6 Reasons to Consider a 2nd Passport

Gaining a second citizenship requires a fair amount of research, a fair amount of bureaucracy and most of all, a fair amount of patience. Occasionally, depending on the program, it can also involve a fair amount of coin. But, a second citizenship can offer an exceptional number of benefits as well which might fit well within your overall internationalization plan. Here are just a few of the reasons to consider it. One: "Nobody kills all the Slovakians" ... or Uruguayans, Costa Ricans or Dominicans. But, it will come as no surprise that certain passports do attract more negative attention abroad than others - the US, UK and Israel (in certain places), come to mind. Any time one country decides to apply military pressure against another, it will create local anger and frustration that is then projected onto the general citizenry of the oppressive nation. It doesn't matter if that particular citizen was against the conflict, the passport alone makes him a target. The terror attacks of 2008 in Mumbai specifically targeted US and British citizens, for example. On the other hand, there are certain nationalities that are either relatively well respected as peacemakers (Canada, Costa Rica), or ones that have tended to mind their own business rather than attempting to project influence outside their borders (Switzerland, Uruguay, Dominican Republic). In other words, having a "neutral" passport can act as a useful insurance policy in case of trouble. Two: Bypass potential travel restrictions / visas Having a second passport allows you to avoid potential travel restrictions or the need to get entry visas to certain countries. Much of the value of any passport is the number of countries it will let you access without requiring the often expensive and time-consuming visa application process. Denmark, Sweden and Finland top the list in that regards with access to 173 different jurisdictions. Perhaps not surprisingly, a country like Afghanistan offers one of the least useful travel documents. Three: Emergency bolthole A second passport acts as an emergency insurance policy in case you need to get out of dodge quickly but are limited by your home country's useless passport. (South Africans during Apartheid, for example). Four: If you want to eventually expatriate If you do decide to officially renounce your primary citizenship, you will need to have established a second citizenship before you do so. To renounce without a new home will make you a person without a state, which will make it difficult to travel in the future. Five: Easier to open bank accounts overseas In this day and age, some citizenships are better than others when it comes to accessing financial resources abroad, particularly if you are a citizen of the US. In fact, it's relatively common now for Americans to be actively excluded from access to services simply because they carry a US passport. Gaining a second citizenship potentially allows one to gain access to these services by registering with that other travel document. (Though arguably, as the net gets tighter around Americans heading overseas, this is not as useful as it once was.) Six: Access additional opportunities

Having the right passport can potentially allow one access to live and work overseas with no additional documentation required. An EU passport, for example, allows one to live and work within any of the other members of the union. Taking those first steps... Of course, choosing a place can be a difficult process. It depends on your objectives, your current level of wealth and your timeline. If you simply want another passport as an insurance policy (and you want it relatively quickly and you have the cash), then the economic citizenship programs of St. Kitts and Nevis or Dominica might be a good option. If you want a second passport and don't want to spend time actually living in the country where you are applying for citizenship, jurisdictions like the Dominican Republic or Paraguay potentially offer such possibilities. Or, if you don't mind going through the proper procedures and waiting a few years in order to get a truly useful travel document from a neutral, rich world country, they are certainly available as well. The key is to start your research now. Decide if it's right for you. And then, if it is, start the process.

Internationalize Yourself

Denver based Barnhardt Capital Management is a futures brokerage firm that focuses on agriculture, round-the-clock broker access, and inexpensive commissions. At least, it used to be. Barnhardt shuttered its operations yesterday after six-years in the business. The firm’s founder Ann Barnhardt posted the reasons online for the entire world to see: “I could no longer tell my clients that their monies and positions were safe in the futures and options markets, because they are not. And this goes not just for my clients, but for every futures and options account in the United States. The entire system has been utterly destroyed by the MF Global collapse.” Ms. Barnhardt further explains that markets are completely fractured… that the rule of law in the United States no longer exists. She decries Jon Corzine of MF Global for having outright stolen customer funds, and various exchanges and government regulators for having frozen out customer accounts as a result. Given that the entire industry is “suicidally-leveraged” and exposed to “European sovereign junk debt,” Barnhardt recommends that ALL customers “withdraw from all of the markets as soon as possible so that they have the best chance of protecting themselves and their equity.” We couldn’t agree more with this sentiment. Our Chief Investment Strategist Tim Staermose wrote just last week that cash is a great place to be right now… and we’ve been arguing for months that markets are completely broken. The market’s price discovery mechanism has given way to rumor and political innuendo. A real economy cannot function under such circumstances. With Europe on the precipice and roughly $600 TRILLION in global derivative notional value lurking in the system, can a real collapse be that far off? Famed hedge fund manager Mark Mobius recently said, “There is definitely going to be another financial crisis around the corner because we haven’t solved any of the things that caused the previous crisis.” Not only have the major issues not been resolved, but governments continue making things worse. More bailouts, more printing, more deficits take an enormous problem and make it unfathomable. As we discussed yesterday, though, most people are completely unaware. Everything ‘feels’ normal, so there’s no cause for alarm. They’re just going on about their lives while Rome is burning all around them. At least a handful of people are paying attention. We received a note this morning from a subscriber in Portugal who writes, “Very well-informed people in Portugal are withdrawing money from the banks and either keeping it at home or buying gold. In fact, I heard on the news yesterday that we are breaking records in Portugal in terms of gold purchases.” Meanwhile, the government of Spain insisted, rather emphatically yesterday, that it has absolutely no need of being bailed out… all while its borrowing costs shot up to record highs. Given Spain’s debilitating debt and deficit woes, this is obvious nonsense; the government is simply trying to put on a brave face and restore confidence just three-days before the election. Our entire financial system, in fact, is based on confidence. Our currencies are backed by nothing but empty promises by politicians. Our banks barely have any cash on the books as a percentage of deposits. Most western nations are completely insolvent. And EVERYONE is exposed to EVERYONE else. Everything can ‘feel’ normal as long as that trust and confidence is still in-tact. But it’s a frail, razor-thin breaking point. And when people lose confidence in the system, things can collapse very, very quickly. To paraphrase the late German economist Rudi Dornbusch, the loss of confidence takes longer than you think it should and happens faster than you thought it could. What to do now: 1. Obtain 2nd Passport in a safe country. 2. Store precious metals outside your home country. 3. Have cash outside of the banking system.

