El Conquistqdor Francisco de Orellana

El Conquistqdor Francisco de Orellana
The Conquistador who put the Amazaon baisn "on the map"....Francisco Orellana

Friday, July 29, 2011

Ecuador property of the month - July: Two bedroom on bath condo in Colonial Quito with baloncy and terraza only $37,500 furnished

Low cost living for expats in Ecuador has boomed over the past several years.

This trend will grow.   US and Western European economies are both being forced to face up to debt, aging populations and huge unfunded future obligations in pensions, medical care and who knows what, amid a disintegrating, global social cohesion evidenced by terrorism… revolution and internal strife.  

Huge losses will occur as the dollar and euro lose purchasing power.

One way to protect against these losses is by seeking a lower cost lifestyle in countries such as Ecuador.

For more information on this condominium for sale go to...


Thursday, July 28, 2011

Preparing for the future....the Noble profession of farming in Ecuador

As many people are rethinking priorities many are considering farming as a business or “going back to the land” as a lifestyle from a previous more innocent era of the pre-industrial world. I must admit….it has been a little of both for us here in Ecuador. And…..for someone that has never farmed before……it has been a very learning and yet rewarding experience. To me...there is something "noble" about farming...the idea of patience, hard work, and producing something natural.....Paternally for the family.

From the start……our family had three main goals in owning a farm…..
1) The need for a “cash crop” for business purposes.
2) A weekend and vacation get-a-way to escape the city life and enjoy time in solitude by myself or with the family
3) Considering today’s economic uncertain world…..a place to exist independently that will allow one to live off the land.

We believe we are on our way to accomplish all three of these goals but as with any farm….time is of the utmost consideration. We will share our experience with you in hopes that we can save you some of the initial pitfalls and maybe entice some more foreigners to join us…..….

Our original goal of the “cash crop” was tourism. However, I quickly found out how out of touch I have become with the typical foreign tourist. I honestly failed in my first several attempts to accurately judge the needs and ideas of our guests and concluded that I could not simply “relate” to the typical tourist that wanted to stay on a farm. The bottom line is….I have been gone too long from my native country!

Nonetheless, we have maintained our cabins which allows my family and friends to make frequent visits and maybe in the future we can open it up to certain visitors that want to experience our business first hand.

Therefore….we needed a new “cash crop”. There are many of these in Ecuador….Cacao (chocolate), banana, and other assorted exotic fruits. I want to mention that to have a “cash crop”…it should be something that can be exported. I want to also add that we are not big on animals….we had cows, bulls, mules, chickens, turkeys, horses and tilapia fish. They are all just a notch below a child in the manner of responsibility and “care” one needs to give. Working with plants is much easier. The sole exception in our area is the mule….that is the best animal a farmer can have.

Based on much research and influence from other neighbors at the farm….our new “cash crop” is now coffee. We intend on doing this on a big scale and will now give a brief summary of how we should be successful.

1) Purchase your property
The best type for coffee is to look for an elevation between 1,000 and 1,500 meters from sea level…and we wanted it less than a two hour drive from Quito. We found it in our area of Pacto which is before the more well known area of Mindo.

We also believe the best type of soil is the type worked by cattle. Find some property that had cows grazing on it for many years with their “fertilizer”. This type of ground is excellent and full of nutrients!

The typical price per hectare in our area averages between $2,000 and $4,000 per hectare (2.54 acres). We know of coffee farmers that are exporting with as few as only 4 hectares but we believe for export you are better off with between 15 to 20.

2) Grow crops to start.
The ground that has been used by a cow pasture will not be accustomed to planting so you will need to work it and turn it over. If necessary…..you will need to kill any vegetation on the field with an all natural organic weed killer. The first crop we plant is corn (four months) to prepare the soil and strangle off any previous plants. Then…we come back with Yucca (six months) which is great to turn over the soil and prepare it for the coffee. Yucca is very similar to potato. I also want to mention that coffee grows best with a little shade. You can use banana trees or as we are using…..Guaba which gives not only shade but great fruit and added nutrients to the ground. This tree reminds us of a small oak tree in appearance These plants take two years to grow and are planted at the same time as your Yucca. The good thing about these two crops is that they will give you some small income before your coffee starts to produce.

3) During the Yucca stage you will begin your seeding process. The seeds are placed in a bed of soil and after two months are then placed in bags. After four months in the bag ……they are ready to place in the soil. Believe it or not….there are coffee associations in Ecuador that will give you coffee beans free. Nonetheless, we are experimenting with our own bean by crossing other beans and brining more famous beans in from Colombia.

