#274 – The Expat Files: Panama’s Cost of Living, Real Estate, and Cultural Shifts

Automatically transcribed from the original recording; names and wording may contain errors.

[00:14] Hello there all you expat wannabes, I'm Johnny Mueller and you're listening to the Expat Files, living in Latin America. The show that tells you just what it's like to live, work, play and or retire down here in Latin America. It's a mix of the good, the bad, the ugly and the great and it's all right here so let's get started. Well today as promised, I'm going to continue to give you some more reasons why it's not a good idea at all to become an expat in Panama. And even though you'll read everywhere that Panama is the fastest growing economy in all the 20 Latin American countries. But what they don't tell you along with Chile, Argentina, Costa Rica and parts of Mexico and Brazil, it's also the most expensive. I mean US expensive, even European expensive. And Panama has by far the biggest real estate bubble in Latin America too.

[01:03] And don't forget if you plan to live in Panama City, it's practically all skyscrapers and towers like the business section in Miami. But it's not spread out like Miami. So get ready for wall to wall people. Because where the action is, it's very densely and tightly packed. But let me tell you about another not so pleasant surprise I found out when booking my ticket to Panama. Now a year or two ago, I used to be able to fly from any Latin American city to Panama for around 200 to 300 bucks round trip. Because believe it or not, Panama is the biggest airport hub in Latin America. Which means you got tons of airlines and flights to choose from. And with that kind of competition, flights are cheap or should be cheap. And note that if you do fly into Panama, you'll be arriving at Tacumen Airport. Far and away the biggest airport in Panama.

[01:50] And the only one for now that accommodates the big jets. But with that huge real estate bubble going on, they've got two more international airports under construction right now. And I say good luck with that when the bubble blows. Anyway, gone are those days where you could get a $200 round trip Panama ticket. Even though competition should dictate that. Now you can add, at minimum, 250 more dollars to that. And at maximum, about 5. Now you heard me right. 250 to 500 dollars extra has been slapped on each ticket to Panama. And for me, this time my sticker shock came in at around 500 round trip. And why is that you might ask? Well that's because of all the brand new taxes they've slammed on airfare if you decide to land in Panama. And there's nothing you can do about it.

[02:37] Now listen to this. Since about a year ago, Panama has been piling on those taxes so heavily that you now actually pay more in taxes than you do for the flight itself. For example, you're going to pay an airport departure tax, a foreigner tax, an inspection tax, a tourism tax, and a security tax. And get this, an airport safety tax. So that's five or six extra taxes. It kind of reminds me of all those blood sucking taxes and charges they slam on your telephone and utility bills up in the states. But much worse. And some of those taxes are applicable even if you're transiting through Panama and not even taking one step out of the airport lounge. And listen to this. I'm getting this info now from the COPA airline website.

[03:23] Now COPA as well as TACA are the two most common airlines passing through that hub. They say that people landing in Panama will now be charged up to 250 dollars each way to cover the departure tax, the foreigner tax, the inspection fees, the tourism fees, and the security charges. So if you doubt it, just go to the COPA airline website. Now remember that's 250 dollars extra each way. So that means that some of you guys going through Panama are going to be slapped with 500 bucks in taxes and airport charges alone. Now luckily I was only slapped with around a 250 dollar tax on my ticket. Still more than the actual cost of the flight itself. Now I'm not really sure how this compares to airport charges up in the first world.

[04:09] Since in the last 20 years or so I've been strictly hanging around in Latin America and have only been up in the first world about one whole week in 23 years. And that was like 15 or even 18 years ago before 9-11 big brother and the TSA. Now these days I can only imagine that those kind of crazy airport taxes are pretty much standard throughout the first world. I mean I remember way back when, 20 something years ago, when you could take a flight from New York to LA for 99 bucks back when they were having air wars. Of course that was not the usual price, but they did occasionally offer deals like that. Remember? Now I don't know if to you listeners US airport taxes and fees are reasonable or not. And though I do hear complaints from expats about increases in airfares, they almost always

