Retirement Plan Blog

Your retirement plan is essential for happiness and success. It is also necessary to be flexible and to keep up to date.You will be affected by politics, economics, climate and a host of social parameters. It is vital to stay in touch and to be able to adapt effectively and quickly.

Relaxed but Poised - Part IV (Final)

In the “Taking a Liberty” post the difficulties of forecasting events was highlighted. All pundits had access to sophisticated statistical methods and had, historically, records of accuracy in predicting results. Almost none of them got things right. How, then, can an individual expect to make good assessments for personal physical and financial safety and security?

In Part I it was established that banks are necessary evils. Knowing this affords some protection. An offshore bank account is still a useful defense against creditors. More importantly privacy has disappeared. A bank will disclose your affairs to any organization or government to enable it to do business in any market which interests it. Most banks will re-lend or invest deposits without permission for their own benefit. Depositors pay for any losses incurred via reduced access to and/or by outright savings confiscation. Deposits should be the minimum necessary, for short periods and spread across many banks.

There are banks which simply hold funds in the deposited currency. The only risk is in the “value-security” of the currency chosen. Such banks raise charges but these could be less than the “haircut” administered owing to losses due to a bank’s incompetent investment of deposits.

Holdings of precious metals are only as safe as the place where they are stored. There are reputedly safe repositories although you may prefer to keep your stock more closely accessible.

The failure to mention the cryptocurrencies with respect to financial safety and security has been criticized. This site is intended for retirees. Many are not familiar with systems such as Bitcoin, the best known cryptocurrency. Such currencies are highly speculative with large value swings over short periods. Privacy and low costs are major benefits. General acceptance for “ordinary” transactions may improve as the understanding of cryptocurrencies increases. Until then any apparent advantages should be used with extreme care.

In short, know your enemy. To paraphrase a well know warning, “if something seems risky it probably is”. Find another way.

Physical safety depends upon the ability to move swiftly prior to an impending disaster. Dangers may be political or economic. Be prepared to be proactive in facing apparent difficulties. Should the anticipated problem not develop recovery elsewhere is easier if you and the family are safe and finances are secure.

Speed of movement depends upon citizenship and residential rights. A minimum “set” of mobility “tools” is two passports and two other permanent residencies, the latter coupled with unlimited re-entry rights.

Parts II and III provided details about the acquisition of passports and this site also gives information on permanent residency conditions and applications for a number of countries. Exercise care when applying for citizenship and/or residency. It is easy to be misled down illegal and expensive paths. Not all residencies are appropriate depending on the movement restrictions that may be imposed.

Your well-being depends upon you. Seek help and assistance from those with experience. Ultimately it is your judgement that will prevail and determine your course of action. Forewarned is forearmed.

Relaxed but Poised – Part III

After Part II it could justifiably be asked - “If a passport is so valueless a document why would a second one be any more useful?” Flexibility is the answer. To leave permanently a country whose passport is held a second passport is needed. Financial and physical safety and security are reasons for needing to leave a country.

A second passport can be acquired by ancestry, as the result of permanent residency, by purchase or, less likely, via political asylum or recognition as refugee. The first option is the best but will not be open to all. The second depends upon successfully acquiring permanent residency, somewhere. Not all countries permit residents to become citizens. Care must be taken in assessing “economic citizenship” schemes. There are many scams concerning the “sale” of passports but some arrangements are legitimate. As examples the Commonwealth of Dominica and St. Kitts and Nevis are two countries offering legitimate “economic citizenship”.

Permanent residency is a civil status freely offered by many countries to retirees. None of the words in this last sentence can be taken at face value. Permanent residency is rarely “permanent” and conditions are often attached. The status is not offered but comes via a detailed, often complex, application. An application is usually expensive and fees are not refundable if the application fails or if the status is subsequently withdrawn or voluntarily forsaken. “Many” countries do not permit such applications. It is often not necessary to be an “age defined retiree”. Application fees may be lower for older applicants.

The country to which one applies depends upon the reason for the residency. For “bolt hole” purposes residency must be available rapidly. In some places temporary residency confers for all practical purposes the rights of permanency and is quickly granted.

Financial security demands that the new country must have an international banking system. This cannot now mean that financial institutions will not report to governments, most will and do. Other governments and their financial institutions must not be constrained by the new residency. Some countries have a prohibition on transacting with those with U.S.A. attachments. Many Arab and Muslim countries will not deal with Israel and vice versa.

