In the mountains in the south of Chile
Buenos Aires, Argentina
As you all know we are officially taking a one-month sabbatical because of a citizenship hearing in one month—or two. I am not yet on the schedule but in my last trip to the immigration office the clerk informed us we were at the end of the process.
As we have reported, different countries keep raising the bar for residency and citizenship and Argentina is no exception.  Of course citizenship is still possible, but it often involves more effort than before. In the case of Argentina, where we are, first they increased the income requirements for immigration. When I started this process, my language requirement was merely to read a paragraph–not translate. However, the judge has the full discretion to grant citizenship or not and my attorney is concerned unless I can respond in a reasonable fashion in Spanish to the judge. Now, with my citizenship hearing already in view, although my attorney will be present, I cannot depend on my attorney to communicate with the judge.
And so an all-out effort to become relatively conversational is under way; hence the sabbatical. But because there are interesting developments under way that may affect some of us, we wanted to send an alert to let you know what is going on.
First the good news. We have heard so many contradictory things about when the FATCA withholding would take effect that we didn’t feel confident enough to make a pronouncement. The deadline for compliance originally was January 1, 2013. But now we think it is safe to say we have a one year respite. As our readers already know, many of the banks have stated that it would be impossible to comply by the first of January next year. Some banks have asked U.S. citizens to move their accounts. But we have the word from Leif Simon, international tax specialist, that the deadline for compliance by the banks was postponed to June, 2013, with the new rules finally taking effect on January 1, 2014. Here is an article from another source, also confirming that fact. http://www.fundweb.co.uk/home/news/us-postpones-fatca-until-2014/1060295.article.
Some banks have begun to comply and there is now hope that the new rules may, in fact, make it easier for U.S. citizens to open foreign accounts since perhaps now all the foreign bank will need to worry about is reporting to the IRS. No guarantees there but Leif, at least, thinks this may be the case. Of course it remains that there are banks that do not consider it worth the trouble and are dropping their U.S. accounts. But there are plenty that still want to do business with U.S. citizens. So I think we can breathe easy with an extra year on the FATCA issue. The word we have right now is that the withholding will not apply so long as the bank with which you are dealing is compliant.
This week we came across some videos we thought you might like. This one is Ron Paul interviewed on the Lew Rockwell show. The interview includes is a lot of discussion about the U.S. presidential debates. But the positive part is the accounts about Ron Paul’s support by young adults, even in foreign countries.  It is not so much the support of Ron Paul that encourages us (although we do like that) as the fact that there is an indication there is a change in the wind among the younger people–and not only in the U.S. but in much of the world.
We have long understood that events tend to move in cycles. The stock market is good for years and when that cycle ends the bull market usually moves to commodities, and so on. In the United States, the housing market boomed for years and, as always, in the end it was crazy, with people bidding prices up on homes for sale in order to outbid other buyers. Those who are seasoned in markets know that when that happens it is not time to buy. It is time to sell.
As someone has said, the sun is always shining somewhere.  When one market peaks and then falls, another is coming into its own. Those who understand these cycles normally do well in all seasons. We are thinking that we may be at the end of one political cycle as well, and beginning another and that young people around the world are waking  up to the cause of freedom of the individual. If that is the case, I think we can say thank  you to the Internet! Here is Ron Paul in The Prairie Fire Of Freedom:  http://www.lewrockwell.com/lewrockwell-show/2012/10/23/316-the-prairie-fire-of-freedom/#podPressPlayerSpace_1
Next, as we all know, at Four Flags Journal we are all about independent thinking on the one hand, coupled with support for and building of community on the other. Although we think that anyone considering a move from their home country to a developing country is an independent thinker already, we still thought you might like this interview with John Rappaport on being an individual, thinking things through and researching them for yourself.
We have long noticed the encouragement in America to not bother yourself with decision-making, just consult an expert and do what he or she says. Here is John Rappaport on the individual. http://fairdinkumradio.com/?q=node%2F116.
Argentina
Sadly we are watching the process of a financial meltdown in beautiful Argentina. We don’t know how long it will take. Some Argentines think it is imminent but my guess is that there will be a couple of years of a gradual grinding down. In our experience, these things usually take longer than you expect. Argentina is especially interesting because quite a few financial analysts believe the meltdown in the U.S., if indeed it does happen, will be more like that of Argentina rather than, for example, Weimar, Germany.
