NEWS/BLOG

Using Your Cell in the Air

The European Commission has approved the use of mobile phones in airplanes over European airspace. Air France is among the first carriers to announce a trial service.

While this might be a convenience for some travelers, others might prefer cabin space where silence reigns. Airlines are expected to levy restrictions of their own to insure that other passengers won’t be disturbed.

Meanwhile in the U.S., the FAA approved an American Airlines trial of in-flight wireless broadband, though no cellular voice or VoIP access.

Inflation Up in Costa Rica

Costa Rica will probably exceed its expected inflation rate of 9% in 2008, according to an announcement made by President Oscar Arias. Inflation there was 10.8% last year.

Inflation across Latin America has increased over the past few months as fast developing economies like India and China boost global demand for food and commodities. The economic downturn in the U.S. will probably result in slower growth in other parts of the world including Latin America.

Costa Rica’s central bank says it anticipates the economy to grow 3.8% this year, down from 6.8% in 2007.

Costa Rica Presents a Dilemma

It’s hard to talk about Costa Rica without talking about nature. Its varied landscape includes 12 different ecosystems, ranging from tropical rain forests and cloud forests to snow capped mountains. It boasts 9000 types of flowering plants, including 1200 species of orchids, some 850 species of birds and 250 species of mammals. More than 5% of all known species of plant and animal life are found in this small country, about the size of West Virginia.

Nature is what draws travelers and expats from Europe as well as North and South America here. Those who want to live amid the flora and fauna, however, face a dilemma. Should you make a home here knowing that such an action contributes to the destruction of some part of the ecosystem?

The director of sales at one development says, “If we wanted to do the right thing, we would all tear down our homes here, reforest and leave.”

The Tamarindo Preserve is one real estate development trying to have it both ways. It’s a low-density development in the seaside town of Tamarindo in the northwest of the country. A laid back community known for its turtle watching tours, Tamarindo draws visitors and foreign residents from all parts of the world. The Tamarindo Preserve calls for 235 villas and 40 condos on just 8% of a 600-acre parcel of land. Some of the proceeds from the housing will go toward protecting the wetlands and estuary that make up the rest of the parcel.

Increasingly, too, resorts and hotels here try to attract clientele by showing that they can be environmentally friendly. Although 25% of Costa Rica’s land mass is devoted to parks and reserves, the country lacks the necessary money to maintain them properly and enforce the laws to protect them. Developers can play a positive role here.

Trailing Husbands

Your spouse gets an offer of a job overseas and you get to go along. That’s what most people think of when they hear the term “trailing spouse.” But sometimes the spouse getting the job offer is the wife, not the husband. What does he call himself? Well, for some, the answer is “stud.”

Stud or rather STUDS is an acronym for “Spouses Trailing Under Duress Successfully,” a social club for stay-at-home husbands and fathers living abroad. The first chapter was founded in Brussels in 1994 and currently has 40 to 50 active members. The original members are scattered throughout the world. Some of them organized a chapter in London which now has about 40 members.

The guys meet as often as once a week to talk politics, sports, and, just maybe, child-rearing. In Brussels, they play golf and go biking. In London, they have lunches and pub walks as well as golf games.

Mostly they speak English but they welcome speakers of other languages. The Brussels club hosts an annual dinner dance for themselves and their wives. The London chapter invites wives frequently so they can meet other couples where the wife is the working spouse.

For more information, check out www.belgiumstuds.com and www.studsoflondon.com.

Living in the U.K. Just Got More Costly

“Non Domiciles” or non-doms are what U.S. expats living in the U.K. are called. Like other U.S, expats, they’re facing increased U.S. income taxes because they cannot offset their income by deducting their living cost abroad. Now they’ll have to pay an additional fees to the U.K. and these charges cannot be used to offset U.S. taxes.

