Latin America

Bill Bonner: American grifters

"Here on the pampas, on the other hand, the Argentinians know better. Their brains have been sharpened by adversity and enlarged by necessity. They know they’re getting ripped off by the government. They find ways to protect themselves. 'There are invoices, and there are invoices. You can get an invoice at the official rate, or one at the unofficial rate. Or one that is not at any rate at all. A, B, or C. The government rigs the system to cheat us; we rig it right back. You just have to make sure you have the right invoice for the right transaction. At the end of the year, people buy and sell invoices. Everybody’s got a trick or two. You have to. Otherwise, you’re a sap.'" Continue reading →

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Puerto Rico: We’re Watching this Offshore Tax Haven

"Although residents must still file a federal tax return, they are exempt from paying U.S. income taxes. Residents also avoid a 15% capital gains tax on assets held before moving there, and sold after 10 years of residence on the island. Former governor Luis Fortuno, who narrowly lost the re-election at the end of 2012, is responsible for the attractive tax incentives on the island. He not only slashed property taxes to zero for new homeowners for the first five years, but he also included a 100% tax exemption on all supplemental, passive income. Moreover, international financial institutions that move to Puerto Rico are eligible for full property-tax exemption." Continue reading →

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Argentina’s Mad Dash for U.S. Dollars

"If you find yourself driving through the suddenly packed condo canyons of Miami—lamenting not having bought during the property crash—shake a fist or two at the Argentines. So many of them ponied up 80 percent cash down payments on units that South Florida’s condo depression rather abruptly turned into another boom. Their thinking was defensive: Swap iffy pesos for dollars and store that value in U.S. property, out of the prying hands of the government back home. Now, with Buenos Aires finding some rather innovative ways to crack down on the flight to dollars, that spirit of capital preservation has morphed into a panic." Continue reading →

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Princeton grad accused of spying for Cuba while employed by State Department

"Former United States government employee Marta Rita Velazquez ’79 has been accused of espionage for Cuba against the United States, according to an indictment released by the FBI on April 25. Velazquez is charged with passing documents and information regarding national defense to Cuban intelligence. The indictment, which was originally returned by a Washington, D.C. grand jury in 2004 and only unsealed yesterday, also alleges that Velazquez helped recruit U.S. citizens to serve as Cuban agents. One alleged co-conspirator, Ana Belen Montes, pleaded guilty to espionage in 2002 and is now serving a 25-year sentence in the US." Continue reading →

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Hunt for Dollars Sends Argentines Into the ‘Cave’

"As the government restricts access to foreign currencies, Argentines seeking hard-to-get dollars have been pushed into cuevas, or caves—clandestine operations where customers pay dearly to exchange pesos for greenbacks. Buying dollars for savings is banned, and authorities make only small amounts of foreign currency available for travel abroad. Travelers must submit an online request to the national tax authority just days before leaving. Businesses need government approval to import equipment and materials at the cheap official exchange rate. Dollar-sniffing dogs are posted at border crossings to catch those traveling with undeclared currency." Continue reading →

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Bill Bonner: Argentina’s monetary and economic mismanagement

"It is always a pleasure to visit Argentina. It is a country where economic disaster stories are daily life....where economists' daffy theories are government policy...and where everyday citizens have to figure out how to deal with a monetary system that is half-mad...and half merely incompetent. When we are here, we need to spend pesos...especially out in the country, where people's math skills are not as well developed as they are in Buenos Aires. But any serious purchase - say, if you're buying an apartment - requires dollars...either on top of the table or underneath it. So, you have to be prepared." Continue reading →

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Bitcoins gain traction in Argentina

"Enter the bitcoin? The virtual currency is emerging as the latest inflation refuge – and Bloomberg reports that TradeHill, a US-based bitcoin exchange, is now planning to open an office in Argentina where demand is fastest in the region. Bitcoins are absolutely not words on everybody’s lips here and many people have no clue about how to use them. But a quick squint at the website of MercadoLibre – a kind of ebay – reveals that you can buy plenty of things, from motorbikes to apartments to an anti-slip spray for bathtubs, and pay with bitcoins. Argentina’s two centuries’ history of currency turbulence, has wired a need for financial smarts into the national DNA." Continue reading →

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Bill Bonner: Turning Argentine…

"'Are you kidding?' said an Argentine friend. 'Nobody wants to save pesos. You get them. You spend them.' 'I've seen this show before,' said another friend. 'I was here in Argentina in the 1980s, when we had inflation of 1,000% per month. And I was in Moscow when the Soviet Union fell apart. Inflation hit about 800% there in 1993. I see signs of a big takeoff in inflation again. Watch out.' But for well-to-do Argentines, the quality of life here must be among the highest in the world. There are dozens of restaurants within a five-minute walk. You can sit outside. The weather is nice. And prices are cheap, if you convert your money on the black market." Continue reading →

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In Venezuela, Almost-Free Gas Comes at a High Cost

"Premium gasoline in Venezuela costs 5.8 U.S. cents a gallon, using the official exchange rate. Every day thousands of taxis, buses and motorcycles freshly loaded with gasoline head into Colombia from Venezuela. Once in Colombia, the fuel is siphoned off by freelancers known as pimpineros who pay them about $2 a gallon and resell the gasoline or diesel to Colombians for a few cents more. Under 14 years of rule by the late President Hugo Chávez, Venezuela kept gasoline prices frozen even as rising government spending spurred robust overall inflation. He made himself enormously popular but damaged long-term prospects for Venezuela's economy." Continue reading →

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