Good Destinations in Event of Global Economic Depression?

[Southern Star]

Good for you Jackstee! I've done something similar (although still have my house in Canada) - I purchased a beachfront property in a nice little bay on the Caribbean side of Margarita Island (off the coast of Venezuela) and will be taking the boat down in the next year. The cost of living is WAY less, the climate is WAY better (and in addition to warm temperatures year round, no hurricanes), the nearby cruising destinations are WAY better and even property values are doing WAY better than at home. In addition, the infrastructure is pretty amazing - the entire island is duty free, health care is first rate and inexpensive, there are even two universities and a modern shopping mall with over 220 stores.

For Canadians, our dollar is actually up at the moment (and up by over 20% relative to when I bought the property a couple of years ago). Nevertheless, similar properties near me have gone up about 25% in real terms (what I could net in USD, which is what I converted from) over the last two years. To augment my retirement income I am in the process of constructing a small inn (with a bar/restaurant , courtyard with pool and a bachelor, an efficiency and five two bedroom apartments directly on the beach). Way more bang for the buck than I could get almost anywhere else and, in the end result, I will be able to retire MUCH earlier than I would have been able to in North America.

Will I be impacted by the economic downturn in the US? Not a great deal, as most of the international tourists there come from England, Europe and Canada (from which they have direct flights). American Airlines have announced that they will be commencing direct flights in the course of the next year, but this can only operate so as to increase my potential client base over what it is right now.

Anyway, if you are nearing retirement, there are certainly places where you can significantly increase the buying power of the USD over what it is (and is becoming) at home.

Brad

[Alan Wheeler]

Folks, a freindly reminder that the subject needs to stay related to boating. This is meandering off to extremems from the boating subject. We don't want to see Political discussions here, this subject is being allowed to stand for the one sole reason of, "where is the best place to go if the world Economy crashes".
Quite frankly, that question is void. I mean, if the world economy falls, then we are all in the same boat. It won't matter where you go will it?
In my view, forget about what everything is doing around you. Curising is not or should not be about running from the world. It should be about the passion of boating and the sea. Otherwise you will become a very "unbalanced" person living in that confined space and viewing the world through a "peephole".

[GordMay]

When economic and/or socio/political systems “crash”; the survivors may be compelled to join a “subsistence’” society.
If this is true; the question becomes: “Where can we subsist, without resort to formal economies?”
Think: Fishing, Farming, Hunting, Gathering, and only then, possibly Trading (barter).

[Captkev]

Originally Posted by Alan Wheeler

Folks, a freindly reminder that the subject needs to stay related to boating. This is meandering off to extremems from the boating subject. We don't want to see Political discussions here, this subject is being allowed to stand for the one sole reason of, "where is the best place to go if the world Economy crashes".
Quite frankly, that question is void. I mean, if the world economy falls, then we are all in the same boat. It won't matter where you go will it?
In my view, forget about what everything is doing around you. Curising is not or should not be about running from the world. It should be about the passion of boating and the sea. Otherwise you will become a very "unbalanced" person living in that confined space and viewing the world through a "peephole".

With all due respect I have to disagree with part of this post.
In my view, an "unbalanced" person is indeed someone who would "forget about what everything is doing around you". I think it's much healthier to squarely face any problems you see developing on the horizon, make all the sensible preparations you can, and then after you've done that continue on with your merry life and hope for the best.

If you're feeling some anxiety about this maybe there's some preparations you could make, such as-

Keep your boat ready to go and well provisioned
Be able to catch rainwater and have a working watermaker
Have your passport,etc. in order
Have an idea of good places to go to weather the storm

also-"Quite frankly, that question is void. I mean, if the world economy falls, then we are all in the same boat. It won't matter where you go will it?" Maybe this is true but I remember my grandmother telling me a long time ago that during the Great Depression there was a lot of people (like them) that didn't even know there was a depression going on. (they lived on a farm in Kentucky). I bet there are some really excellent islands out there that would be great places to be. I guess we'll just have to go find them for ourselves.

Or maybe you're right and it won't matter where we go... in which case we'll probably get raptured out of here !

[blondezilla]

Don't forget your aluminum foil helmet. Very important...
Just poking...

[David_Old_Jersey]

Originally Posted by Captkev

in which case we'll probably get raptured out of here !