Under the new law, the U.K.will charge an annual £30,000 (about $59,000) flat-rate fee on non-doms who have had this status for seven years. This includes all those living in Britain who declare that their home is in another country. The U.K. is not calling it a tax and the U.S. isn’t recognizing it as such, which is why it can’t be used as a tax credit in the U.S.

Until now, non-doms have not been taxed on their worldwide wealth, just on the money they earn in Britain or bring into the country. This has made London a mecca for the very wealthy and for high earners, who have lived here virtually tax-free, at least as far as U.K. taxes go. U.S. citizens are taxed on their worldwide income.

Many of these non-doms are investment bankers working in “the City,” London’s financial district. All in all, some 115,000 currently have non-dom status. Only about 10,000 are estimated to be from the U.S.

In today’s global economy, multimillionaires and billionaires are minted every minute. Some are from the BRIC countries - Brazil, Russia, India and China - but many are from France and Germany as well as elsewhere in Europe, Latin America and Asia. London has been a favorite destination until now, which is one reason London real estate has become so expensive.

For the richest of the rich, paying the fee won’t be a problem. However, the new rules will most likely mean that many of those with wealth will chose to live and work elsewhere. In addition, private banks will probably move their income offshore and London will cease to be the financial center it is now. It’s not just non-doms who’d like to see the new laws repealed.

Foreign Stocks, ETFs and the Descent of the Dollar

The shrinking dollar makes moving from the U.S. to many other countries expensive, as would-be expats know.  Investing in foreign markets, however, produced highly impressive gains during most of 2007, but some of those gains result from how much the dollar has lost against foreign currencies.

For example, the greenback lost 9.6% against the Euro and 16.7% against the Brazilian real in 2007. Other currencies that have made investments look good are those of Canada and Australia. If the U.S. dollar becomes stronger, investments in ETFs or stocks of these countries will decrease in value. But is the dollar apt to show strength any time soon?

If you think the dollar is about to make a comeback, you might want to invest in counties where the currencies don’t move as much against the dollar. Some currencies showing stability against the dollar include the Chinese Yuan, the Hong Kong dollar and the Mexican peso.

Many experts currently expect the Euro to continue its gain against the dollar.  From 2001 through 2007, the greenback has declined at a compound rate of over 7% per year against the Euro. There’s an ETF that allows investors to profit as the decline persists, Rydex Euro Currency Trust or FXE. For the year ending January 31, 2008, it had increased in value 17.9%.

As the dollar dips, commodities rise. If you’d like to participate in profits in grains such as wheat, soybeans, corn, etc., then consider PowerSharesAgriculture Fund or DBA, up 44.77% for the year ending last January 31.

Whatever the investment, do your own research.

Those E-mails Aren’t from Us!

Once again I must apologize for something I didn’t do! You may have received e-mails that appear to have come from liveabroad.com. Well, they were not sent by us but by strangers who decided to use our return address. I wish we could stop them, but there appears to be nothing we can do. Anyway, we are not selling pharmaceutical products or anything else via e-mail.

We do have advertisers and we’re grateful for their support. We also get credit for any Amazon purchases someone makes if they click on of our Amazon links. Even if you buy something else, something totally unrelated, Amazon credits us.

You’ve probably noticed by now that we have a section of the blog devoted to international investing. In case you haven’t looked, it isn’t about real estate in foreign countries. Other expat sites do a much better job with international real estate than we could possibly do. Instead it’s about emerging markets and exchange traded funds with some explanations of these investments. These things don’t have to be complicated, and I hope you find these explanations clear and timely as well. But as with any investments, of course, there are risks.

Mazatlán Is Mexico for Real

Puerto Vallarta may draw the tourists, but Mazatlán, about 275 miles to the north, is increasingly attracting expats who want to experience “the real Mexico.” Between 3,500 and 7,000 U.S. expats have settled in this city of about 400,000. Some are restoring historic houses near the center of town, while others have built modern villas on the hillsides overlooking the bay. Some have their eyes on beachfront high-rises still being developed.