Your Money and What's Coming

There's an old playbook that politicians have used for centuries; it contains a handful of tried and true plays to call when they're completely desperate. History is full of examples of bankrupt nations relying on these tactics, and one of their favorites is capital controls. Capital controls essentially restrict the flow of funds across a nation's borders. They take different forms, but the end result is trapping money inside a country, making it very difficult to move money overseas. Why would a government do this? Simple. Because once capital controls are imposed, the next step is to oblige individuals and businesses into buying their government debt. They force us to park our money in domestic banks, then they force the banks to use OUR money to buy THEIR bonds. Just imagine being forced into loaning the government your hard-earned money for a 30-year stretch at less than 4% interest! You'd be eaten alive by inflation! If it sounds far-fetched, think again... it's happening all the time. Just a few days ago, Argentina's socialist president imposed strict capital controls for the country's mining companies and sought to prevent Argentines from holding foreign currency. This is after she already nationalized pension funds and seized private bank accounts. Not to be outdone, the US government passed something called the Foreign Account Tax Compliance Act (FATCA) last year, and it's tantamount to capital controls. Let's put it this way-- if you really wanted to screw American businesses and make it difficult for them to be competitive, FATCA is EXACTLY the legislation you would pass. Once all the rules kick in, it will be very hard for American individuals and businesses to operate abroad. This is what capital controls are all about-- make it difficult for people to move money overseas so that they'll keep it in the United States. Given that the US government already controls the banking system, how long will it be before banks have to start investing their depositors' funds into the 'safety and security' of US Treasuries? For all the sheep who are soundly asleep despite what's going on around them, they're going to wake up one day soon (once all the rule go into effect) and realize that their money is trapped as if they're living in some third world dictatorship. For anyone who's aware and paying attention, the FATCA legislation poses a clear deadline for taking action. To put it very plainly, you NEED to take action and diversify internationally before these FATCA rules kick in. It's that simple. Get a Dominican Passport and open an offshore safe deposit box or offshore account now. Banker Trust is not subject to FACTA rules. The United States is on a one-way collision course with its financial judgment day; the country long ago passed the historical point of no return-- the point at which it has to start borrowing money simply to pay interest on the money it has already borrowed. Throughout history, countries that passed this point of no return soon defaulted on their debts, entered into extended periods of severe inflation, or both. This is nothing new-- the idea of a government going bankrupt is practically as old as the concept of government itself. Along the way as they slide down the slippery slope of economic calamity, governments typically hit the accelerator by resorting to financial repression; rather than making the economy open and attractive to talented people and investment capital, they instead confiscate, inflate, and over regulate. These tactics include oldies but goodies like civil asset forfeiture, capital controls, and a host of whacky new taxes. Like a Christmas Tree tax, for example. Sumptuary laws (regulation and taxes over lifestyle habits) are quite common, dating back to the Renaissance period 'beard taxes'. If you wore a beard during the time of Peter the Great in Russia, or Henry VIII in England, you paid a tax to the government for the privilege. There are many modern day equivalents of the beard tax-- taxes on cigarettes, mobile phones, vehicles, luxury goods, etc. We should expect the introduction of even more-- a national sales tax, an Internet tax, a carbon emissions tax, and a financial transactions tax. After this, the next mind-boggling category of taxes that will be introduced are 'social taxes'. In other words, you get taxed on what everyone else is doing... like an anti-terrorism security tax, or better yet, national healthcare where you pay for other people to go to the doctor. During the Tokugawa period in feudal Japan, they called this 'honto mononari'. Village peasants were taxed by the local daimyo on the basis of the entire village's rice yield for that season. Even if you didn't grow a single grain, you still paid. Perhaps the most heinous forms of taxes to come, though, are asset taxes. And at roughly $5 trillion in total value, individual retirement accounts (IRAs) are the lowest hanging fruit that the federal government can grab. It's not that far-fetched. Argentina has done it. Hungary and Ireland have done it. Even France passed a law last year authorizing the government to use pension fund assets to pay off its debts. And if you recall, the US Treasury raided public pensions this year to tide itself over during the budget debacle. The next step will be for the government to nationalize a portion of IRA assets. They'll wait for a severe market downturn that wipes a huge chunk from most IRA accounts, blame capitalism for the failure, and then pass a law requiring that X% of IRA funds be held in the 'safety and security' of government debt. If you think this can't happen, then I encourage you to do absolutely nothing. Keep your IRA funds parked with a big, conventionally-thinking financial institution that has absolutely no interest in your financial security.