For flexibility there must be no restriction on physical movement to and from the new country. This may rule out some places. Ecuador restricts new residents to three months’ absence for each of the first two years of temporary residency, to six months for the next two years of permanent residency after which an absence of up to five years is permissible. Uruguay prefers that at least half of the period of application processing is spent in the country. The U.S.A. cancels residency for those who are absent for more than twelve months without prior permission. Other countries allow multiple re-entries and no absence restrictions provided financial commitments are maintained.

The priority must be the reason for which residency is being sought. Side benefits such as are offered by Panama should not cloud the real personal issue.

Relaxed but Poised – Part II

It is too late when the trooper carrying an automatic weapon appears on the promenade behind your beach lounger. You have just not been paying enough attention to current affairs. Just because you have no voting rights does not mean that you should ignore local politics. So far as safety is concerned two things need to be considered separately, citizenship and residency.

Almost everybody is able to obtain one passport. It may be as a result of the accident of birth or because of a successful application for political asylum or of having refugee status approved and resettlement granted. A passport is a document evidencing identity and citizenship. There is no obligation on an issuing authority, usually a government, to grant a passport to any applicant. If issued the passport remains the property of the government and it can be cancelled at any time. The holder of a passport usually has the “right” to enter, leave, reside in and work in the country of citizenship. These “rights” may be varied at any time. No government is obliged to accept the veracity of a passport so far as an individual or a group is concerned.

The document, the passport, often states that the holder enjoys the protection of the issuing authority. This should not be taken too seriously. When visiting a country other than that of citizenship “protection” means that the holder can be sent back to the country of citizenship at the holder’s expense. No reason nor explanation need be given for such action.

If, when visiting a foreign country, a person is detained or imprisoned the most that can be expected of the detainee’s country of citizenship is that a request may be made that detention is under no worse circumstances or conditions than a citizen of the detaining country may expect to be held. A detainee can have no expectation of receiving funds by way of a grant or loan from the country of citizenship nor will there be any interference in the legal system of the detaining country. If the country of citizenship has no diplomatic representation in a detaining country then a third country which is so represented may be given instructions with respect to the limits of the help that may be offered by the detainee’s own country. If it seems that the future of a detained person may seem bleak that is simply because it is.

There may be and are all sorts of declarations of the rights of individuals by any number of august international bodies but there is no acknowledged or accepted capability of enforcement of such rights. The possession of a legally issued passport is essential for travel between countries but it confers few enforceable rights on the holder.

It is possible to hold more than one passport. How this is possible and what advantages this has will be considered in Part III of this series of posts and also, for retirees, the question of residency as distinct from citizenship.

Relaxed but Poised – Part I

Eternal vigilance is the price of freedom. Who said it? Who cares? It is a necessary but no longer a sufficient condition for safety. For retirees time is short and recovery opportunities limited. Security both physically and financially requires preparation and the ability to act. Financial arrangements can become unsafe. Physical conditions can deteriorate rapidly. Careful monetary and residential planning and constant attention to detail are essential to avoid disasters.

An offshore bank account, once, put a physical and jurisdictional barrier in the path of any creditor. This is no longer enough for immediate and long term safety. The protection afforded by banks has diminished as the confidentiality of clients’ affairs has eroded. Anonymous or “numbered” accounts are now relics of the past. Banks and their managers as a “friends of the family” in stable relationships over decades have disappeared.

Banks now intrude into the affairs of their clients under a “know your client” policy. Customers must adopt the policy of “know your enemy”. Banks operate, as they must legally, for the benefit of shareholders. All services offered have only this in mind.

Banks must now report to Governments details of clients’ accounts. Countries compel banks to report by imposing penalties for reporting failures on dealings in their financial markets. The ubiquitous “FATCA”, the U.S.A. Foreign Account Tax Compliance Act is notorious. This legislation has caused banks to close the accounts of anyone with an American connection and to refuse such a person account opening facilities. Many countries have followed the American example hoping to recover taxes.

Banks are not just money holders. They lend depositors’ funds without permission. Enough money is kept on hand to deal with daily transactional needs. Not all investments are profitable. If things go badly the daily drawings of clients are restricted and ultimately depositors' funds are confiscated to balance the books. This “lending process” is called “fractional reserve banking”. Just as central banks create money for governments so main street banks do the same for their customers. Debt is the agency of fiat money creation. Banks add to the national money supply often to no good economic purpose. It is the customer that faces a “haircut” if things go ill as was the case in 2008.

