a distinct Latin American bias. That is no accident.

It is in Latin America that we have found freedom, wealth, and privacy – in the form of governments that have no particular interest in keeping the residents of their countries under surveillance. They say power corrupts, absolute power corrupts absolutely. Well it seems to us that Latin American governments have power, but not absolute power – because their systems are less developed than those further north. So the fact that these governments don’t have the financial resources to employ high-tech methods of spying on their citizens is certainly a blessing.

The Republic of Panama stands out in Latin America as a major offshore tax haven and financial hub. Offshore bank accounts, IBCs (Panama Corporations), Private Interest Foundations and other similar privacy tools make for a business-friendly environment. The recently elected Martinelli government promises to continue with Panama’s liberal economy at least for the next five years (whether conservatives hold power after that will depend on whether Martinelli can deliver on his promises.)

But besides being a good place to incorporate or open bank accounts, Panama is a very liveable place. Sophisticated capital Panama City has some beautiful areas and, despite a real estate boom in recent years, remains relatively inexpensive. You can still get a good meal with a local beer for $5. But if you want to pay $100 for a top-class trendy sushi dinner, you can do that too. You have the choice.

Banking services in Panama are getting better too. Traditionally Panamanian banks have had a ‘take it or leave it’ approach to new business, and pressure from the US has made it particularly difficult for US citizens and residents to open bank accounts in Panama. One of my favorite articles about Panama banks is here. In the last year or so I have seen this changing, with more product differentiation and even something that’s never been seen before – Panamanian banks such as Multibank (the locally owned bank formerly known as Multi Credit Bank) and London-based international giant HSBC competing with each other agressively in the local market, trying also to steal away market share from more expat-oriented banks like Credicorp.

So these days, it is getting easier to open bank accounts, customer service is getting better (think shorter lines in bank branches), and probably most importantly for our global readership, internet banking and credit/debit card services are becoming much more developed.

One of my clients, for example, now has an airline miles credit card linked to his Panama company account and spends tens of thousands of dollars every month buying goods for resale all over the world. The goods move through the Colon Free Trade Zone and are sold on worldwide. The credit card works in US dollars without surcharges, allows 30-50 days interest free credit, and as a bonus my client can fly almost anywhere he wants to go for free, using the miles accumulated.

At the same time, Panama banking privacy is good, and the country is one of the few that still allows offshore corporations with bearer shares, much to the chagrin of the G20. But they can’t say too much because Panama has one huge strategic card to play – the canal – which the Chinese would happily buy up at any time. But that’s another story…

Further resources: Peter Macfarlane has authored an e-book entitled “EIGHT IMPORTANT THINGS YOU SHOULD KNOW ABOUT GOING OFFSHORE IN PANAMA THAT YOUR LAWYER MAY NOT TELL YOU!” You can obtaihn this ebook free, right here and now, simply by visiting our Panama Banking for Corporations and Foundations page. You’ll also find further information on banking in Panama together with a range of other worldwide financial centres in our Practical Offshore Banking Guide.

What a bizarre world we live in. Here at the Q Wealth Report we work hard to explain the world in a way that our readers can understand. But so many things are full of truth, lies, and irony all mixed up together that they defy logical analysis. Nevertheless we are going to try…

Russia’s Pravda, formerly the official organ of the Soviet Communist party, published a blistering attack on the United States last week. That would not seem so strange, except that the post-Communist periodical accused America of “descending into Marxism.”

One of the comments, for example, was that “the population was dumbed-down through a politicized and substandard education system based on pop culture.”

How very true. It was in the pages of our newsletter last year that Dr Richard Cawte warned against the dangers of television. In the constant race to produce more and more “content” for TV and internet, the quality has gone downhill so much. I even watched the BBC World News Channel the other day and the team was clearly half asleep. Fair enough since it was 4 a.m. in London. The point being do we really need people sitting there at 4am talking when they have nothing useful to talk about?

The writer of the Pravda article, it must be said, appears to be a victim of the propoganda machine himself. As we say in England, “the pot is calling the kettle black.” No doubt the communists who founded Pravda would be shocked at how much it has been dumbed down. I just took a look at their lead headline stories such as “Money Stuffed in Bra Saves Brazilian Woman’s Life” and “Men Become Impotent Because of Women’s Bare Legs.”