Bl##dy hell!, don't open that can of worms

[Celestialsailor]

I find the postings on this thread quite humorous actually. The sky is falling...the sky is falling! Funny how people from other countries have a crystak ball into the US economy. Now listen up mates...We've been through this 1/2 a dozen times in my life and so have you. That's how I was able to afford Arco ST winches...when your currency was in the toilet. Our last one was in 89 and guess what...I survived!
Now...To answer Captkev's post...I'm in Hawaii and I chose it for a few reasons. Housing still is cheap on this Island. It's south of the palm tree line and great cruising grounds if you want a place to hang out while the financial smoke clears. Not the best palce for marina facilities but if you're an American, your dollar is only worth something here.

[TaoJones]

Originally Posted by Celestialsailor

I find the postings on this thread quite humorous actually. The sky is falling...the sky is falling! Funny how people from other countries have a crystak ball into the US economy. Now listen up mates...We've been through this 1/2 a dozen times in my life and so have you. <snip> Our last one was in 89 and guess what...I survived! <snip> if you're an American, your dollar is only worth something here.

No, CS, you've never been through this before - unless you're old enough to have lived through the Great Depression of the thirties.

I'm not forecasting another deflationary depression, understand - quite the contrary, actually. It is hyperinflation that casts an ominous shadow over our immediate future.

So perhaps I should have written that you haven't been through this before unless you're old enough to have lived in Germany in the immediate aftermath of World War One. The inflation inflicted upon an unwitting and powerless German population by their callous government when faced with staggering war reparations payments was breathtaking.

In the economic history of this planet, every government pondering its threatened economic survival has opted to save itself by engineering inflation at the risk of destroying its economy. All of them believed they could control the inflation they gave rise to. The number of governments who were actually able to do so is exactly zero.

What is complicating things for any American cruiser who believes he/she can just sail away to another locale and ride it out is the fact that the financial "innovations" that spawned the current situation were purely an American invention. And what is most disgusting is that the process of creating CDOs (collateralized debt obligations) was replete with fraud from beginning to end.

From the buyers who lied about what they earned, to the mortgage brokers who only gave work to appraisers who would give them the numbers they needed, to the financial wizards who bought the bogus loans to package them into "securities" that they then paid bond ratings firms (Fitch, S&P, Moody's) to stamp AAA, there was fraud every step of the way.

Only the ultimate fools who purchased these AAA-rated bonds for their attractive interest payouts were, evidently, blind to what they were buying. The pathetic part is that many hedge funds, banks, insurance companies, even small municipalities leveraged their "investments." That is, they borrowed against their holdings to buy more. Many were leveraged more than 20:1.

When it became clear that they were holding garbage, everyone tried to exit at the same time. Their only problem was that to sell something, you need to find someone who wants to buy it. Thus, they learned too late that the huge supply of bonds they so desperately wanted to sell, met a marketplace that offered zero demand, and they learned, too late, that their "investments" were worthless.

That, we have seen before, but never on such a massive scale. On a planet with a total economic output of about $60-70 trillion American dollars annually, there are derivatives overhanging the market with a nominal value of approximately ten times that amount ($517 trillion, June '07, but much more today).

So, as others have pointed out, a meltdown of the American economy will have severe ramifications for the rest of the world. And as David M suggested (post #35), how welcome do you really think you'll be when you sail into an idyllic anchorage to while away the days, waiting for the world's economies to regain their footing. Especially, I might add, if you're flying the flag of the country that created the fraudulent "structured investments" in the first place, and sold these "AAA-rated investments" to the unwitting - perhaps the very leaders of that perfect little tropical island you'd like to anchor off of.

TaoJones

[Celestialsailor]

Oh Hell...Lets go sailing

[Alan Wheeler]

unless you're old enough to have lived through the Great Depression of the thirties.

A very different time and a very different World. The great depression can not be compared to today. There have been many financial depressions before and scince the 1930's. It is a cycle. But the big main difference in the world today is the political shape of the world. In the 1930's, the USA was the major world finacial player. But today the US is not so big. We now have emerging giants like China, India and the rest of Asia and the new Russia. None of these countries had any influence in the 30's. Today, many countries like NZ trade with these countries. We have rising inflation for two reasons. We have to pay through the nose for Oil, so transport costs rise and that gets past on through goods and service. But also prices rise because of demand. China is buying up steel, coal, oil etc and so the price rises. Because China is booming, wages and conditions are improving and people are buying food and goods. NZ's dairy products have increased upto 50% in a year. The overall increase in Groceries at the local supermarket has skyrocketed and will continue to do so. We just hit NZ$1.80/ltr for fuel today and NZ$1.34/ltr for Diesel. Ouch. But then other goods have become so cheap. Only a few years ago we had the NZ dollar at only 33cents to the US. Now we are over 80cents. That makes one heck of a lot of difference to importing things. Hard to sell of course, but easier to buy. My Plasma Screen TV was a Panasonic 42" and it cost me NZ$12000.00 about 4 or5 yrs ago. Today I saw them advertised for NZ$1995.00 There are 42" screens in cheaper makes for as low as NZ$700.00
Things us Kiwi's have to be careful of is Debt level. It must remain manageable. I can remember when I bought my first home back in 1989-90. My mortgage interest rate was at 14.75%. Interest has been high in the past and may well be again in the future. You have to prepare for that and make sure you don't get over your head.
But anyway, any depression will not neccessarily be Global this time.