Risk spreading is one defense. Hold cash, including fiat money, precious metals (gold/silver), buy property, acquire a few blue chip shares, deposit in a number of banks, use at least one bank practicing a 100% reserve policy – i.e. it does not lend your money. Such a bank will raise charges but these could be less than any loss if a “friendly financier” becomes “Figaro from Seville”. Ask Greeks, Cypriots, Irishmen and Zimbabweans, a few who have suffered recently. Keep money assets in a range of “stable” currencies.

The tap on a computer keyboard should create or reverse a fund transfer. Keep computer batteries charged and VPNs updated. Scan the headlines of at least two international newspapers daily.

Know your enemy, be vigilant, be prepared. Part II follows.

Taking a Liberty

Recent elections in Australia, United States of America, France and the United Kingdom have proved that, politically, nothing can be taken for granted. The best predictions have been bad in all cases. Seasoned observers and previously accurate complex mathematical formulae have proved that predictions once thought to be reliable can be totally wrong on the day.

Australians expected a right-centre government with a good working parliamentary majority and at least a compliant upper house. Instead the government is one seat away from a hung parliament in the lower house and in the Senate commanding a consensus is like sweeping fog into a corner on a windy day.

Americans were led to believe that they could expect the “ho hum” of their special kind of two party politics in a continuation of the system designed to do very little at enormous expense and at which it spectacularly succeeds. What they have is a non-professional behaving grossly unprofessionally. Succeeding in business it is often a matter of doing and saying whatever is necessary. Lies, sailing close to the wind, sleight of hand and sometimes outright dishonesty are needed to achieve objectives. Competitors play by the same rules. In the civil service totally honest people are not in the minority. Honourable employees totally bemuse and confound the “quick or the dead” businessman who has amassed no such currency.

None of the major French political parties managed to get a presidential candidate to contest the final run-off for the presidency. The hard right wing candidate did not quite have the legs on her campaign to win. As the Americans have learned the new president is no pushover and does not succumb to bullying.

The politics of expediency led the British Prime Minister to seek to convert a comfortable position into a landslide victory to ensure a hold on power for a decade. Success looked to be assured. Unfortunately the Conservative party believed its own rhetoric and sold it to a largely supportive media. In common with the Australian government the British leader has found that governing for the benefit of the “well-off” while offering the majority grinding austerity simply does not work. The voters thought this way also and now no party has a majority in parliament and the Prime Minister will be lucky to see out this year in power much less the next ten.

So how can ordinary people, especially retirees, protect their own interests when those in charge with all the accoutrements of power get things for themselves so horribly and disastrously wrong? More is needed than financial care and acumen and certainly much more than simply keeping abreast of current affairs. There has to be the ability to react and to act with speed, certainty and legality. Some ideas and suggestions will appear in the next post on this site.

Ecuadorian Confirmation

It can now be confirmed that Mr Lenin Moreno defeated Mr Guillermo Lasso in the run-off election for the Presidency of Ecuador. Mr Moreno won with 51.16% of the votes. He was the vice-president in the out-going Presidency of Mr Correa, the latter being ineligible for re-election.

It is likely that the basic policies of the previous administration will not change greatly as was certain to be the case had Mr Lasso been successful. However, every new leader anywhere will want to put his own stamp on the country.

New laws with respect to entry to Ecuador were published prior to the election. Administrative regulations have not yet appeared.

There is continued easy access for tourists and other non-immigrant visitors. Provision is also still made for immigrant visitors to acquire residency. It does seem that some new procedures will be established. There will be a temporary residency which must be held for 21 months prior to application for permanent residency. There are more stringent restrictions with respect to absence from Ecuador during the temporary residency and early permanent residency. It seems also that there have been changes with respect to health insurance.

Until matters of practice become established it may be advisable for prospective retirees, for whom a particular immigrant visa is available, to check with local lawyers and/or the Ecuadorian Embassies in home countries. Some details may no longer suit all applicants and a re-assessment of plans may be necessary.

This site has provided links to information posted since the new laws have been promulgated on its "ECUADOR VISA FOR RETIREMENT" page. The information is in varying degrees of detail and most is not from official government sources. Those seeking details should beware of sites basing comments on conditions which were current prior to February 2017.

Nothing is a continuing or cast iron certainty so far as governments are concerned. Prospective retirees must keep in touch with changes to ensure that their financial security and personal needs can be satisfied on an on-going basis with adequate flexibility to take account of possible future changes.

Prudence, Protection and Preservation

The previous two blog posts described the risks to your wealth and from where it comes. This post reviews earlier strategies, which although no longer fully effective are still useful, more precisely identifies potential attacks and suggests alternative protective possibilities.