Nonetheless, some of his points are interesting and relevant. I particularly liked this one:

These past two weeks have been the most breath taking of all. First came the announcement of a planned redesign of the American Byzantine tax system, by the very thieves who used it to bankroll their thefts, loses and swindles of hundreds of billions of dollars. These make our Russian oligarchs look little more then ordinary street thugs, in comparison. Yes, the Americans have beat our own thieves in the shear volumes. Should we congratulate them?

Certainly food for thought I would say.

Our attention was drawn to the said Pravda article by our friends over at MoneyMorning, who have recently been writing a lot of good stuff about the Russian economy. For example, contributing editor Martin Hutchinson sent over the following comments for our readers about why NOT to invest in Russia…

A country that was wealthy when oil was $140 per barrel became deeply impoverished when oil prices dropped all the way down to the $30 range. Those of us who had been alarmed by Russia’s increasing geopolitical and economic assertiveness indulged in a little schadenfreude, feeling that it couldn’t happen to a nicer bunch of guys.

Now, the table has turned again. At $68.87 a barrel, the price of oil is far higher than the price assumptions on which the majority of Russia’s oilfield-investment calculations were based.

Russia has effectively seized the assets of the British oil company BP PLC (NYSE ADR: BP).  Last week BP accepted the very unpleasant Mikhail Fridman as chairman of its joint venture TNK-BP, a sign that its attempt to control the investment into which it had put the majority of the capital was ended. In the long run, the forced expropriation of foreign investors will prevent the Russian oil sector from remaining truly competitive. But in the short run, the expropriated foreigners have found so much oil there that huge revenues are assured for at least a decade, provided the oil price remains reasonably high.

In other sectors, too, the free cash for those with political connections allows deals to be done. Opel, for example, General Motors Corp.’s (OTC: GMGMQ) European subsidiary, was sold not to the Italian company which had a strategic plan for it, nor to the Chinese company that could use it to enter the European market, but to Magma Group, a Canadian parts company controlled by Russian interests, with financing from the Russian state-controlled bank Sberbank Rossii OAO.

The result may not make much sense operationally, but it is another example of Russian interests controlling major strategic assets in Europe. Needless to say, the various gas and oil joint ventures undertaken by Gazprom OAO (OTC ADR: OGZPY) in Eastern Europe, the Mediterranean and North Africa are also extensions of Russian power.

The fact that Russia’s MICEX stock index is up 100% since early January (albeit still 40% below its December 2007 high) is not very relevant to the people who run Russia.

They appear to have two objectives: Using the capitalist system to make themselves and their colleagues very rich and projecting Russia’s power on the world stage – just as the former Soviet Union used to do.

To Prime Minister Putin, capitalism is an attractive discovery, because it works economically much better than Communism did, and thus allows Russia to regain more of its former power than would have been possible under the Soviet system.

In this sense, Putin and current Russian President Dmitri Medvedev have finally achieved the original goals of Mikhail Gorbachev’s reforms in the 1980s; the objective of those was certainly not to bring down the Soviet government or upset the system, but simply to get the economy working more efficiently towards the leadership’s objective of greater Soviet power. Minus the other ex-Soviet Republics, Russia has now achieved this objective – and it may not stay minus the other Republics for very long, if Russia’s rulers have their way.

Given the way the system is rigged against the outsider, Russia is not a particularly attractive place to invest. Clearly, there may from time to time be a good short-term bet that Russia’s rulers will overcome current difficulties. However, the world contains other good managers besides Putin, and some of those others have a genuine interest in shareholder value and determination to create more of it.

By all means, look for Russian companies in consumer sectors that are outside the grip of the oligarchs – but do not expect to do too well, because you may find your company has a new and very expensive sleeping partner. Probably the best vehicle is the Market Vectors Russia ETF (NYSE: RSX), which benefits from Russia’s still-low Price/Earnings Ratio of 7.2.

But remember this: Russia isn’t a great global growth market like China, India or Brazil. And without major changes, it never will be.

Editor’s note: Thanks to the U.S. Treasury, investors can now switch some of their savings over to what could be a superior “legal tender.” Called “Gold Dollars,” this govt.-approved money spends like regular dollars – but it’s backed by physical bars of 24-karat gold. Gold expert Peter Schiff has written a report about this historic development. Whether you convert $10 or $10 million of your savings, his 5-minute “Gold Dollar” strategy could automatically increase your savings by 100%… 300%… even 500% in the coming days. To get Schiff’s intelligence for free, please go here.

By Doug Hornig, Editor, BIG GOLD for Q Wealth Report

Tuesday, October 9, 2007 started as a nice day in New York City. A lovely early fall day, with the temperature still a balmy 80° at 2:00 in the morning. By evening, though, the temperature had dropped twenty degrees, the clouds had rolled in, there was thunder and rain.