[TaoJones]

Originally Posted by Alan Wheeler

A very different time and a very different World. The great depression can not be compared to today. <snip> . . . any depression will not neccessarily be Global this time.

I appreciate your commentary, Wheels. I referred to the Great Depression because it was the most recent economic upheaval on a scale commensurate with what we presently face, and because it was a phenomenon with which most literate people have at least some familiarity. The hyperinflation of Weimar Germany, however, is the blueprint for what American economic leadership is currently attempting to foist on the rest of the world.

You're correct that relative American economic "weight" has been reduced by the blossoming of vibrant economies such as China, India and Russia. I would also add Brazil and the European Union to your list. But it is incorrect, in my view, to think that economic distress in the US will, therefore, not have a global impact.

Why? Because the American dollar is the world's reserve currency. Many of the world's most important commodities are priced in American dollars. For Kiwis or Ozzies or anyone else wishing to buy crude oil, for example, they must first buy American dollars, and because the American dollar is being systematically devalued, they must buy more and more American dollars with which to purchase that crude oil.

As long as the American dollar continues to lose purchasing power, the cost of all things priced in American dollars will continue to rise, ipso facto. The determined over-production of credit and currency by the Federal Reserve Board and the U.S.Treasury guarantees that the American dollar will continue to shed purchasing power.

To do without crude oil altogether is simply not an option. Petroleum is the very lifeblood of advanced Western economies, or any emerging society pursuing technological development.

That is why the deadly hyperinflation of Weimar Germany is the best fit for what American economic leadership is doing now. And while that was largely confined within Germany's borders, it still impacted fellow European states to some extent.

At the time, the British Pound Sterling was the world's reserve currency. Had it been the German Mark, every society on earth would have suffered. With the American dollar the world's reserve currency today, it is impossible for the contagion not to spread into all other economies.

TaoJones

[Alan Wheeler]

At the time, the British Pound Sterling was the world's reserve currency.

Are we talking the 1930's here? Because no it was not the reserve currency. The UK had just come out of the WW1 and was broke. Gold Standard was used to "balance" the Sterling. Because the UK had been using Gold as a cahsh and carry for munitions, the IK had very little Gold left. So Churchall was reluctant to use it to give Balance to the stirling. But he was pressured into it by the US.

One of the delemas of the world monetry systems is that no one can actually identify whay the great depression actually accoured. Many have theories and can be well substantiated. But from my very small understanding, I believe it was a series of very seperate events that all unfolded in several major player countries, to create history. I am not so convinced that we have the same playing field today. I think we will see some swings and roundabouts through this down turn. I also think this down turn is a show of wealth redistrabution over many more countries than in the past.
But as I said way back in this thread, what will happen will happen. Not much we can do about it. But I am sure going to enjoy sailing as much as I can. My one and only really big fear is that this year our Marina charges are going to go up in one ginormous wack.

[Southern Star]

Tao, there is another reason that the economic downturn will inevitably spill over into other countries: reliance upon trade with the USA. Canada, for example, is the largest trading partner of the USA (no, it is not China or Japan or Mexico as many people mistakenly believe) and there can be little doubt that our economy is being hurt by both weakened demand in the US and by the relative increase in value of our currency to the weaker USD: the recent 20 % approximate increase in the value of the Canadian dollar has made a corresponding increase in the cost of our products in the USA.

This, of course, does not merely effect products made here for export into the USA. It has also increased the cost of travel for Americans to Canada (or virtually anywhere else in the world) which has dramatically reduced American spending abroad on tourism. It has also virtually brought an end to the burgeoning film production industry in Canada.

I find it interesting (and a little ironic) that there is now a debate in the US about re-opening NAFTA - something which, with the devalued American dollar, could largely operate so as to protect Canadian domestic industry against having to compete with the reduced cost of American-made products in Canada.

Regardless, as you say, virtually every country will be affected by the disastrous downturn in the US economy. Is there then no way to escape or minimize the impact? The simple fact is that there are other places well-suited to sailors where everything from docking, to boat maintenance, to fuel, to food and booze will cost much less in USD than they do at home. That, as I understood it, was the purpose of this post. A place to ride out the storm more cost effectively than at home.