We are currently still in the growing stage and have not ventured into the processing stage. That requires some machinery and intend on getting into that in years to come. The drying, shedding and roasting stage is the real “art” of coffee which places it on a level with wine.

We have calculated that farming 7 hectares of coffee should gross between $3,000 and $4,000 per month in today’s money. Of course…that is before labor which is an important aspect but not a extremely big expense typically $270 per month.
We have only one on site laborer Inez who has been on the farm for 10 years including the previous owner. She is on permanent salary and we intend on paying temporary pickers by the bag when it is time to harvest.

The downside to Coffee is that it normally takes five years to produce and has a life of 15 years per plant. But in the meantime…you can sell locally your corn, yucca and any other production you might have: In our case….we have an abundant amount of Banana but that does not give a good price locally. Yucca now seems to have a good price locally. Nonetheless…..we only hope to break even now and cover our costs.

As for the marketability of Coffee….the price has doubled in the past 8 months and there is no end in sight. China is opening up a huge market and Latin America is known for the best quality coffee in the world. As one American recently commented at our Coffee shop “Dios no muere” in Quito……”Coffee is the last legal drug the US government has not made illegal”.

I do not consider myself Juan Valdez but if anything…….I am convinced that income producing property (especially farming) is one of the best sources for income in my latter years of life (I do not believe in the word “retirement”) and also as a legacy for my children. You may see shortly that governments (Social Security) will not be able to take care of you anymore and you will need to look for more traditional forms of a “safety net”. The type of safety net the world used to know before the intervention of the central government welfare state came into existence. May the peace of God be with you!

Interested in more information or on how we can help you become a farmer in Ecuador????? Send us an email at colonialquito@yahoo.com or come by for a cup of coffee at our Casa de Café in Colonial Quito!

And the Empire Goes Broke.......

We've been putting the pieces together. Last weekend, we noticed that the "Imperial Agenda" was part of the reason the middle class is going broke.

Cheap credit helped finance the middle class spending spree. It also helped finance the empire. Without artificially cheap credit, neither the federal government, nor US households, would be in the mess they're in today.

And now the empire follows its own inevitable course. Bread at home. Circuses abroad. The voters won't give up either one.

As for the bread at home, 44 million people now get food stamps. One of every four children gets them. The US Treasury sends out 88 million checks every month. And 51% of the public now gets some of its money from the feds.

Overseas, the circuses get bigger, more costly, and more absurd. The US is now involved in 6 military adventures in the Mideast and North Africa, if you include its intervention in Yemen and Pakistan. It maintains bases all over the world. And it now costs $1 million to keep a single US soldier in the field in Afghanistan.

How long can it afford the costs? The federal government gets roughly $2.2 trillion in tax revenue. It spends roughly $3.6 trillion. You can see for yourself, the feds have to borrow nearly 50 cents for every dollar in revenue.

But wait...we'll 'grow our way out of debt' just like we've always done in the past, won't we?

Uh...no. Not this time.

Because the last time the US had this much debt was immediately after WWII. "After" is the key word. WWII had a beginning and an end. The homeland population made sacrifices during the war so they were ready to spend when it was over. Military spending could be dramatically cut, too, giving the domestic economy a boost.

But now, the wars never begin and never end. There are no declarations of war. No debates in Congress. No surrenders. No armistices. No ticker-tape parades. We now have wars that go on forever against enemies who are never clearly identified, at costs that can't be calculated and for reasons that can't be explained.

Meanwhile, at home, the feds no longer offer relief to those who are temporarily unemployed or to an economy that is in cyclical recession. Now, they give permanent support to people whose jobs are gone forever...and to an economy locked in an eternal slump.

The wars go on and on overseas. At home, the recovery never comes. And the Empire goes broke.


Bill Bonner
for The Daily Reckoning

Wednesday, July 27, 2011

In Defense of the Empire by Bill Bonner

Reckoning from Vancouver, British Columbia...

Oh my, the young man accused of killing 93 people in Norway, isn't the man Homeland Security and the Pentagon hoped for.

But we'll come back to that...first the world of finance.

Republicans and Democrats are under pressure. They need to keep up appearances. Both sides want to make a debt deal – so as to give the impression that US authorities know what they are doing and are in control of the situation.

Undoubtedly, it will be like the European deal...too little and too late to make any real difference.

Meanwhile, stocks fell 43 points on the Dow on Friday; no big deal, in other words. Bonds went up – showing that investors aren't particularly concerned about the debt ceiling problem. And gold rose back over $1,600.

So, let's move on...back to the future of the US empire.

As an empire matures, every opportunity to expand becomes a matter of national defense. (In America, the word "empire" is never mentioned.)