As with the weather, there were some hints of trouble here and there on Wall Street. But all in all, things could not have seemed better. Little did we know, the stormy end of 10/9/07 signaled a very large bubble that had just popped.

That was the day when the Dow Jones Industrial Average hit its historic peak. From there, it was all downhill — slowly but steadily at first, and then violently after last August — until the Dow bottomed (for now) on March 9 of this year. Over that span, the index lost 54% of its value.

It’s been a crushing blow to just about everyone. But it’s already being referred to as the crash. As if the unpleasantness were now all behind us. More likely, in the future it will be seen as, simply, the first crash.

Don’t believe it? In a moment you will, when you see the scariest graph of the year.

But let’s quickly recall what’s already happened. During the late, great housing boom, interest rates were at microscopic levels, while bankers were encouraged to grant home loans on little more than a wink and a nudge. In order to inflate their balance sheets, those bankers resorted to all sorts of gimmicky, adjustable rate mortgages (ARMs), whose common feature was an interest rate that would eventually reset. That is, it would balloon somewhere down the road. And those most likely to come quickly to grief were the riskiest borrowers, who held loans known as “subprime.”

“But not to worry,” borrowers were told. “Betting on ever-rising home prices is the safest wager in the whole wide world. If you have problems with cash flow when the ARM resets, your house will be worth a lot more, so you can simply sell it and walk away with a nice chunk of change in your pocket.” Uh-huh.

The bankers themselves were a little more concerned about the deterioration of their portfolios. They took out insurance in the form of credit default swaps (CDSs). These were a brand-new invention in world financial history, allowing mortgages to be sold and resold until they were leveraged 20 times over. They became the shakiest part of a huge global derivatives market, with a nominal value in the tens of trillions of dollars.

For a while, this Ponzi scheme even worked. But then, as they had to, the ARMs began resetting, and there were defaults. Then more of them. Because at the same time, the housing market was cooling off and the economy was stalling out. More and more people were trapped in a situation where they owed more on their home than they could sell it for. Many simply mailed their keys to the bank and moved on.

All of this wreaked havoc in the derivatives market. Sellers of these exotic packages could no longer establish what they were worth. Buyers couldn’t determine a fair price and so stopped buying. As the ripples spread through the world financial system, trust disappeared and liquidity dried up.

Now consider that the base cause for all that dislocation was the subprime sector. And how big is that? Not very. Subprime mortgages account for only about 15% of all home loans. Their influence has been way out of proportion to their numbers, because of derivatives. Here’s the good news: the subprime meltdown has about run its course. These loans were resetting en masse in 2007 and the first eight months of ’08. Now they’re pretty much done.

And the bad news? No one in the mainstream media seems to be asking what should be a pretty obvious question: What about loans other than subprime? Truth is, the banks didn’t just trick up their subprime loans. ARMs were the order of the day – across the board.

Now, here’s that frightening graph we referred to earlier. …

Take a good, long look. You can see that from the beginning of 2007 through September of 2008, subprime loans (the gray bars above) were resetting like crazy. Those are the ones people were walking away from, sending a shockwave from defaults and foreclosures smack into the middle of the economy. Now they’re gone.

The ARM market got very quiet between December 2008 and March 2009, hitting a low that won’t be seen again until November of 2011. Small wonder a few “green shoots” have poked their heads above ground. But in April, resets began to increase and will reach an intermediate peak in June. After that, they tail off a little, going basically flat for the next ten months.

It’s not until May of 2010 that the next wave really hits. From there to October of 2011, the resets will be coming fast and furious. That’s 18 months of further turmoil in the housing market, and the beginning is still nearly a year away! (Although the months in between are likely to be no picnic, either.)

While it isn’t subprime ARMs that are resetting this time, neither are they prime loans. Those eligible for prime loans wisely tended to stay away from ARMs in the first place, as indicated by the relatively small space they take up on each bar.

No, the next to go are Alt-A’s (the white bars), Option ARMs (green) and Unsecuritized ARMs (blue). Alt-A’s are loans to the folks who are a small step up from subprime. Unsecuritized loans are a 50-50 proposition; either the borrowers were good enough that they weren’t thrown into the CDS pool, or they were so risky no one would insure them.