A few years ago it was necessary only to open an offshore bank account to achieve satisfactory capital security. An account with a bank in a jurisdiction other than that of normal residence or citizenship would usually put physical distance between funds and creditors. It would also establish legal barriers to the access of account details and to the funds. Accounts could be anonymous or numbered accounts making identification of ownership difficult. More complex financial structures, limited liability companies (shelf companies) and trusts, could be established with less than obvious beneficiaries. This has changed in the past few years.

Governments often assume that those with offshore bank accounts are, prima facie, tax evaders. Laws have been passed by many countries requiring overseas banks to report the holdings of their nationals and residents. The U.S.A leads in this kind of legislation with its Foreign Account Tax Compliance Act. Many countries are following this example. Banks are compelled to report on customers owing to draconian penalties imposed in the event of their failure to comply upon remittances made via the regulating country. So far as the U.S.A. is concerned the reporting requirements are extremely onerous. Banks now prefer not to have as customers anyone with connections to America. Accounts have been closed and new applications are denied. The law also applies to other financial institutions such as stock brokers.

It is almost impossible for American citizens and residents to open or maintain offshore accounts. However, as Rothschild suggested banks will not be cowed by governments. Some banks are opening new entities which do not do business in or with the U.S.A. They are not threatened by the penalties and can entertain accounts for those on whom they might otherwise be forced to report. Those requiring offshore facilities have simply been driven deeper underground. The government is frustrated and banks lose very little, if any, business.

Banks are still the principle enemy of wealth preservation. There is hope. Developing now are facilities which bypass banks for transfers and most other transactions. Crypto-currencies, of which there are now many, are increasingly accepted by businesses and can be dealt with via the internet directly between customers and enterprises. The best known such “currency” is “Bitcoin”. It has gained wide acceptance for transfers domestically and internationally. Neither bank nor government intervention is necessary.

Funds should be spread over a number of countries and banks practicing “fractional reserve banking”. Banks which do not lend depositors’ funds are safer but there are charges and always risks so far as any particular currency is concerned.

So, there are available anonymous facilities if needed. Banks should be used if and when necessary. It is important to stay in touch financially and politically. This website discusses all of these matters.

Unrestrained Banks : Above the Law

Having painted banks as the villains in the financial world, can the charge be sustained? An understanding of money and how it is created is necessary. In most countries commercial banks are the biggest creators of money. Banks create money out of thin air. Once a loan to a customer is approved a credit is made to the client’s account. This is done simply by a few taps on a computer keyboard. The borrower can immediately draw cash. Money has been created. The crucial misunderstanding is that credit, not the currency is, in fact, money, new money born of nothing.

Central banks create money for the government by similar wizardry. Central banks have special rights granted to them by governments. Often central banks are not parts of governments or they have a legislated independence. In the U.S.A. the Federal Reserve is a private organization. A government “orders” money, notes and coins, by issuing interest bearing financial instruments, “official I.O.U.s” to the central bank which then prints and mints the currency. The central bank alone has the right to trade the government’s I.O.U.s or treasury bonds to commercial banks (upon whom trading can be forced) and other parties.

It was once the case that commercial banks operated as intermediaries between depositors and borrowers. Banks were required to maintain a minimum percentage of depositors’ funds against the latter’s possible cash drawings. This was a bank’s government imposed statutory reserve. It was a principal limiting component of “fractional reserve banking”.

Thus national money supply was controlled. When, during the Reagan/Thatcher era, guidance of the economic principles of John Maynard Keynes were forsaken for those of Milton Friedman many controls were relaxed. Commercial banks could then lend beyond the extent of depositors’ funds.

Every deposit is a liability for a bank. Without regulation banks quickly became technically insolvent. Banks lent to borrowers who were financially unable to service the loans. Borrowers could take up such loans initially because of very low interest rates charged for the first few years.

Some banks saw a way to balance their books. Sets of mortgages, which were the majority of the low interest loans, were bundled and sold as financial derivates with the potential earning rate of the interest to be charged to mortgagees after the concessionary initial rate had expired. These sales netted a few banks vast amounts of money domestically and internationally. The likely eventual worthlessness of the sold items when mortgagees defaulted was known to the selling banks but this did not stop them trading these items even to other banks.

So many commercial banks traded while insolvent, a criminal offense, and fraudulently sold items knowing their likely worthlessness. Their actions precipitated the 2008 Global Financial Crisis which is still inhibiting the health of the world’s economies. This is why the answer to the question posed in the first sentence above is emphatically “YES”.

