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Seeing as this thread is the most dog slow conversation in months, I have a completely irrelevant question. Several of you appear to have lived abroad in what one would impolitely term "third world countries". DinOR and the Philipines comes to mind.
Right now I am seeing ads for golf course and beachfront property in Morocco and other areas for $30,000 and up. Picking up a golf course studio apartment near the beach for $30K seems like an excellent deal. All sorts of thoughts come to mind. Is it cheap enough that I could maintain $150K in investments and somehow live off the interest (or if not, what level of capital would I need)? How does one determine if a foreign country is safe for Westerners? How does one manage the different currencies, the tax situation, etc.? What secondary factors does one typically consider, such as access to hospitals, health insurance, local diseases, religious conflicts, expatriate colonies, etc.?
I am no expert, but you would first want to make sure that there will be no serious problem with your holding property in Morocco. This comes to mind because I know that Mexico and several Pacific nations do not allow foreigners to own real estate, or do not allow foreigners to hold certain real estate (for Mexico, I believe you cannot own along the coast unless you are Mexican, and becoming Mexican is apparently difficult). Morocco is pretty far from Mexico, but there might be some similar issues there. There are ways around those problems--you find a local agent or agency that you trust to hold the property for you. You know, a local agent that you would trust with a large chunk of what you own.
I have also heard that Morocco is an uncomfortable place to be Jewish. I don't know about other religious/cultural groupings, and it might be different in an expat colony.
The sites that I've been looking at seem to cater to British retirees who are trying to stretch their savings. One such example is www.compasspropertiesabroad.com.
Brand,
There is a site (Real Posts) which contains commentary from US State Dept personnel who have been posted to scores of locations around the globe. It's in the form of a questionnaire, and many have multiple entries up listed newest to oldest.
While it's hardly an exhaustive source, you might find it interesting to flesh out your ideas about Morocco.
http://www.talesmag.com/sitemap.shtml
My last visit to Africa was to Addis and Tangier, so not very useful to you.
I would certainly not buy a property in a place site unseen. It is a good excuse for a vacation to an interesting foreign locale, if nothing else.
I can't believe everyone isn't talking about the Bear Stern hedge fund blow-up. This might the real deal, the big shock to the financial system that so many here have been hoping for. Probably not, but I notice that *all* the financial stocks are taking a beating right now.
Jimbo: You need to meander over to Calculated Risk. They have scores of in-depth analysis of the Bear Stearn blowup, including links to some excellent resources. I think a lot of us have gotten our BS fix over there. ;)
Bruce: According to those maps, Tangier is within an hour of many new developments. Please add commentary. :)
Vicente
2007 Jun 25, 5:12pm
Can you be more explicit about "financial stocks are taking a beating"?
Why would Bear Stearn be the straw that broke the camel's back particularly? Perhaps like some other recent implosions it's a symptom or a victim not a trigger event.
Perhaps now that it's down "there's never been a better time to buy" a CDO eh?
In keeping with the start of this, you would think a "hedge fund" would be something you would want as a safety net? It seems now that the meaning of hedge fund is something entirely different? I are an engineer not a financial analyst, sometimes the terms they toss around confuse me.
What can a saver do to protect his purchasing power, and maybe make some investment income?
emu farms. invest everything in emu farms and reap the rewards!
Different Sean Says:
emu farms. invest everything in emu farms and reap the rewards!
It is a good time to buy or sell an emu. Also don't forget to buy my book, "Rich emu, Poor emu".
SP
Brand,
I've never found any single, comprehensive source for the things a would-be expat usually wants to know. As I'm not looking to the North of Africa as a possible residence, I failed to note many of the things I expect you'd be most interested in.
What does strike me as relevant is the velocity of change there. Tangier was (May 2006) experiencing a construction boom which I understand is driven partly on the monarchy's commitment to welcoming tourism, partly in preparation for Expo 2012. I would not be surprised to find living expenses rising in the future.