Those two are bad enough. But Option ARMs are the real black sheep, loans with choices on how large a payment the borrower will make. The options include interest-only or, worse, a minimum payment that is less than interest-only, leading to “negative amortization”-a loan balance that continually gets bigger, not smaller. Imagine what happens with those when the piper calls.

Once the carnage begins, will it be as bad as the subprime crisis? That’s the $64K question. Perhaps not. For one thing, subprime loans were a much larger chunk of the market when they started going south. For another, there’s been a lot of refinancing as interest rates dropped; that should help ease the default rate. And the government has massively intervened, with measures designed to prop up those who would otherwise lose their homes.

On the other hand, we’re in a severe recession, which wasn’t the case when the subprime crisis started. More people will be unable to meet payments. And the housing market has continued to decline, pressuring both marginal homeowners and banks that can’t sell foreclosed properties.

Is the stock market’s next 10/9/07 on the way? Yes. Which day will it be? That’s unknowable. It could be in a week, or not for another year.

But make no mistake about it, the second crash is coming. It can’t be prevented, no matter what desperate measures Obama and his hapless financial advisors come up with. All we can hope for is that, with a little luck, it won’t be as severe as the first one. But it will last longer. We aren’t even in the middle of the woods yet, much less on the way out.

The order of the day is to be very defensive. There will be few safe havens, but they do exist. Read our report on “48 Karat Gold,” a gold-related, conservative investment that has continued going up even while the common stock market bombed. It’s not too late to profit… click here to learn more.

What will Ricardo Martinelli’s election as the new President of Panama mean for the offshore banking sector and Panama’s tax haven status? Will Panama IBCs and Corporations still be attractive tax planning vehicles? Will Private Interest Foundations remain inpenetrable?

The election of a self-made multi-millionaire as Panama’s new President this last weekend is good news for anyone thinking of doing business in Panama’s booming offshore sector. “Super 99″ Supermarket tycoon Ricardo Martinelli beat socialist Balbina Herrera who was intent on raising taxes and threatened changes to Panama’s traditional laissez-faire approach to government.

Martinelli is a business friendly conservative who understands the need for fiscal discipline, says Reuters. What we particularly like about him is his money is not from family or government. He is a self-made millionaire who has been there, done that, seen hard times and survived – the real archetypal tycoon.

He was almost bankrupted by looting at his supermarkets after the US invasion of Panama in 1989 but since then he has built up business interests also in real estate, hydro electric energy (very smart guy), and sugar. The Panamanian electorate has bucked the recent trend in Latin America towards left-wing governments, showing once again that Panama is a business friendly country.

Needless to say, Martinelli is keen to court the Obama administration, given the importance of US trade with Panama. In common with what’s going on in the rest of the world, Panama is likely to loosen up bank secrecy somewhat over the coming years. Despite their committments to the G20 and OECD, we know the Panamanians will deliberately move slowly on this. But it is coming.

On the other hand, a closer relationship with the US, which Martinelli is seeking in the scope of a Free Trade Agreement, also stands to benefit the offshore sector through increasing opportunities for legitimate international tax planning. (See yesterday’s article about the enormous tax benefits US tax law actually allows for offshore business, especially in the pharma and tech sectors, and for high net worth individuals)

Indeed, the anti tax haven crusade is already getting worried about this prospect and cranking up the publicity… something that can only be a good sign for supporters of the right for individuals to do what they like with their own money!

The Tax Justice Network, in a recent article called Grimy Panama, describes Panama as an “especially unpleasant secrecy jurisdiction,” pointing out that unlike most tax havens and even their bete-noire Switzerland, Panama does not have any tax or information exchange treaties. Furthermore, they point out, “The OECD notes that Panama made a commitment in 2002 to conform to international tax norms but since has completed not a single agreement to implement its promise.”

Another report claims that this Free Trade Agreement between the USA and Panama, which comes much closer with the election of Martinelli, would “undermine U.S. efforts to stop ofshore tax-haven abuse.” Apparently, these people have some problem with Panama trying to create a “comparitive advantage” for itself through regulation of financial services… while in the almost the same breath they suggest that the USA should seek to gain what could only be described as a comparitive advantage for itself, by putting up legal and fiscal barriers to American companies wishing to do business overseas. Finally, needless to say, they throw in accusations of money laundering on behalf of American International Group, Mexican and Colombian narcotraffickers.

Bottom line? The socialists are worried because events in Panama and the possibility of a Free Trade Agreement would give Panamanian companies better access to US markets on more preferential terms. That could open up exciting new possibilities for paying less tax legally.