Ever since 9/11 "defense" industries have been peddling the idea that Islamic terrorism is a threat to national security. Their spirits must have lifted when they first heard the news from Oslo over the weekend. Finally, after 6 years of relative quiet, here comes more evidence that there really are some Islamic terrorists!

But now we discover; he isn't an Islamic terrorist at all. He's a Christian terrorist; he thinks he's defending Christendom from the Islamic Threat.

Oh la la...the valiant knights of the military industrial complex now have Christian terrorists on the right...and Islamic terrorists on the left. Or vice versa.

But wait, their story was that they were defending the USA and its empire against Muslim bad guys who want to destroy it. Are they also defending the empire against Christian bad guys who want to protect it?

Ay yi yi...what a tangled web we weave...

Sunday, July 24, 2011

Growing Bananas in Ecuador

Other Ecuador “experts” rave about exporting handicrafts… yawn… whatever…

I don’t see many people in Ecuador getting rich from that…

Today let’s take an inside look at a great business opportunity for any Ecuador investor and the second biggest cash cow (or export product) of Ecuador (after crude oil)… banana.

This week during my current property search I found myself on a hacienda in southern Ecuador talking to the owner of a large banana farm.

He explained how the business works.

Each banana tree bears fruit only once in its life, to one “bunch” which contains around 130-140 individual bananas. Before one tree is cut the baby tree is already on its way from the same root.

The owner has 38 hectares of banana fields. Each hectare produces 30-40 boxes of banana a week (for exporting). Each box contains about 100 bananas.

Each box sells to middlemen in the port for $5.50, who then turn around and sell the product to the international buyers in the US and Europe for around $10 per box.

The owner mentioned of the $5.50 per box, about $1.50-2 is profit, which figures to be about $1700-3000 per week in profits for the farm.

He doesn't even live on the farm. He simply has one full-time farm manager, and about 20 guys who come once a week to help with the weekly harvest.

Banana farms in the same area near Machala sell for about $25,000 per hectare.

An interesting opportunity indeed.

Saludos until next week, feel free to ask me any questions about Ecuador by posting them here, glad to help,

Domenick Buonamici
Ecuador Investor, Reporter

Thursday, July 21, 2011

Overconfidence in Paper Currencies

Why Gold is Still the Best Measure of Price Stability

Bill Bonner
Reckoning today from Paris, France...

Yesterday, the Dow shot up more than 200 points, for no apparent reason. Gold backed down below $1,600 for a very obvious reason.

Nothing goes up in a straight line, not even gold. After such stunning gains over the last few weeks, the stuff that Ben Bernanke does not regard as money, gold, needed a rest.

But if gold isn’t real money, what is?

Pieces of paper that a private bank and the US Treasury say is real money?

“This,” they insist, “is a dollar. You shall use it as money.”


“Because we say so.”

“Because we say so” is good enough for most people most of the time. But there are times when it’s not. Such as when the financial authorities are up to no good. Then, smart people turn back to gold.

There’s no magic to money. It works as a medium of exchange and a store of value when, and only when, its quantity is strictly controlled. That’s what’s nice about gold. Its quantity is controlled by nature herself. People have been trying to get around it for centuries. Alchemists labored long and hard to turn base metal into gold. None succeeded.

The only way you can increase the supply of gold is by mining it...which is expensive and time consuming. Of course, technology helps. But technology tends to advance with the economy itself. So when the economy is growing at 1% a year...the quantity of gold tends to increase at about a 1% rate too.

What a miracle! Prices remain stable because the quantity of gold increases at almost the exact rate necessary. This is why you can reach about as far back in history as you want, you’ll find that gold was just about as valuable a thousand years ago as it is now.

In the 19th century, paper money was backed by gold. People had learned their lessons in the panics and bubbles of the 18th century. They didn’t trust pure paper currencies. Lincoln fiddled the dollar during the War Between the States...inflating the currency to pay for his killing campaigns – but it was put right soon after. Apart from that, for the whole period...from the beginning of the 19th century to the creation of the Federal Reserve in 1913...the dollar was stable and reliable; people trusted it because there was real money – gold – standing behind it.

But now, the chief of America’s central bank says that gold is not money; the dollar is supposed to be money now. And now, the feds don’t worry too much about how many dollars they issue. Their primary goal is no longer preserving the purchasing power of the buck – it’s lost 95% of its value since the Fed was set up. Now, they’re more concerned with the stock market, with the housing market, with consumer spending, and with the next election.

So, what do you think, dear reader? Can you have confidence in these men? Do they know what they are doing? Did they see the crisis coming? Did they understand what was happening? Have their efforts to fix it been successful so far? Is protecting the value of your money – and the financial health of the nation – their number one goal?