For confirming argument read "The Production of Money: How to Break the Power of Bankers", by Ann Pettifor, Verso, London, 2017.

How Your Money Goes

Knowing your enemy is said to be the secret of victory. This not only true militarily but also financially. For the hunted staying at least on step ahead of pursuers assures freedom. The inactive exercise of vigilance is necessary but not sufficient for safety and protection. For retirees financial security is vital. From any loss of wealth, those no longer earning an income will have difficulty in recovering. None of this is new. In 1790 Rothschild said: "Let me issue and control a nation's money and I care not who writes the laws." This simple statement identifies for everyone their principle antagonist in the fight to preserve wealth.

Thieves, beggars, creditors, relatives, friends and many others met in the course of an ordinary lifetime will be experienced as they all trying to acquire riches from those known or unknown to them although the former have no right to possess such wealth. Rothschild was a banker and his famous statement clearly identifies the wolf in sheep’s clothing, the fifth columnist who is the enemy of those wishing simply to retain and enjoy the fruits of their own labour when they have accumulated enough to support themselves for the rest of their life.

Banks operate stealthily. They attract supporters, their natural prey, by offering small rewards by way of interest on deposits. Then they lend this money to others. Their myriad of small, often unidentifiable, though justified by all their kind, charges erode their customers means of support until the fleeced have nothing more to give. Blame for their depredations is usually laid at the feet of others, principally governments. The latter accept such responsibility in the belief that their own raison d’être is assured by their “friends”, the bankers.

Eventually, when it is too late, the politicians, who form the government in most countries, find that their country is bankrupt and that the bankers, the banks’ owners and directors, have hived off their gains outside the country. The government is left with an empty ruin of debt and that for some sort of survival the country must rob its own citizens. Pessimistic? Ask the people of Ireland, Cyprus, Greece or Zimbabwe. Remember the Great Depression of 1929 – 1940, disastrously terminated, but not solved for most, by the Second World War, recall Germany’s Weimar Republic, never forget the plundering of private citizens’ gold by the U.S.A. government in 1933.

So, having identified the threat to personal wealth is it possible to thwart it? In any market nothing is certain. What is sure is that, for survival, doing nothing is not an option. Your well-being before and after retirement depends upon you being in touch with current political trends and knowing of available protective strategies. All comments and suggestions are made with a view to preserving the safety of an individual’s wealth. There is no attempt here to solve national macroeconomic problems.

For ideas, guidance and choices see the next couple of posts in this blog and other pages on this website.

Outcome Uncertain in Ecuador

There seems to be some uncertainty with respect to the outcome of the Ecuadorean presidential election. This seems to be following the trend of countries such as the U.S.A. and Australia. President Trump was not expected to win according to most forecasts even on election day. In Australia, the incumbent government of Mr Turnbull had to wait many days to have a one-seat majority confirmed. Even so, this was a pyrrhic victory owing to the fact that the government's situation in the upper house, the Senate, deteriorated.

The situation in Ecuador is likely to be more volatile than in the U.S.A. and Australia even though there were and continue to be large public demonstrations against President Trump both domestically and abroad. It must be emphasised that no political situation can ever be taken as stable, certainly not set in concrete.

The policies of the right-wing presidential contender, Mr Lasso, differ markedly from those of the left-wing previous president Mr Correa and his protégé Mr Moreno. Changes in laws and regulations may be expected if the former candidate ultimately wins office.

Resident retirees should have taken more than a passing interest in the election even though most would not have been eligible to vote. They should have built into their residency as much flexibility as possible particularly with regard to their finances, both capital and income. If possible they should have an alternative country to which they can go if that becomes necessary.

Potential retirees to Ecuador would do well to wait until the situation is resolved and any changes become clear. A re-assessment of needs may be necessary and a change of target country may be best. Flexibility, alternatives, strategy revision, substitutes, timing changes and adaptive speed must all be watchwords in dealing with governments, financial institutions and income possibilities.

This website has many pages relevant to specific countries, banks, income, tax, health and other less vital considerations such as, climate, social situations and time zones that retirees should take into consideration. It is unlikely that any one country will prove to be ideal for all purposes. Being willing to make compromises should enable changes to be made after resettlement or prior to confirming arrangements although this is rarely easy. Never get “locked in” to a changed and deteriorating situation which will lead especially to major financial losses. Remember also that your country of origin may not be able or willing to provide assistance to you.

You can buy books by Les on specific countries for Kindle or for other readers at the retailers mentioned below.

You can also buy a Kindle device from Amazon for reading the e-books that you purchase.

Just click below where appropriate.


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