We are pleased to welcome Ricardo Martinelli as the new Panamanian President, and take this opportunity to remind readers that we are now offering a free e-book “Eight Important Things You Should Know Before Doing Offshore Business in Panama.” Because the business culture in Panama is different, the way of doing things may not be what you are used to, and there are certain ways of getting things done (or conversely doing things the wrong way) that might surprise you.  Download your e-book by Peter Macfarlane now, here: Panama Corporations and Banking – Hidden Truths Revealed.

by Peter Macfarlane, Offshore Banking expert for The Q Wealth Report

“Obama Plan Aims to Limit Use of Offshore Havens by Multinationals and the Wealthy” is the subheading of a Wall Street Journal article entitled Firms Face New Tax Curbs.

Hot on the heels of the crackdown on tax havens announced in the UK budget, President Obama today reveals what White House press officers are hyping as “a far-reaching crackdown on offshore tax avoidance and evasion, targeting many U.S.-based multinational corporations and wealthy individuals.”

Ironically this new attack does draw attention to the fact that there is a great benefit for American companies and wealthy individuals to going offshore completely legally. If you’ve been wondering whether all this “offshore stuff” is completely legal, here you have your answer!

The proposed changes, if they happen, will take place between 2011 and 2019. So how much money can you save by going offshore legally right now, starting with your 2009 tax bill, even if you have to make some changes over the coming decade?

As the article points out, however, the current tax system is actually very beneficial to American companies running business internationally. The pharmaceutical and technology industries are cited as particular beneficiaries, as are high net worth (HNW) individuals. Treasury and IRS officials acknowledge it has become much more commonplace in recent years for both businesses and  individuals to take advantage of low taxes as well as lack of transparency in many offshore tax havens.

So going offshore may not be politically correct, but it certainly is legal and beneficial… and morally the right thing to do as well, if you don’t approve of what the government does with taxpayers’ billions. In this situation I’m reminded of the famous tax case judged by Judge Learned Hand that I quoted in the Practical Offshore Banking Guide 2009:

This decision became one of the bases of the US tax system at the IRS code.

Of course, it’s not an accident that the current tax system is very beneficial to American companies doing business overseas. The aim of previous governments that originally introduced this policy was to encourage American companies to do business overseas. Exports of goods and services were the mainstay of the American economy… until somewhere along the road the Chinese took over this role and the American economy became bloated by more and more money created out of thin air through dodgy banking transactions.

American technology firms like Microsoft or Google lead the world. Very likely if benefits like this had not been in place, they would not have decided to base themselves in the USA.

Obama, of course, knows this too… but he’s on the bandwagon at the moment trying to benefit from publicly cracking down against perceived abusers of the tax system.

Making it more difficult for these major pharmaceutical and technology firms to do business could be yet another disaster for the US economy. Microsoft alone has an economy bigger than many countries, and they are actually very well diversified geographically already. It would not take much to move their home base outside the USA, and I believe they would consider doing so in a flash if circumstances warranted it. Obama also doesn’t want to lose the likes of Microsoft and Google over a little publicity stunt, so he will have to take care.

Likewise, the High Net Worth investors who are sophisticated enough to be doing offshore are likely the ones who are actually creating wealth for the American economy. They are to be encouraged. If they leave the USA, the USA will be the loser, not the individuals.

So what will come of this? Frankly not much I believe. It is hype, designed to appeal to the masses, circulated by the mass media. To scare people off unsophisticated tax evasion tactics like having unreported personal offshore bank accounts … puehhlease!!!

People who read The Q Wealth Report know better than to believe the hype or break the law. We explain exactly how you can benefit from going offshore legally. We even offer a free five part course so if you are not yet amongst the super wealthy HNWs, you can become one. Module 1 of our free Secrets of the Super Rich course is about Offshore Banking. This one and the other four modules will allow you, in about ten minutes a day, to gain a new perspective of the world we live in – and the way you can prosper within it. We will show you ways you can legally create wealth offshore because of the recession – not in spite of it.

As I said at the beginning, this new attack does draw attention in no uncertain terms to the fact that there is a great benefit for American companies and wealthy individuals to going offshore completely legally. How much money can you save by going offshore legally right now, even if you have to make some changes over the coming decade? Start today with the Secrets of the Super Rich and The Q Wealth Report

By Peter Macfarlane, Offshore Banking Expert for The Q Wealth Report. Part of the mini series on Secrets of Offshore Banking and Asset Protection.