Five years from now, which do you think will be worth more? The dollar without gold behind it? Or gold, without the dollar?

The dollar, you say?

Well, good luck to you!

Tuesday, July 19, 2011

Sticking With the Golden Formula As Empires Crumble

Reckoning from Paris, France...

The European democratic social welfare model – which took root in North America, Australia and other colonies throughout the globe – is putting in a giant, multi-decade top. Birthrates are low. GDP growth is low. Job creation is low. Debt is high. Its money corrupted by the paper-based dollar, the whole system has degenerated...ossified...and decayed. Now, it is dominated by frauds, incompetents and parasites.

Kurt Richebächer used to call it 'late, degenerate capitalism.' We call it Zombiedom!

Hold onto your gold.

We left you yesterday just as we were describing how the US slipped into corruption and degradation. It was nothing personal, we were about to say. It was nobody's fault in particular. That's just what happens.

We were also musing – on Bastille Day – on why monarchy was not such a bad system of government, after all. At least, Louis 16th was less sensitive to mob pressure; he didn't have to keep his eye on the opinion polls. He could do things that were necessary, even when they were unpopular.

As a government matures, more and more people find ways to game the system. This is true of all forms of government, not just democracy. People always want to get ahead in the easiest, surest way possible. Often, it's easier to steal money than to earn it. In a monarchy, people court favors and privileges from the ruling class, just as they do in any other system. They win battles, procure women, keep secrets or tell them, they don't rebel...or they do, they are useful...or troublesome. They connive. They plot. They flatter. They use their elbows and their brains. They do what they have to do to gain an advantage.

In democracy, they grease the legislature to get special laws limiting competition...special tax breaks...bailouts...jobs...and titles. Why do you think Wall Street is the single largest contributor to Congressional campaign coffers? Because it has a lot at stake. And who would have thought – 100 years ago – that the president of the United States needed a well-paid assistant in charge of African-American Media? Does he also have an assistant in charge of Irish-American Media? And who covers the Yiddish press for him?

There's a little niche...a sinecure...a bit of spare change for almost everyone.

As time goes on, the number of leeches, parasites, and blood-suckers multiplies. You see it at the local level as at the national one. If you want to build a house in Anne Arundel Co., Maryland, for example, you have to be prepared to pay thousands of dollars in bribes. Engineers, clerks, administrators, environmental protectors – a whole gauntlet of zombies stands between you and finally breaking ground.

Last week, at the dump, we noticed a large group of men in clean white shirts and hard hats wandering around. They seemed to have notebooks in their hands and stopped from time to time to write something down.

Who were they? Surely they were on the government payroll somewhere, somehow; they were probably making sure that the county dump was run according the latest standards of Zombiedom.

But it is not just government that is corroded. The private sector – especially those parts of it that are most closely connected to government – gets twisted too. Education in America is a government industry – even though there are plenty of private schools and universities. At the university level, it is almost impossible to exist without doing Washington's bidding. Students are supported by grants and loans – coming from the government. And universities depend on government research and other projects for a major part of their funding.

Plus, the universities are no different from any other advanced, degenerate system. As they age, they too are full of their own tweedy leeches. Americans came to believe that their children would do better in life if they had a university education. This proposition was so little challenged that it led to almost a complete lack of price resistance. The more people paid, the better they liked it; presumably, because they were sending their children to the 'best' universities. Families mortgaged their houses in an effort to pay for their children's college education.

Now, of course, the nation is saturated with university graduates who are largely illiterate and incompetent. People are beginning to realize that a college diploma is as bad an investment as a house. The Financial Times:

The cost of education...in the US has soared in recent decades while median incomes have stagnated... In the past decade, tuition rates at public universities have risen 5.6% a year above inflation...

"Over the past 60 years," says Jim O'Neill, head of the Thiel Foundation, "owning a house became part of the American Dream. People were told: 'buy a house, don't worry about the price; you'll earn it all back later.' Now it's the same thing with college."
In the curious way that Zombiedom takes over, the idea that a university degree would pay off was not entirely an illusion. As society became zombified, the value of phony professionalism grew. Degrees and qualifications are important in organizations that don't actually produce anything. An active, profit-oriented entrepreneur will not particularly care if a person has a degree or not; he wants a producer. But universities, the health care industry, many large corporations, and the government itself are not output oriented. Usually, no one knows if they do anything useful or not. So, how can they select or advance employees – except by reference to degrees and qualifications?

The cost of a university education, as a percentage of disposable household income, has risen from about 18% in 1985 to nearly 35% today. But did a college degree really pay off? Guess how much more a university graduate earns today...in real terms...than, say, a college graduate in 1985.


More to come...