For some time, it has been home to U.S. and Canadian citizens trying to stretch their retirement (or pre-retirement) dollars. It’s not difficult to find other English-speaking expats for socializing or, if you speak a little Spanish, to lose yourself among the local people. While some expats worry about finding quality healthcare, some who’ve settled here claim they’ve experienced the best care ever in Mazatlán.

Though you’ll see cruise ships docked in the harbor, Mazatlán is a working city which boasts the largest port facility between Los Angeles and the Panama Canal. It is home to Latin America’s biggest fleet of commercial shrimp vessels. Excellent seafood restaurants abound.

For more, see our article, Mexico—Still a Mecca for Expats and this Los Angeles Times article Mazatlan, a Mexican Harbor for American Expatriates

Be Prepared to Be Amazed by Argentina

Some have been arguing in favor of Argentina ever since the country started making its economic come back. According to the UN 2007-2008 Human Development Report, Argentina ranks 38th in economic, health and social development. (The report placed Iceland first and the U.S. in 12th place.) A baby born in Argentina today can expect to live 74.8 years. In literacy, Argentina ranks 27th; a total of 97.2% of Argentines are literate. The average Argentine spends 16.4 years in school. Only 570 out of 1000 have a cell phone, however, this was based on data from 2005 and has surely changed in the meantime. Argentina is on a roll.

The country just turned its clocks ahead an hour in order to take advantage of the daylight hours. It recently elected a woman president, Cristina Kirchner, who had previously been the country’s first lady.

What’s not to like in Argentina? U.S. foreign policy. According to a poll by The Chicago Council on Global Affairs and WorldPublicOpinion.org,. Argentina leads the list of countries that distrust the U.S. and the U.S. role in world affairs. This is understandable, since Reagonomics and IMF recommendations are seen here as the causes of the economic crisis which reduced over half the population to living below the poverty level. The antagonism, however, doesn’t extend to the American people or American products. Argentinians love McDonalds’s and this is in a country famous for its beef! (The Buenos Aires restaurant La Brigada has the title of “best steak in the city.")

Speaking of Beueos Aires, the hot new neighborhood is Puerto Madero, flanked by La Plata River and a protected nature reserve. Formerly a port area of brick warehouses, it has been transformed into upscale residential apartments, restaurants, offices and lofts flanked by picturesque canals. From all over the city, Porteños, as people of B.A.call themselves, are seen here on weekends, strolling, riding bikes and congregating in the cafes here. Weekdays, it’s business people from nearby high-rise offices and at night, it’s diners at elegant restaurants and moviegoers. In case you’re thinking of visiting, there are also some five star hotels. If you’d rather sleep cheap, look into hotels and guesthouses in the Microcentro area and Plaza de Mayo. The streets of Peurto Maderno, you’ll notice, are named after women. The area is served by a tramway and a few buses, but is not connected to the city’s subway system

More on Double Inverse ETFs

The top gaining ETFs for the week ending January 18 in Investors Business Daily were all double inverse short funds, and their returns were 18% and up. Now, after today’s big plunge in the Chinese markets and a downward slide in Europe as well, while we were taking a holiday in the U.S., there’s sure to be more interest in these double short funds. (See the earlier blogpost, Time to Let the Dog In?)

How do double inverse ETFs work? Instead of shorting all the stocks in an index, they use derivatives, which include futures contracts, options, and swaps, (A swap means you sell one security and buy a comparable one). Their value is derived from the value of an underlying security, commodity or other financial instrument. Derivatives don’t have the trading costs associated with shorting.

With swaps, there is a payment of interest.  Futures are “margined” or leveraged, which means a small amount of money is used to garner a greater return. For an ETF to give back 100% of a negative return of an index, the ETF need only invest 10% of its cash into the futures. If the ETF is to generate a 200% negative return, it invests 20% of its money into the futures. The remaining assets, 90% or 80%, are in short-term notes, which pay interest.