Clients often ask me “what is the best offshore bank?” However, there is no correct answer to that. The best answer I can give is to respond to the question with a question. Best offshore bank for what? For privacy? For wealth management advice? For corporate accounts? For e-commerce? All these require different types of banks and services, which is why there is no single “best offshore bank.”

Below are just a few factors you should consider when looking for the best offshore bank for you. Let’s talk first about privacy or bank secrecy, because that’s what is on most people’s minds at the moment.

Your Country of Citizenship and Residence as beneficial owner of the account is a major factor, even if technically you are opening an account for a corporation or foundation from the other side of the world. In order to enhance your banking privacy, you should be looking to bank in a jurisdiction where you home country does not have undue influence. Europeans, for example, should look to other continents, to countries that are not covered by the European Union Savings Tax Directive. That means avoid all European countries, including Switzerland, Liechtenstein etc. Avoid also territories of European countries – like the Cayman Islands, which are British, or Curacao which is Dutch. Panama might be a good option, or Uruguay, or a wilder card country.

For Americans, however, Panama is to be avoided. Even the best offshore banks in Panama cannot be regarded as private for Americans, because of the US influence in Panama going back nearly a century. Switzerland no longer offers good banking privacy to Americans – since long before the current UBS fiasco. The Caribbean is also too much within the US sphere of influence. Americans looking for the best offshore bank for privacy should look to some lower-profile European countries, or maybe to the Middle East or Africa.

Another important factor to consider is what do you want out of your bank? For some people, the best offshore bank may be one where you have a great relationship with a private banker who knows you, advises and supports you, and takes you to lunch in a nice restaurant when you visit. Others couldn’t care less about that, but prefer great technology – online access to markets 24/7, without the hassle of trying to get hold of a private banker by telephone to execute buy or sell instructions.

Some people know exactly what they want – while others don’t have a clue and therefore need good, impartial wealth management advice.

Also important – how strong is the bank? Very important these days as most offshore centres do not have deposit protection or guarantee programs like the FDIC. That said, reputable offshore jurisdictions really don’t need such programs. The banks being bailed out are in the USA and Western Europe. Small, private offshore banks generally have a much more conservative profile and are not exposed to so much risk. We haven’t heard of any tax haven banks going under during the crisis, have we?

Next question o your mind – does Peter have specific recommendations for banks? The answer is yes I do. I deal with a number of the best offshore banks, right from small ones through to the biggest, physically located in many different jurisdictions around the world. I can put you in contact with them so you can open your account directly, with no need to deal through intermediaries. This information, however, is reserved for paying subscribers of The Q Wealth Report. Specifically, you will find my recommendations for the best offshore banks in the Practical Offshore Banking Guide 2009 that you can download right now in the Members’ Area, as soon as you have signed up. If, after reading this guide, you need more help making a decision, members are welcome to contact me for a personal one-on-one consultation. If you are considering membership of The Q Wealth Report, then the Practical Offshore Banking Guide 2009 is just one excellent reason why you should sign up now!

Coming Next: Wealth Management Advice – Whom Can You Trust?

by Peter Macfarlane, Offshore and Non-Resident Banking Expert for Q Wealth Report

At last we are seeing some sense in the anti-tax-haven rhetoric being rehashed by the mainstream press. An interesting article by Richard W. Rahn in the Wall Street Journal sets out to defend tax havens and the useful role they play in the global economy:

If the government suddenly said you would incur more onerous and expensive tax regulations and reporting requirements if you moved your business to a low-tax state such as Texas or Florida from a high-tax state such as New York or California, you would be justifiably outraged. Now substitute Switzerland and Bermuda for Texas and Florida, and France and Germany for New York and California, and you’ll understand a new form of “tax protectionism” that is infecting Washington.

Tax evasion is illegal…  surely there can’t be many people left in this day and age who would seriously believe that they could just open an offshore bank account in their own personal name, not declare it, and thereby evade tax. As you can see from reading publications like my Practical Offshore Banking Guide 2009, it is just a tad more complicated than that. And the vast majority of people I know who are offshore do so perfectly legally and in full compliance with the laws of their country of residence.

Of course, the best way to go offshore is to move yourself. That rather takes the wind out of the sails of fuzzy thinking leftists who try to argue that if you are living in a country you should pay for government services there (quite apart from the fact of whether you actually use those government services).