Bill Bonner
for The Daily Reckoning

The Greater Depression Is Upon Us

The phrase "Greater Depression" was coined by Doug Casey a decade or so back, as a way of describing the economic crisis he foresaw as inevitable, and which is now materializing.

Doug Casey now believes that the unfolding crisis is going to be even worse than he first imagined, and the longer the rest of us at Casey Research study the tea leaves, it is hard to disagree that the Greater Depression is still ahead.


The eurozone is growing increasingly desperate. Watching the heads of Europe dither and debate over further bailouts to the unhappy Greeks and other troubled PIIGS – before ultimately reaching back into the pockets of the equally unhappy citizens in Germany and the decreasing number of still-functioning economies in the eurozone – reminds me of a down-on-his-luck blackjack player. He's mortgaged his home to play the game but is now down to his last chips. He doesn't want to risk his remaining resources but has no choice, because to walk away now will mean taking up residence in a cardboard box. And so, reluctantly, he shoves across another pile. As the PIIGS start to default and either leave the eurozone entirely or are shunted off into some sort of sidecar organization, there will be great volatility in the euro and in the European markets.

The U.S. debt situation is far worse than anyone in Washington is willing to admit. We keep hearing calls for more, not less debt creation. But if people would stop kidding themselves and tally up all the many demands the U.S. government has against it, the actual debt-to-GDP ratio rises to something on the order of 400% – and even that is likely understating things. The fundamental flaws in the U.S. monetary system – flaws that have given license to the bureaucrats to smash the limousine of state straight into a wall – have required a remaking every 20 to 30 years or so. The problem is that there is pretty much nothing else that can be done to save the status quo at this point, and so the monetary system is likely to collapse. That means big changes ahead, including – or perhaps starting with – a poisonous ratcheting up of interest rates.

China's miracle mirage. While having aspects of a free market, the hard truth is that China is run as a command economy by a cadre of communist holdovers. This is apparent in the cities that have been built for no purpose other than creating jobs and boosting GDP. It is also apparent in the growing inflation in China – the inevitable knock-on of the government's decision to yank on the levers of money creation harder than any other nation at the onset of the Greater Depression. Meanwhile, signs of social unrest crop up here and there. Though so far they have been swiftly put down, there is no question that the ruling elite has to walk a very fine line. If the Chinese economy stumbles seriously, all bets are off. That we are talking about the world's second-largest economy means this is not of small consequence.

Japan is essentially offline. Reports from friends in Japan – including one who was initially skeptical about the scale of the problems at Fukushima – have now changed in tone by 180 degrees. You can almost feel the growing sense of desperation as the already massively indebted nation begins to slide toward an abyss. There is little standing in the way of the world's third-largest economy's slide.

The Middle East is in flames. This, too, is far from settled. As usual, the U.S. government has been hopping here and there in an attempt to maintain its influence, but at this point pretty much everything is up for grabs. The odds of the U.S. retaining the same level of influence in the region that it has enjoyed over the last century are slim to none, especially now that even the Saudis are shipping more of their oil to China than to the U.S. Again, big changes are ahead.
I'm convinced that nearly everything about today's world is going to change over the coming decade... much of it for the worse.

But that doesn't mean that people – you – can't come through this in more or less good shape, just as our parents and grandparents made it intact through the last Great Depression. Pay attention and take action, and you'll do far, far better than most.

Some investment ideas...

First and foremost, protect yourself against the collapse of the U.S. monetary system. It is not as simple as ducking into the nearest coin store and loading up, though that should certainly be one part of your strategy. Between now and the endgame that leads into what we can only hope will be a new money based on something tangible, there will periodically be opportunities to make big moves with your portfolio.

As Doug also likes to say, you should do whatever you want in this world, as long as you are willing to accept the consequences. If you are willing to risk going down with the ship, then do nothing.

Some other investible ideas...

Everyday essentials. Energy is the classic essential. Sure, energy use and prices will ebb and flow with the economy, but ultimately everyone uses energy every day, and the people in emerging markets want to use a lot more of it. Carefully thought-out investments in energy, ideally bought on the dips, belong in everyone's long-term portfolio.

Breakthroughs to a brighter future. Throughout modern history, companies that make significant technological advances transcend bad economic times. Do you think that the company that finds a cure for a common variety of cancer will be weighed down, even by a stock market crash? Hardly. In cautious amounts, these sorts of potential breakthrough stocks belong in your portfolio.

Investing in the inevitable. A ton of charts and data point to just how unusual and unsustainable today's low, low U.S. interest rates are. When these sorts of baseline trends eventually change direction, they tend to move in the new direction for years, and even decades. No one can pick the bottom, but anyone who is paying even a little attention can and should be getting positioned to profit from a sea change in U.S. interest rates while they still can.