[04:57] seem to assume it's because of the increase in the price of fuel. Well there is that, but what about the additional airport taxes and fees? Why doesn't anyone ever mention that? To me any tax is unreasonable because the government never gives you your money's worth. So maybe someone out there can clue me in on taxes and surcharges and fees at US airports. Not that I have any plans to ever fly back to the states, I'd rather down a bottle of Drano. Now I do understand from some of my pissed off Canadian friends that they really hate flying out of Canadian airports. And yes, Canadians do get pissed off though in a kinder, gentler, more polite way. Hey, god darn it. Anyway, they tell me that the extra costs and charges and taxes to fly out of a Canadian

[05:43] airport are so high compared to US airport charges that last year in 2012 over 7 million Canadians flew out of nearby US airports to avoid their own excessive airport charges. Why not eh? But still, those new Panama killer airport charges beat all. So think of it this way, rags like International Living and a lot of expat websites will tell you that just with your Social Security check income, you could easily qualify for the Panama Pensionado program which gets you a residency fast track in Panama right away, providing that you could prove that you have $1,000 or more a month coming in from a foreign source. And as you might imagine, that was a plan specifically aimed at US citizens on Social

[06:29] Security. And that's how that plan has been advertised for years. It's always been looked at as a golden cheap retirement solution, basically for Americans. Because you see when that plan was first instituted a couple of dozen years ago already, they knew that Americans solely receiving Social Security were still making more than 5 times the average wage of a Panamanian. So Americans coming in just with Social Security checks were automatically and solidly upper middle class compared to a local and thus had tons of discretionary income. Now a dozen years ago or so, Panama was a very good deal for Social Security recipients. But these days, if that's all you've got, Panama is not a good choice at all. So if you're unlucky enough to be there, only on a $1,500 a month Social Security check

[07:18] which is the average payout, you won't be living anywhere near a first world lifestyle. Unless you get a fully paid for house or residency, that means you've got no monthly rent tab which will save you about $800 a month because that's what a one bedroom is going for in Panama City right now. A guarded first world style place that is. Unless of course you want to live in a dump a bit outside the city, and there's a lot of those. Then you might be able to get away with $300 or $400. But in that case, you probably won't want to walk around the neighborhood too much. And never at night. And Panama is a place where you just have to have a car. Which means you better have your car paid for too. Then and only then would you ever be able to live a near first world existence on a Social Security check. Oh, and did I tell you, even if you have your house and car paid for, forget about ever

[08:06] turning on your air conditioning. Or like one of my expat friends says who actually lives on more than a Social Security check, he says he does occasionally flick on the air conditioning, but mostly when company comes over. And the rest of the time he sweats it out like the rest of the locals who don't have AC. Now Panama you see, has got some of the highest electric rates in the world. So unless you like air conditioning more than food, your Social Security check is just not going to cut it. So what's your electric bill really going to be like? Well I have a friend who's got a two bedroom apartment with AC in all the rooms, and he uses it some of the day and most of the night. Or else he says with the heat and humidity it's almost impossible to sleep at night. Anyway, he pays about $325 bucks a month, just to give you an idea of a real case.

[08:55] Oh and by the way if you're one of those folks from Texas or Florida who says hell, I never liked AC. I prefer the heat so the cost of electricity doesn't bother me. Well all I can say is, you haven't felt heat and humidity till you've been to Panama or points further south. The fact is most gringos will tell you, gringos that aren't low budget backpackers that is. They say living without AC in Panama is like living without central heating in Chicago or Cleveland. Anyway Panama is not in the Altiplano and you absolutely need air conditioning much of the time or you're going to be miserable. Now I do know quite a few people who actually are pensionados in Panama. Practically all of them who came down years ago as retirees and are getting some kind