In addition, these same places may also prove to be sound areas for investment in real estate etc.: as more and more people choose to retire in Central and South America, the Caribbean, Portugal, Spain, Greece, the Baltic etc. the property values there are steadily increasing. There are few (none?) who would predict any imminent increases, let alone significant increases in the value of real estate in the US.

So in response to an earlier posting by Alan suggesting that this has become a political discussion, I respectfully disagree. Nowhere am I (nor is anyone else that I have read) blaming a particular type of government, political party or even leader as being responsible for what is occurng. However, the economic downturn is, regardless of the causes, a matter of significance for boat owners and cruisers just as much as it for homeowners. The good news for the boat owner is that, unlike a house, the boat can be moved .

Brad

[David_Old_Jersey]

Originally Posted by TaoJones

That, we have seen before, but never on such a massive scale. On a planet with a total economic output of about $60-70 trillion American dollars annually, there are derivatives overhanging the market with a nominal value of approximately ten times that amount ($517 trillion, June '07, but much more today).

- You owe 1,000 dollars, it's your problem;
- You owe 10 Million dollars, , it's not your problem.....it's the Banks problem;
- The Bank owes 50 Billion dollars.........it's not the Banks problem........it's your problem.

I think a large part of the way out is for folk to pretend / to allow themselves to be misled / to be lied to that it is not so serious - given that the potential outcome is unimaginable to most and coupled with the vested interests involved in pretending the Emperor does have Clothes this is quite a realistic plan!

What am I doing? Cash and no debt until I am comfortable that I understand WTF is going on, but I reckon it will be ok in the end - circa 2011 and in any case opportunities always present themselves - and if not?......it won't really matter what bits of paper I have in my hand ........besides, I have a lot less to worry about than some! (Many?!!).

(I am not disclosing my emergency destination for obvious reasons .....but for 1000 bucks a head I will reserve anyone a place )

[TaoJones]

Originally Posted by Alan Wheeler

Are we talking the 1930's here? Because no it was not the reserve currency. The UK had just come out of the WW1 and was broke. Gold Standard was used to "balance" the Sterling. Because the UK had been using Gold as a cahsh and carry for munitions, the IK had very little Gold left. So Churchall was reluctant to use it to give Balance to the stirling. But he was pressured into it by the US.

No, I was referring specifically to the Weimar Republic era in Germany (1919-1932). The British Pound was the world's largest currency, at the time, and was the de facto reserve currency, although French francs and German marks were widely accepted as well.

Yes, the economy of the UK was seriously impacted by the First World War, as were the German, French and American economies, but the Pound Sterling retained its status as the world's most widely accepted currency. And, as you have noted, the gold standard was still in effect. The gold standard was what kept all of the would-be currency manipulators honest.

It was the world-wide Depression of the thirties, and the Second World War (1939-1945) that imposed a burden on the Pound Sterling that it couldn't bear. When the Allies felt victory in WWII was certain, they met in Bretton Woods, New Hampshire in early July, 1944, to forge the world's first negotiated system for monetary relations among independent nations.

Thereafter, all currencies were pegged to the U.S. dollar, because the dollar was "as good as gold." That is, it was convertible to gold. Gold, however, forces governments to be honest, and they find it inhibiting to their grand schemes.

Established as the world's reserve currency since the end of WWII, the American dollar provided benefits to the U.S. that no other nation enjoyed. Once the world's many and various citizens came to regard the U.S. dollar as "money" anywhere and everywhere, the honesty imposed by the gold standard upon American politicians with visions of Empire was infuriating. Finally, in 1971, when the Nixon administration "closed the gold window," and nations could no longer trade in their excess dollars for gold at the rate of $35/ounce, the American dollar was backed by nothing but "the full faith and credit of the United States government."

For those who are familiar with the cartoon character Wile E. Coyote, think of him running off the edge of a cliff in his pursuit of the Roadrunner. For a short while, he can actually run on nothing but the air - until the realization sets in that he is completely unsupported. What follows is the long fall to the base of the cliff and the little puff of dust.

Since 1971, when the U.S. dollar ran past the edge of the cliff that was gold convertibility, it continued to "run" on the air that is the government's full faith and credit. The realization that it is only paper (or, more accurately today, electronic digits) unsupported by anything but empty promises and other paper (U.S.Treasury bonds) is beginning to sink in all over the world.

As a result, the U.S. dollar has begun that sickening fall that ends in a cloud of dust.

TaoJones