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Why not Panama as an asset haven?

Posted by John Reed on

Because of many records of the Panama law firm Mossack Fonseca being released, Panama is now in the spotlight as a place where rich people around the world hide money. Just doing that is not illegal per se. But illegality is often the motive.

The six currencies I recommend

I have recommended six foreign currencies as places to put savings: AUD, CAD, CHF, DKK, NZD, SEK. I considered Panama long and hard based on many recommendations. Indeed, I almost went there last summer and last month to investigate the country to recommend. But I do not and have never recommended Panama. See my book How To Protect Your Life Savings from Hyperinflation & Depression, 2nd edition

How to Protect Your Life Savings from Hyperinflation & Depression, 2nd edition book

Corruption and freedom

But in addition to looking at the main criterion: the nation’s national-debt-to-GDP ratio, (http://www.tradingeconomics.com/country-list/government-debt-to-gdp)I also looked at the Transparency International Perception of Corruption index (http://www.transparency.org.nz/images/2016/CPI2015_map%20and%20country%20results_flyout.jpg?PHPSESSID=1d0dd3cdba6adb35b2676dd69f71367e) and the Heritage Foundation Economic Freedom Index. (http://www.heritage.org/index/ranking)

‘Enough said’

Panama is in Latin America. One can almost say that, then say “enough said.” There are two countries down there with good TI ratings: Uruguay and Chile, but Chile manages to sound awfully Communist much of the time. Even the best countries down there seem unable to stay on the Democracy/free-markets wagon for long.

Fabulously strategic geography

Panama has a location with fabulous potential, one of the most strategic locations on earth. Look at a globe. It jumps out at you.

Panama ranks 72nd out of 167 countries in corruption ranked by Transparency International. In contrast, the currencies I recommend are all in the top 13. The U.S. is 16th.

Many who fancy themselves worldly and sophisticated regard my focus on integrity as prudish, Boy Scoutish, and naive.

For my part, I have never understood why people who consort with shady characters or countries are surprised when they become victims of them. Live by the shady country, die by the shady country. I’m talking about your reputation or your money here, not murder, although Numbeo ranks Panama 83rd in crime out of 117 countries. 1st is worst. (South Korea is safest.) http://www.numbeo.com/crime/rankings_by_country.jsp

Economic freedom

In economic freedom, Panama ranks 66th on the Heritage Foundation index. AUD, CHF, and NZD are in the top five. CAD, DKK, and SEK are in the top 26.

In short, it is no accident that Panama was not on my recommended list in spite of it being recommended by many to me and to the world as the client list of Mossack Fonseca reveals.

I base my recommendations on a somewhat holistic mix of variables with an emphasis on integrity, rule of law, stability, freedom, strength. Things that are not Panama’s strong suit—to say the least.

Some places that rank high on many of these lists—like Hong Kong and Singapore—are not on mine because of the Communist Party of China or the small amount of the currency being traded or the precariousness of the country’s neighborhood (Singapore).

Japan ranks high on most lists, but not mine because they have the worst debt-to-GDP ratio on earth. Taiwan is too weak and exposed to China. I also believe the Far East is the most racist part of the earth, so I am not sending Caucasians there, or Infidels to low-crime, Muslim oil kleptocracies like Qatar or UAE.


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