We are very welcome there. I think some of that may be the mindset of the Souk, but much of it seemed to me perfectly genuine. [surfer-x: Tangier coastal surf 6/glassy in May. Locals swear it's like that fall-winter-spring.]
On matters of finance, I have found Adam Starchild's The Offshore Entrepreneur generally helpful. Online table of contents and some abstracts are at:
Brand said:
Right now I am seeing ads for golf course and beachfront property in Morocco... [is this a good idea?]
Morocco is not a bad place to live - the cities (tangier, rabat, marrakech) are relatively cosmopolitan and have enclaves of western expats, mostly european. In general, urban facilities (roads, power, water) are in decent shape.
Although the theocracy is not very vocal, their influence has been rising slowly. It isn't a problem yet, since the natives are not prone to going nuts over silly stuff. It is a predominantly islamic country, the law is based on islamic law (with french/spanish influence). It is hard to say which way this will go over the next twenty or thirty years.
Personally, I wouldn't buy property and move there to retire - although it is a tremendously fun place to live in - as long as you can get out if needed. :-)
SP
I haven't had time lately to read my favorite blog. But I wanted to share this today. Is Lennar smoking crack? Unexpected loss? Come on guys...
Brand,
Could we just forget I ever posted that cyberhaven link? I read Starchild a long time ago and remembered being interested. Now it looks like cr#p.
I thought this article was emblematic of America.
http://biz.yahoo.com/cbsm/070620/8d95be7caf994c909605fad32361c515.html?.v=1&.pf=retirement
Investment companies trying to profit off of the sheeple’s apathy. They want to profit by default from people who don’t care and are unwilling to take any active role in their retirement portfolio.
Why would Bear Stearn be the straw that broke the camel’s back particularly? Perhaps like some other recent implosions it’s a symptom or a victim not a trigger event.
Vincente,
The prevalent theory behind this is that the BS funds collapse unearthed a dirty little secret - these very, very illiquid financial instruments such as CDOs and MBSs have a financial value that is not very clear because they are so illiquid and infrequently traded. As a result, when hedge fund investors and the banks that loan money to the hedgies so they can "double down" their bets get the least bit antsy and ask for a valuation or ask for a margin call, there can be sudden downward valuations on these funds. All of a sudden, the investor realizes their stake in the fund is worth 30% less than they thought previously (this is more or less the case w/ the BS funds).
People are concerned that the BS problem could be the start of a chain reaction because now, all of a sudden, everyone else who has a stake in all these other funds with heavy investments and leverage in MBSs is exposed to the risk of significant devaluation. Add to this picture the recent push by Moody's to revalue many of the funds in this category, and in the worst case scenario, you could potentially be looking at a massive panic and fleeing for the exits by investors to these funds.
Whether or not the panic occurs is obviously not certain. Clearly BS "decided" to bail out at least one of their funds to stave off this scenario. I believe a similar thing happened during the LTCM meltdown.
I'm by no means even close to having the most expertise on this matter among the posters here, but that's my lay-person's understanding.
KT,
I agree, it IS a mess. The Act, as originally written was not necessarily a bad piece of legislation. I've advocated "negative enrollment" for years. It's sad to see this become a political football. Enter greed.
Getting a new job and/or transferring can be stressful. Perhaps what's needed is proper follow up from HR within a reasonable time to get participants into investments they have actively selected, making the "default funds" a temp. parking vehicle?
Nice find.
skibum,
No, that's about the size of it. This "re-pricing of risk" is what it's all about (and what BS and the street is fearing). You may have missed your calling.
On the Bear Stearns and other funds woes, here's a shot across the bow from Bill Gross:
http://www.bloomberg.com/apps/news?pid=20601087&sid=abbFUHu6bkY4&refer=home
Gotta love the guy! A frank assessment, and he manages to squeeze in at least 3 separate colorful metaphors:
RE: CDOs:
``AAA? You were wooed Mr. Moody's and Mr. Poor's by the makeup, those six-inch hooker heels and a `tramp stamp,''' Gross said in his monthly commentary posted on Pimco's Web site today. ``Many of these good looking girls are not high-class assets worth 100 cents on the dollar.''