One foot over the border. History has shown that having even one foot over the border can make the difference between losing everything and coming out just fine. Internationalizing your assets is not always easy or convenient, but that doesn't make it any less urgent that you do so.
The bottom line is that while the scale of the crisis is beginning to become more widely apparent, and reading and thinking about it can become fatiguing for those of us who have been on this story from the beginning, the base case for a Greater Depression is fully intact. We need to gird our loins and continue to take active measures to prepare – with the caveat that even in this base case, there are prudent measures you can take to ensure that not all your eggs are in one basket.


David Galland,
for The Daily Reckoning

Wednesday, July 13, 2011

How to Stay on the Right Side of the IRS

By Erika Nolan, Publisher, The Sovereign Society

The right offshore legal structure can offer many benefits: asset protection, financial privacy, tax savings and access to a wider world of investments.

Yet if your structure is not “compliant,” you risk losing these benefits and worse. You could face significant fines from the IRS and, in the extreme, even jail time.

Fortunately, in June, the IRS announced that taxpayers with offshore investments have through Aug. 31 to disclose previously unreported foreign account holdings. This means Americans have an opportunity to participate in a new “voluntary disclosure initiative” in order to get current on their tax returns without risking jail time.

The IRS has such specific reporting requirements for offshore investments and if you don’t know which forms you’re responsible for submitting you risk making an innocent mistake. Here’s a checklist so your offshore structure is helping you build and protect your wealth and not putting you in legal jeopardy.

Five Steps to Make Sure Your
Offshore Structure is in Good Standing
The truth is, it’s all too easy to run afoul of the U.S. taxman by under-reporting and misfiling the proper returns. So a key principle to keep in mind is that if you should suspect your offshore structure may not be compliant, take quick action to correct any mistakes before the IRS comes a knocking.

Here’s a quick checklist to help you do that...

1. Have Your Offshore Structures Reviewed Annually

Put as much emphasis on your annual financial review as you would for your annual physical.

Prevention is key. Don’t get caught in a bad spot because the tax code has changed - impacting your offshore structures - while you are left in the dark. And don’t assume that a non-U.S. professional will remember which U.S. IRS forms must be submitted. It is up to you to ensure that the taxman gets everything on time and accurately filed.

2. Work with an International Tax Attorney - Not a CPA or Accountant

If you have any concerns about reporting requirements, work with someone who specializes in international structures and tax reporting.

Make certain your offshore structure is 100% compliant. It’s never a good feeling to realize you’ve run afoul of the taxman. But the fate of your finances is in your hands. Rather than run the risk of increased penalties or the threat of an IRS shakedown - be proactive. Chances are, your structures are in good standing. But it pays to know for sure. Obtain the expertise of a licensed professional as well as the time honored principle of attorney-client privilege.

3. If You Discover Under-Reported Income - Seek Criminal Tax Counsel Immediately

U.S. citizens and U.S. resident aliens are required to report their world-wide income annually. If your international tax consultant believes you have inadvertently violated IRS reporting requirements, seek criminal tax counsel as soon as possible.

Under no circumstances should you, yourself, go to the IRS directly to resolve your situation!

Criminal tax attorneys understand the necessary process to resolve most reporting mistakes. Their job is to represent you before the IRS and to work quickly and efficiently to ensure that your structure is fully compliant.

If you can prove reasonable cause and/or the absence of willful neglect for your failure to file the returns, you may be able to avoid penalties.

In a best-case scenario, all you’d be liable for is back taxes plus interest. (Keep in mind, income must be reported in the year it was earned.)

4. Have Your Legal Counsel Hire an Accountant

By allowing your legal counsel to hire a CPA - you will greatly streamline the reporting process. In most situations, you will be required to provide documentation for up to three years (or as much as six years if you have made any mistakes that could be construed as tax fraud).

For example, say you established an offshore trust in 2003. You believed that your offshore trustee was filing the IRS Form 3520A each year. Yet four years later, during a routine conversation, you discover (much to your surprise) that they never filed the form. In order to correct this mistake you would need to go back to the 2003 tax year and file all the necessary documents from that point forward.

Keep in mind that failure to file the form 3520A or 3520 could lead the IRS to assess a 35% penalty against the value of your trust assets.

5. Don’t Liquidate an Offshore Structure Until You Take Care of Delinquent Tax Forms and Penalties

Disbanding an offshore structure will not help you avoid trouble. If the IRS discovers that you’ve closed a non-compliant structure without first getting it compliant, they could bring criminal charges against you.

But there is a silver lining ...