Moving offshore yourself is very practical these days for many entrepreneurs and business people, or even many retired professionals. They can do a little consulting or investing on the markets over the internet from a home office, fly back home once in a while to take care of those little bits of business that still require personal physical presence… and they can quite legally live tax free and stress free in a tropical paradise (or maybe a clean air mountain paradise like Andorra if that is more their thing.) That’s what we have been preaching for years here at The Q Wealth Report.

The current warpath being beaten by Senator Levin and his crew is flawed, as the WSJ piece points out, because tax evasion is already illegal. “It is a fool’s errand to pass ever more laws against things that are already illegal…” says Rahn. More tellingly, he presents evidence to back up his claim:

The chief tax writer in Congress, House Ways and Means Committee Chairman Charles Rangel, Treasury Secretary Timothy Geithner, and former Senate Majority Leader Tom Daschle apparently did not report all of their foreign-source income. Their actions tell us that either the tax law is too complex, or they thought the tax burden was excessive. Would their behavior and that of millions of others improve by making the tax law more complex and punitive?

Finally, Rahn leaves us with what is perhaps a chilling thought for the future of a collapsing US economy, or perhaps just an accurate vision of the future:

The proposals by Messrs. Dorgan, Levin, Baucus and the Treasury will almost certainly have the unintended consequences of driving more U.S. businesses elsewhere, discouraging foreign investment in the U.S., and actually encouraging more U.S. investors to move their funds (either legally or illegally) not only out of the country, but to places in Asia or the Mideast that tend to be less cooperative with U.S. tax authorities than are the European and British low-tax jurisdictions.

Well done to Mr Rahn and the WSJ for sticking up for beleagured tax havens. Here at The Q Wealth Report we will continue to inform and entertain our readers with practical information on how to move yourself and your money offshore, how to create a new stream of wealth with your new offshore business, and how to do everything within the law. Of course, our best practical “how-to” information is reserved for pid-up subscribers to The Q Wealth Report. Besides instant access to our downloadable reports on offshore banking and gold bullion investments, and the archive of previous editions of The Q Wealth Report, an individual consultation with Peter Macfarlane is included in the benefits of signing up. What are you waiting for? Join Q Wealth today!

With all the fuss going on about Swiss banking right now, many people might have overlooked the fact that you can simply move to Switzerland and live virtually tax-free, legally, and without being subject to notoriously strict Swiss immigration controls. How? Through the Italian tax haven enclave of Campione d’Italia – a little part of Italy, with some very special personal tax concessions, that functions like a part of Swiss territory.

“The first pure haven I remember reading about was Campione D’Italia, a village sized city on the shores of Lake Lugano in Switzerland and the first person I ever heard write or talk about Campione was Harry Schultz, publisher of the Harry Schultz International Newsletter” writes  Roger Gallo of Escape Artist. “Harry Schultz was the only one around at that time who was using the then uncommon word, ‘international’ when he spoke, and he was also the only one who was writing for an American audience who seemed to know all of the offshore secrets, and he knew scores of them.  He was years ahead of almost everyone else in writing about asset protection and he was the first to write about offshore investing. Harry has been publishing his newsletter for 41 years and it still very much garners the respect of most of the current lineup of hotshot investment gurus.”

Campione d’Italia is a small Italian commune of 1.7 square kilometres located entirely within Switzerland, on the eastern shore of Lake Lugano at the foot of a beautiful mountain. There are approximately 3,000 inhabitants, about 1,000 of them foreigners. The official currency is the Swiss Franc, but the Euro is accepted as well. All banking is done through Swiss banks. A famous Casino generates substantial revenue, which is one of the reasons why the residents of Campione enjoy some very special tax concessions.

Campione’s tax advantages only apply to private persons resident in Campione, and not to companies domiciled or managed from there (except that there is no VAT in Campione, which I suppose is a big advantage for companies)

How can you obtain a residence permit in Campione? You must normally buy an apartment or a house – simply because there is very rarely the opportunity to rent. Currently, however, I know of an opportunity to obtain a residence permit by renting. A client of mine is privately renting one of the nicest fully furnished, ultra modern duplex apartments in Campione Switzerland for EUR 2900 per month. It is located on the only sand beach with palm trees that we know of, in Ticino (what my client calls the “Banana Belt of Switzerland”). The deal is you pay one year in advance and that includes the right to Swiss & EU residency. He’s also prepared to sell at EUR 365,000. For more information contact me via info@petermacfarlane.net and I’ll put you in touch.