OR,
Defaults on subprime loans will ``grow and grow like a weed in your backyard tomato patch'' and if total losses reach 10 percent, CDO slices rated A may also ``face the grim reaper,'' Gross said.
OR,
``The willingness to extend credit in other areas -- high yield, bank loans and even certain segments of the AAA asset- backed commercial paper market -- should feel the cooling Arctic winds of a liquidity constriction,'' Gross said.
skibum said:
I’m by no means even close to having the most expertise on this matter among the posters here, but that’s my lay-person’s understanding.
Good summary. Another 'plain english' explanation is:
1. Investors gave money to B-S.
2. B-S went out and bought Collateralized Debt Obligations.
3. CDO's were backed by the value of the collateral assets.
4. The valuation of the collateral is now questionable.
5. Investors want to know whether they are adequately covered.
6. If B-S is forced to verify the valuation, it is likely to come up short.
7. If valuations are lower than thought, the value of the CDO falls.
8. Investors rush to the exits, causing the CDO to plummets further.
9. This can trigger a worldwide re-valuation of all collateralized debt.
10. Pretty much all models are screwed because you don't know if your counterparty is solvent anymore.
11. When you don't 'know' and your models can't 'tell' you anything for sure, your risk shoots up.
12. High risk needs to get priced into everything you invest in, assuming you actually choose to invest instead of curling up into a ball and sobbing.
In other words, the tide is going out. Nobody knows who is swimming naked - it could be you.
SP
O.K Bill, we get the idea without the "tramp stamp" thing! For once BG and I are in agreement (mostly). Bank loans are an entirely different asset class and probably shouldn't be lumped in with this mess.
I think there may have been (1) add'l step? Merrill provided BS w/ "warehouse lines of credit" to run out and buy this cr@p and THEN back filled it w/ investor $'s. I guess that's how Merrill got involved. As in "we have warehouses full of money".
DinOR Says:
I think there may have been (1) add’l step? Merrill provided BS w/ “warehouse lines of creditâ€
True - in my summary this was simplified into 'investors' who gave money to B-S. I glossed over the fact that the money was actually OPM - that is pretty much a given on Wall Street. :-)
SP
DinOR says:
“Rich emu, Poor emu†LOL!
Where do I get MY copy!?
Maybe at "www.I_Am_Facing_Extradition.com"
:-)
SP,
True, true. It's a given. I will say that I like the brand of candor Bill Gross is bringing across. You have to wonder why he didn't have more pointed comments earlier?
As for living abroad, there's a number of good websites that offer that information. My favorite is internationalliving.com - though it's approach to real estate is awfully bubbly.
That's one thing I've always wondered about so many of those "escape-artist.com" type web-sites? I'll take obviously the pricing model in much of Central/South America is built on someone that has leave the U.S post haste?
"Buy this lovely villa in Colombia for ONLY 2/3rds of what a similar property in Miami would cost you!"
Yeah uh.. if I'm going to live in a country where more people are held for ransom than hit by champagne corks I'd be looking for a little bit more of a discount? Hint? At least where the Philippines is concerned virtually everything that's for sale (is also for rent!) In fact with but a few exceptions the lists are almost identical. Difference is, just as it is here, rents are ridiculously cheap! Think ocean view w/pool for about $600 a month. That's their ADVERTISED price!
The Bill Gross outburst was very entertaining. The real question is why is he talking like THAT and talking like that NOW ?
I point you all to this 2-year old article posted by another Bill on MSN Investor. I highly recommend reading this, even though most of us will not find anything "new" in there.
http://www.fleckensteincapital.com/hotpotato_pt1.htm
It's a 3 part series, replace the pt1 by pt2 and pt3 to access other parts.