The government wants to encourage voluntary tax compliance. So even though the IRS has the right to file criminal charges against anyone who is non-compliant, you can minimize this threat by initiating contact with the agency.

And remember, you are facing an important deadline: Aug. 31, 2011 if you or a loved one needs to apply for amnesty.

In Wealth & Prosperity,

Erika Nolan
Publisher, Sovereign Society

Friday, July 8, 2011

The US Government will use any reason to confiscate your gold.....again!

Do think the government does not want controll of your gold? Do you think the gold confiscation that occrued in the 1930s could not happen again? Read on......

By Zachary Roth | The Lookout – 22 hrs ago

A jeweler's heirs are fighting the United States government for the right to keep a batch of rare and valuable "Double Eagle" $20 coins that date back to the Franklin Roosevelt administration. It's just the latest coin controversy to make headlines.

Philadelphian Joan Langbord and her sons say they found the 10 coins in 2003 in a bank deposit box kept by Langbord's father, Israel Switt, a jeweler who died in 1990. But when they tried to have the haul authenticated by the U.S. Treasury, the feds, um, flipped.

They said the coins were stolen from the U.S. Mint back in 1933, and are the government's property. The Treasury Department seized the coins, and locked them away at Fort Knox. The court battle is set to kick off this week.

The rare coins (pictured), first struck in 1850, show a flying eagle on one side and a figure representing liberty on the other. One such coin recently sold at auction for $7.6 million, meaning the Langbords' trove could be worth as much as $80 million.

The coins are part of a batch that were struck but then melted down after President Roosevelt took the country off the gold standard in 1933, during the Great Depression. Two were given to the Smithsonian Institution*, but a few more mysteriously escaped.

The government has long believed that Switt schemed with a corrupt cashier at the Mint to swipe the coins. They note that the deposit box in which the coins were found was rented six years after Switt's death, and that the family never paid inheritance tax on the coins.

A lawyer for the Langbords counters that the coins could have left the Mint legally since it was permissible to swap gold coins for gold bullion.

Authorities in the Roosevelt era twice looked into Switt's coin dealings, including his possession of Double Eagle coins. In 1944, Switt's license to deal scrap gold was revoked.

The battle over the Double Eagles is hardly the only recent coin contretemps. Two British metal-detecting enthusiasts are said to be locked in a bitter dispute over how to divide the profits from a horde of Iron Age gold coins that they unearthed together in eastern England in 2008.

And an 80-year-old California man was jailed in 2009 after allegedly hitting another man in the head with a metal pipe and firing a gun at a third man during a dispute over missing gold coins.

Some coin disputes involve more than wrangling over valuable collectors' items. In 2007, Secret Service and FBI agents raided an Indiana company called Liberty Dollar, in a bid to stamp out illegal currency. The firm was making "Ron Paul Silver Dollars," in honor of Rep. Ron Paul, whose presidential campaign advocates bringing back the gold standard.

And since we're talking about coins, here's a list of the ten most valuable coins you might find in your pocket change.

Thursday, July 7, 2011

We’re Number One: More Reasons for the Decline of the American Empire

Reckoning from Baltimore, Maryland...

You will not find today's Daily Reckoning much to your liking. Because it creeps upon an idea that will probably make you feel uncomfortable. At least, that is the effect it has on us.

But first, the latest news from the world of money.

Yesterday, the Dow fell 12 points. Gold shot up $30. And oil is headed back towards $100.

Gold refuses to go down. Stocks refuse to go up. But over the last ten years, gold has gone up big-time, while stocks have gone nowhere.

Why? Because America topped out in 1999.

We went to church on Sunday. The church was built in the 1860s by a group of Maryland Episcopalian planters who were breaking away from a pro-Union parish. Physically, it is a marvelous example of 'carpenter gothic' architecture from the mid-19th century.

Since we had been living in Europe for the last 15 years, we had few opportunities to attend our local church. But it once played an important role in our lives. Our family went every Sunday, and your editor was an altar boy for several years.

So, he put on his Sunday-go-to-meeting clothes - coat and tie - on Sunday morning, returning to the church he knew as a child, and took his place in a pew in the back of the church.

The first thing he noticed was that he was the only one wearing a tie...or a coat. The rest of the congregation looked as though it was ready to order foot-long hotdogs or spread out beach towels. A man who must have been 55 years old came in a pair of baggy shorts - the kind you would normally dip in soapy water and use to wash the car. Over his broad stomach he wore an olive-drab tee-shirt of the sort worn by Tennessee auto mechanics. This was a level of informality we had never before seen in an Episcopal church. Or any church, for that matter.