Confusing? There are more detailed explanations in these articles:

Inverse (Short) Market Cap ETFs

How Short ETFs Make Money

The double inverse ETFs actually pay quarterly dividends with the money earned in interest. The reason to own them, though, is to protect a portfolio against downside risks, which are now looming large. Or to take money out of a bear market.

Time to Let the Dog In?

Yes, there is a fund with the symbol DOG, the Short Dow 30, which moves the opposite of the direction the Dow is moving and at the same pace. But when the bears are really in control, as they seem to be in recent days, it can make sense to hedge with some of the “double short,” also known as UltraShort, funds. The funds do the shorting, which means an investor is permitted to hold them in an account where shorting isn’t allowed. Remember, though, that a volatile market may change directions several times in a single day.

These funds are the double inverse of the Dow, the Nasdaq and the S&P:
DXD UltraShort Dow30
QID UltraShort QQQ (Nasdaq)
SDS UltraShort S&P500

These are the double inverse of some international markets:
FXP UltraShort Ftse/xinhua China 25
EFU UltraShort MSCI EAFE
EEV UltraShort MSCI Emerging Markets
EWV UltraShort MSCI Japan

These are the double inverse of specific sectors:
DUG UltraShort UltraShort Oil & Gas
SKF UltraShort Financials
SRS UltraShort Real Estate
SCC UltraShort Consumer Services
RXD UltraShort Health Care
SMN UltraShort Basic Materials
SZK UltraShort Consumer Goods
SSG UltraShort Semiconductors
REW UltraShort Technology

Do your own due diligence. Remember, there’s no such thing as a sure-thing investment. This is not an ad for ProFunds, just some ideas of things you can do when the market goes south. For more, including information you can download, see www.proshares.com/funds/

Ways to Stay with Locals

Homestays for travelers existed long before the Internet, but websites and e-mail make it much easier to link with people in other countries. Now there’s couchsurfing.com with over 400,000 members worldwide and more joining everyday. The average age is 26, but members are all ages. A nonprofit supported by contributions, it has no charge for joining. Newcomers are urged to have themselves vouched for by existing members. The organization stresses that it is not just a way of traveling on the cheap and that the real purpose is have a better understanding of other places and other cultures.

Some of the organizations that have been around longer are Servas International and the Friendship Force, both dedicated to fostering world peace. Servas (it’s the Esperanto word for service) is best suited for individuals traveling alone although some hosts can accommodate two people. A homestay usually lasts just two days. To become a member of Servas, you must be interviewed by an existing member. For a list of members in areas you plan to visit, a deposit is required and certain rules must be observed. You make your own arrangements and show your “letter of introduction” upon arriving at your host’s home. For more, see Servas.org.

With chapters in many cities, the Friendship Force plans trips or “exchanges” for groups who are then hosted by groups in foreign countries. Travelers are designated “ambassadors.” For visiting destinations where you’d prefer traveling with a group and having preplanned activities, this is an interesting and relatively inexpensive possibility. The website describes “exchanges” currently offered with the dates. It’s advisable to apply early. See theFriendshipForce.org - and not friendshipforce.org, which is an online dating and penpal service, unless that’s what you’re looking for.

Helping People with Parks and Bike Trails

"Income equality is impossible, so what other equality is?” asked Enrique Peñalosa during recent New York stopover. “Access to green areas, a waterfront, to sports and music facilities. What we do with our cities will determine quality of life for hundreds of years.”

While serving as mayor of Bogotá, Colombia from 1998 to 2000, he instigated the transformation of this city of 6.7 million from a traffic-snarled, crime-ridden metropolis into an inclusive and clean urban area with buses, parks, bike paths and libraries. One of his first moves was to prevent cars from parking on city sidewalks, reclaiming them for pedestrians and cyclists.