This was written more than 2 years ago and introduced me to the craziness of lending, financial dark matter and essentially the root causes of the housing bubble. All this has become common knowledge NOW. Then, it was like a shocking truth that made understanding the bubble so much easier.
HeadSet
2007 Jun 26, 7:38am
DinOr, SP, Skibum
So, with the BS meltdown, naked swimmers, vulnerable CDOs, and questionable MBS backing, are we finally going to see the liquidity crisis (opportunity) sooner than later?
I want the lack of easy credit to swell the unsold listings faster than a diuretic Clydesdale can fill a coffee cup. I want to see lowballs of cents on the dollar become routine, boring news. When??
Headset,
I don't know about "cents on the dollar" for houses just yet but no question, subprime is effectively shutdown! The only reason this lending distribution channel hasn't been completely choked off is b/c new loans CAN have the risk efficiently priced.
Where the downward pressure comes from is the fact that Mr. Howmuchamonth? is in essence priced out of even discounted home prices (let alone armed for a bidding war!) There will be no help for Stanley Johnson.
"Evacuate, in our moment of triumph?"
In the hodgepodge of data from the press release for the latest Case/Shiller Index numbers, it should be noted that Stumptown, Seattle and Fortress BA are showing increasing rates of appreciation for the past couple of months. Subprime fiasco, what fiasco? Is this a case of you can't chart what you can't sell? A few more months of data will reveal if this is a seasonal issue or the beginnings of a recovery in these markets.
HeadSet Says:
So, with the BS meltdown, naked swimmers, vulnerable CDOs, and questionable MBS backing, are we finally going to see the liquidity crisis (opportunity) sooner than later?
The only thing you can be certain about is that risk will get priced in, which basically shuts down the subprime party. Liquidity will certainly be lower - but whether it will reach a crisis is open to question. Liquidity crises are big, scary events that affect far more than housing.
For what you want (cheaper houses), you don't need a full blown liquidity crisis - you need a 12-24 month credit squeeze all the way up to the A-grade. This will make mortgages more difficult to qualify for, and also reduce business investment (~jobs). The raised lending standards (20% down, 28% of verified long-term income) will stay in place for a long time after that.
SP
W.C. Varones
2007 Jun 26, 10:55am
Diversify! A little gold, a little foreign stock, a little domestic stock.
For what you want (cheaper houses), you don’t need a full blown liquidity crisis - you need a 12-24 month credit squeeze all the way up to the A-grade.
All I want is for the bond market to wake up from its hangover induced by drinking too much cheap "liquidity". Especially the non-treasury - and add sufficient risk premiums for MBS that reflect the reality of the housing market. In other words, I want the 30yr FRM to go up to 8% at least. That's all. Nothing earth shattering. ;-) That's how it was 10 years ago. Everything else will automatically get adjusted.
StuckInBA said:
I want the 30yr FRM to go up to 8% at least. That’s all. Nothing earth shattering.
My expectations are also quite close to that. 8% and above, accompanied by some realistic lending standards will bring things down to earth.
When I was talking about a year long credit squeeze, that was in the context of Headset's "pennies on the dollar" scenario - the point being that he would get that without even a total liquidity crisis. Sorry I didn't make it very clear in that post.
SP
If there is a high inflation scenario in the US, do you think the proverbial rich foreign investors would jump in before a bottom that we're comfortable with? Or would they get scared and stay home?
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The dollar keeps falling against other currencies and in purchasing power. Just a few years ago, a Euro cost 75 cents, and now a Euro costs $1.33. What can a saver do to protect his purchasing power, and maybe make some investment income?
There are big problems with all the main investments. Gold has high transaction costs, gets no interest, and is a big target for theft if you take physical delivery. The stock market seems ready for a fall. The bond market has been getting hurt as interest rates rise.
Of course, there is always real estate, but don't even get me started on that one...
Patrick
#housing