We were reassured when the choir appeared at the back of the church. It looked normal. Clad in bright red and blue, traditional vestments. With the cross going before them. But wait...there were two flags flanking the cross. One was a flag for the Episcopal Church. The other was the stars and stripes of the USA. Politics and religion - the state and the church - marched side by side up the aisle, as the choir pumped out a joyful hymn.

This church had become very pro-Union! Later, the choir sang two patriotic songs - "God Bless America" and the purely securely "America the Beautiful." Never before had we heard praises to Caesar sung in a church.

But it didn't seem to bother anyone. Christ and Caesar, Caesar and Christ... Most people like to see them together; they are as happy serving one master as the other. They like it even better when they have two of them.

It didn't bother us either. After all, the morrow was the 4th of July. Maybe they did this only once a year....

Meanwhile, on the Internet, a site called "Economic Collapse" anticipated the high spirits of Independence Day with a list of 20 "not-so-great categories" in which the US really is Numero Uno. Its author first assures us of his loyalty:

I love the United States. I love the American people.
Then, he opens fire:

America is like an aging, bloated rock star that has become addicted to a dozen different drugs. America is a shadow of its former self and it desperately needs to wake up before it plunges into oblivion.

If you do not believe that America is in bad shape, just read the list below. The following are 20 not so good categories that the United States leads the world in....

#1 The United States has the highest incarceration rate in the world and the largest total prison population on the entire globe.

#2 According to NationMaster.com, the United States has the highest percentage of obese people in the world.

#3 The United States has the highest divorce rate on the globe by a wide margin.

#4 The United States is tied with the UK for the most hours of television watched per person each week.

#5 The United States has the highest rate of illegal drug use on the entire planet.

#6 There are more car thefts in the United States each year than anywhere else in the world by far.

#7 There are more reported rapes in the United States each year than anywhere else in the world.

#8 There are more reported murders in the United States each year than anywhere else in the world.

#9 There are more total crimes in the United States each year than anywhere else in the world.

#10 The United States also has more police officers than anywhere else in the world.

#11 The United States spends much more on health care as a percentage of GDP than any other nation on the face of the earth.

#12 The United States has more people on pharmaceutical drugs than any other country on the planet.

#13 The percentage of women taking antidepressants in America is higher than in any other country in the world.

#14 Americans have more student loan debt than anyone else in the world.

#15 More pornography is created in the United States than anywhere else on the entire globe. 89 percent is made in the USA and only 11 percent is made in the rest of the world.

#16 The United States has the largest trade deficit in the world every single year. Between December 2000 and December 2010, the United States ran a total trade deficit of 6.1 trillion dollars with the rest of the world, and the US has had a negative trade balance every single year since 1976.

#17 The United States spends 7 times more on the military than any other nation on the planet does. In fact, US military spending is greater than the military spending of China, Russia, Japan, India, and the rest of NATO combined.

#18 The United States has far more foreign military bases than any other country does.

#19 The United States has the most complicated tax system in the entire world.

#20 The US has accumulated the biggest national debt that the world has ever seen and it is rapidly getting worse. Right now, US government debt is expanding at a rate of $40,000 per second.
The truth is that America has changed. Most of us don't even say hello to our neighbors anymore.

The United States was once the most blessed nation on the face of the earth, but now we are literally falling to pieces.

Does anyone have any ideas about why this could be happening?

Well, yes. We do have some ideas. But don't think for a minute that we're going to give you earnest advice on how to make the country a better place. There are approximately a million civil servants who are paid to do that! You can see for yourself what a good job they have done.

No, we're just going to explain how America became a country of fat poor people who - when they're not watching TV - are murdering and raping their fellow citizens.

In fact, we already have. It's in a book. About 5 years ago, with Addison Wiggin, we wrote Empire of Debt. We predicted how America's imperial mission would evolve. And we said it was unstoppable. Forget the debt ceiling. Forget the budget cuts. Forget the idle ranting and raving, posturing and pretending...this Bozo is going bust! Congress has raised the "ceiling" so often - 94 times in the last 94 years, the Capitol might as well be an open-air building. We wrote:

"The imperial spirit has gotten the best of her. She no longer plays a role that she can understand and control. Now, she is an imperial power: she must read from the script that has been thrust in her hands. She must provide security for the entire world... Someone has to do it. It is her turn to wear the purple, whether she wants to or not. Thus did she become the dictatress of the world; but no longer ruler of her own spirit - or her own finances."
Like a clown shot out of a circus cannon, America's trajectory is fixed. Just look at the "Number 1" items above. They are the marks of an imperial power in decline. Overseas, the imperial garrisons squander her military might. At home, the masses degenerate, squandering her wealth.

And here's the worst part: America will continue in this direction until she falls on her head.


Bill Bonner
for The Daily Reckoning