To sum up some of the many advantages of being resident in Campione d’Italia:

* Political, social and economic stability
* First-class Swiss infrastructure
* Swiss Franc is the official currency
* Banking through Swiss banks with Swiss banking secrecy
* Attractive lifestyle in a quiet, clean environment
* Efficient and reliable public services
* Swiss postal services, telephone numbers and car registration plates
* Effectively resident in Switzerland – with E.U. residence permit
* No value added tax (VAT)
* Special income tax concessions, no inheritance or gift tax

Interested in reading more like this? Every quarter, The Q Wealth Report covers material related to living the good life in tax havens around the world, protecting your assets in first class private banks. Right now, our focus is on How to Buy and Hide Gold Offshore. We are also publishers of the Practical Offshore Banking Guide 2009. Learn more at The Q Wealth Report homepage, or sign up today for our free 5-day e-mail course: The Secrets of the Super Rich

by Peter Macfarlane, Offshore Banking Expert at The Q Wealth Report

Do you know how anyone, regardless of credit history, can borrow money offshore at only 1% interest (or even less) with no scheduled repayment date, then simultaneously reinvest it for a much higher return elsewhere?

Of course not – because the rock-solid European banks routinely making such loans are not allowed to advertise these deals in your country. Your government calls this “investor protection.” Here at The Q Wealth Report, we call it “protecting the cosy domestic banking cartel.”

Foreign currency aribitrage is one of the areas where you can make money even in a falling market. Currencies will always go up and down, and there will always be big differentials in interest rates. Trading “pips” in the forex market, where you can make or break your account in a matter of minutes, is not every investor’s idea of fun. Slower moving and less risky (though of course not risk free), the types of foreign currency arbitrage programs we are writing about here offer an attractive alternative for more conservative investors.

The arbitrage or investment loan is a fairly standard wealth creation offering from European private banks, albeit little known. The gearing of the initial deposit, together with the currency arbitrage, makes it possible to invest a larger amount in a currency with high interest rates, thereby increasing the prospects of high returns.

Typically you will have to invest about USD/EUR 250,000 in a private offshore bank to get that facility. This can then be leveraged from one to five times, depending on the risk level of the currency you are buying into. If the initial deposit is USD 250,000, a loan of up to USD 1,000,000 can be contracted and then a proportion of that can be invested in a high income Bank CD in a currency paying a much higher interest rate.

The loan will typically be taken in a low interest currency s0 at the moment, USD, EUR and GBP would be perfect… although traditionally most loans have been taken in Swiss Francs or Japanese Yen. To spread risk, you can also choose to take the loan in a combination of two or more currencies. Then, you take the loan proceeds to buy another currency, paying a higher yield in CDs – typically in a multi-currency account at the same bank.

A variation on the same theme, of course, would be investing in gold. You can certainly borrow money against CDs or electronic gold to invest in other products offered by your private bank. Whether they would allow you to borrow against physical gold? I doubt it, unfortunately. In this case you might just be better off buying Perth Mint Certificates and asking your friendly offshore banker for a loan secured by that. Alternatively, hedge your investments by borrowing against US dollar investments, in US dollars, but using the loan proceeds to buy gold. That way you get the best of both worlds.

(Note – I normally recommend only physical gold – see my article How to Buy and Hide Gold Bullion Offshore. But, if someone is lending me money at 1% interest in fiat currency, and I can buy gold with it, I might not be so fussy…)

The profit factors, to summarize, are as follows:

• Exchange rate factor: Raising a loan in one currency and investing in another can lead to exchange rate gains as wells as losses.
• Interest rate factor: Where investments are made in bank CDs, the interest rate level of the currency of CDs can affect the return on the investment.
• Gearing factor: The return on investments is improved by the gearing of the initial deposit. The gearing factor plays an important role again if there is a loss. (You lose more!)

Of course, like any investment, you should do your due diligence very carefully. The good thing is that this, when done correctly (read those last three words again!) this makes a standard, conservative bank deposit that much more exciting. In these times of low interest rates on major currencies, we could certainly all use a little more excitement like that, couldn’t we?

How do you go about getting an Invest-Loan? Not, as you’ve probably guessed, from your local high street bank. If your existing banker won’t lend you money for things like this, it’s time to think about moving your investments to a different bank. A good place to start with the Practical Offshore Banking Guide 2009, available free for download to our members. I’m happy to make personal referrals to private banks who will carry out Invest-Loan transactions, at no extra charge to all Q Wealth members as part of the free consultation that members are entitled to. Just contact me via the Q Wealth London offices. If you’re not yet a member, you can join now to gain immediate access to these privileges.