While he was in office, a city bus system was built at a mere a fraction of the cost of modern subways, and a bike path 211 miles long (the longest outside of China) was created. A derelict downtown avenue became a grand pedestrian boulevard, and a slum near the presidential palace was turned into a 39.5-acre park. Crime fell 35% during this time.

His ideas are especially important as uncontrolled growth in the cities of India and China presents a grave threat to the environment. Interestingly, though, environmental concerns aren’t his motivation. His main focus has always been to improve the quality of life for large numbers of people.

Not building roads or rail services the city saved money for other uses. During his term the city built or improved 1,200 parks and added 100 nurseries, 51 schools and 14 libraries. School enrollment rose 31%. His achievements won the Stockholm Challenge prize for Bogotá and a $1 million award from the Gates Foundation for Peñalosa himself.

From 2001 to 2004 he was a visiting scholar at New York University and a fellow at the Institute for Transportation and Development Policy, a nonprofit agency. During that time, he provided advice on urban planning to such diverse cities as Hanoi, New Delhi, Jakarta, Dakar, Senegal, Guangzhou, China, and even Los Angeles.

Returning to Bogotá in 2004, he continues to work with cities where goals of sustainability, equality, quality of life and competitiveness are acknowledged. “Future competition between societies will be for quality of life,” he says. “Talented people will go to cities that are socially inclusive, pleasant and move. The 80% of Asian cities to be built by 2100 could be much better than New York or London. My mouth waters at what could be done.”

Greetings All!

A special welcome to those of you who recently joined the Network as Associates. If you haven’t explored liveabroad.com, please do. You’ll find information on more than a few countries with links to other sources of information such as books. To search for resources by topic, visit our Links pages where you’ll find such categories as Expat Sites and In-Country Contacts. To stay current, keep checking this News/Blog. You’ll find a link under the logo on our home page, or just bookmark this address: http://liveabroad.com/index.php/news/index/

Those of you who’ve been following the blog know that I’ve been very concerned about the future of Antioch College, where I got my degree with a year abroad in France. Earlier this year, the college announced its intention to close its doors after the current academic year. In the months since then the alumni have made enormous strides in getting organized and raising money. The decision has been reversed and the college will remain open, but more funds are needed. To find out more, see antiochians.org/

Will next year be the year you move abroad? Or will it be further in the future? Sometimes the stumbling block is simply having too many possessions. If you’ve reached the point of having more of everything than you need, why not ask friends and family to make a donation that will help in parts of the world where help is really needed? Or start a new tradition with your family and friends by making donations in their names to an agency that helps poor people help themselves.

In any event, have a joyous holiday!

Give Where Help Is Needed

Women in Kenya are using solar cookers and have started small businesses selling them to other women. The cookers enable them to harness solar power to purify water as well as to cook food.  Their use makes clean water available to more families and eliminates the need to burn wood, which is a scarce resource. A donation of $150 trains and provides follow-up for a village group and $30 trains one family in solar cooking.

Women in Malawi are building small businesses and providing for their children through small business loans from what the women “Banki Yanga” My Bank, which serves only the poorest women. One woman, Dorothy Kanjautso received a $70 loan to buy play mats and games for her small nursery school. This amount enabled her to build a primary school in her village for 200 children. In addition, she has taken three AIDS orphans into her home, and charges no tuition to other AIDS orphans.

Many of the women who receive the loans are community leaders. They also meet regularly for support and sharing ideas. Loan repayment rates average 98%, allowing funds to be loaned out to others who continue the process of lending hope. Just $86 provides the average first loan to a Malawi woman, and 15 provides one share of a micro-loan.

Alternative Gifts International works with over 100 agencies with excellent track records. AGI allocates 90% of funds received to cooperating agencies, with just 10% used for administrative and fund-raising expenses. Other projects range from planting trees in Haiti to providing medical aid in Dafur. For more information, see www.alternativegifts.org/