Of course the inflation rate is vastly misrepresented by the Argentina government (Surprise! Surprise!) They are claiming 9%. There are some items I watch week to week and, for example, the coffee cream that I have mentioned before, for which I paid 8.50 pesos early this year, was 17.50 pesos this week. Does that sound like 9% to you? Not to me either!
The government took over retirement funds earlier this year, and now they have reduced the amount of the monthly retirement.
Also, since dollars are the world reserve currency, most international business is transacted in the U. S. Dollar. Therefore, Argentina needs dollars to pay their national debt as well as for imports, and so they have shut down possession of dollars by the population. They have also set the exchange rate more recently at 4.70 pesos per dollar. None of this is hard to understand when you understand the financial dilemma the government faces.
Although the official exchange rate is 4.7, you can get 6.15 pesos per dollar in Buenos Aires on the black market–if you have dollars. I could tell you how it can be done but then so can just about anyone else in Buenos Aires. They are arresting dealers who are paying higher than the official rate for dollars, but more appear in their place.
It is very interesting to have a front row seat in all this just to see, first hand, how it works and the steps that people take to protect themselves and their assets. Every time a new regulation goes in, the Law of Unintended Consequences seems also to take effect.
However, many Argentines are trapped. They would like to leave but it has become impossible for many through control of the currency, demonstrating again the wisdom of the “flags” which we so often discuss here. One of our favorite informants here in Buenos Aires about the goings on in Argentina has parents who planted flags years ago. He is a Canadian citizen as well as a native Argentine. Compared to many others, he is a free man. There are many Argentines who have planned ahead and given themselves options.
One of the unintended consequences right now is that, since people can have problems withdrawing their money from the banks, they are holding their cash outside the banks. Statistically almost half of the people do not use Argentina banks. The fact that the banks are short on deposits also has fallout of its own. We don’t know what the outcome will be but we are watching with interest.
Because I know how negative news can tend to make people think a certain country has devolved into a jungle, I want to explain that life goes on normally for most of us here. The city is still beautiful and except for occasional demonstrations, things are pretty normal. And to be honest, even demonstrations are not abnormal in Argentina!
Tourists are still coming and people are still immigrating here.
I see people living on the street now occasionally that I think should not be there. Some street people are there by choice. I have been told they are born in the street and live on the street all their lives. You will see the children riding the subway and singing—performing. If they do something to earn money I always give them something. If they are just begging, I normally do not.
A lot of people are worried and are having a difficult time–particularly Argentina retirees now adjusting to lower income. As we have published here before, there is little debt here in Argentina, making unlikely that a lot of people will lose their homes.
Chile
Chile presents a different picture entirely. Chile has a growing economy and the president of Chile is encouraging entrepreneurs to immigrate to their country.
We consider Chile a worthwhile consideration. The country is beautiful. With the Pacific Ocean to the west and the Andes, which we love, to the east, bordering with Argentina, Chile offers about any weather pattern you like, from the Atacama desert in  the north, with the warm, arid climate in that area, ranging all the way south to the more humid environment in the straits in Patagonia.
Chile is a vast playground with white water rafting, mountain climbing, fishing, swimming, snow skiing in the Andes in winter. You name it, Chile probably has it. So their offer of special treatment for promising entrepreneurs is worth considering if you are in that category (or maybe even if you are not—yet!) Read about it at http://startupchile.org/about/the-program/?utm_source=Issue+%233+October+2012&utm_campaign=Issue+%233&utm_medium=email.
Uruguay also continues to do well and Paraguay really doesn’t seem any the worse for their coup.
For those who have so kindly written to ask how the Spanish is coming, It is coming well. As you know I enrolled in a new course that I liked so much I contacted the owner and put it on our web site. I’ve studied from a college textbook, also with a certified teacher but didn’t really seem to make much progress–until now. As described before, with this course you learn the language the same way you learned English, from hearing and repeating. No grammar or conjugation of verbs or anything like that, just learning to speak Spanish.
Of course I’ve known enough Spanish to get around in South America but that’s quite different from conversations. Suddenly, learning the language has become much easier. If you’re planning to move south later and you get started now, just spending a little time each day, you’ll be surprised. You’ll be speaking Spanish by the time you get here and it’s painless!. A family could make a fun time of doing the lessons together. If you try it and decide it isn’t working for you, there is a money back guarantee.
Back to our original subject, if you are seriously planning a move to the far south, we think that the sooner, the better. It takes time to make this change and as has been said before, even the longest journey begins with the first step.
We hope you will take that step soon if you plan to do so. Let us know if we can help.
Arlean
We respect your privacy and never share your personal information.
Copyright 10/28/2012 All rights reserved.