[09:41] of pension and social security. So they're not exactly panicking yet, but they're getting damn worried about the cost of living. In fact that couple from Canada I told you about on the last show, who owned that house on the golf course for the last eight years, they've been living down here four months out of the year for all that time, planning on getting their pensionado residencies when their social security kicked in, but now seeing first hand what's happened to Panama, they've decided against it. They admit the cost of living is out of control. And even though they made a half a million bucks on the sale of that $140,000 house I told you about, they don't want to keep their money in Panama. Not anymore they don't. And I'll be telling that story on another show so stay tuned. Anyway, most gringos and expats that I know that have residency on that pensionado program

[10:27] in Panama, they fly back and forth to the states maybe four times a year. They've all got families and friends and kids and connections there. And all of them, I mean all of them, used to tell me how that just a few years ago it was dead cheap like $300 bucks round trip or even less. That was to and from any big city in the states like Chicago, New York, Los Angeles, whatever. But now just like everything else in Panama, flights are more than double that, sometimes triple. And that again would severely restrict anyone on that Panama pensionado program who was solely depending on his social security check. In fact, as I'm talking to you right now, I'm looking up the cheapest air flight from Chicago to Panama City and it's $743 if you could get it because those so-called very

[11:14] cheap or cheapest flights are often unobtainable when you try to get them unless you're very lucky because the airlines only block off a select few cheap seats. But you knew that already, right? So the point is, if you're a pensionado in Panama and you go back to the states four times a year like a lot of these people do, even if you take the cheapest flight, like the one I just found for $743, you're looking at dropping $3,000 a year just on airfare. That would eat up two full months of your social security payments. Oh and here's something those smiley faces at International Living never tell you about. Now as you probably know, they use the US dollar as currency throughout Panama. But they have their own change called Balboa's, which you can't use anywhere else in the world

[12:00] except in Panama. Now when shopping in Panama or doing any other kind of business in Panama, I mean with the smaller local vendors, they're going to just load you up with Balboa change. And even on a short vacation, you could easily get stuck with $30, $40 or even $50 worth of that crap by the end of your trip since the dollar Balboa coin seems to be what everyone wants to give you for change instead of regular US dollars, which just reinforces the rumors that I've heard about the shortage of US dollars here. So a pocket full of those Balboa's is absolutely worthless when you want to leave the country since the bank airports and the money changers won't take the stuff. So if you go to Panama, try to spend those coins as fast as you get them. Use them as tips or whatever or you'll just get stuck with them.

[12:48] And here's another thing they never tell you about using paper money down here. Now stores and businesses will accept any US paper money. That's their currency. However, if you bring out a 50 or a 100, even if it's in perfect condition, most stores and businesses will haul out a big log book and write down the serial number that's on your grant or Franklin. Then you'll have to verify that number and sign your name in that log book along with your passport number and you'll have to hand over your passport to them too. And then they'll make a photocopy of your passport. Nice, huh? All that takes some time. And of course it's better than them not accepting the bills at all, but it's one big hassle. And by the way, if there is one saving grace to being in Panama, it's the shopping.

[13:35] They do in fact have some of the lowest priced clothes and furniture in the world. In fact, they've got all your name brand clothing items and I mean dirt cheap. And that's of course because all that stuff from China is coming on a daily basis through the canal, which also means you can get every product known demand in Panama, again because everything comes through the canal. So you're going to get great deals on all the Chinese stuff that's coming through, but there's no deals at all on anything made in the US. That is, if you can think of anything that's made in the US. Anyway, you won't get any deals on products made in Europe or Latin America either. Even when places are having huge sales, you'll pay first world US prices and more. And speaking of made in China, while sitting in a hotel and flicking through the TV channels,

[14:22] I just had to check out what was on the local Chinese channel. And obviously it was not a channel meant for the average Panamanio. Why? Because they had no subtitles in Spanish. And the fact is, for all my years down here, I've never met a single Latin person who could speak Mandarin or any Chinese dialect. And if the Chinese really wanted to commingle with the Latins and let the Latins in on their part of the world, their social and economic world, that is, they would have at least have attempted to put Spanish subtitles on their TV programs now, wouldn't they? But they didn't and they won't. Because you see, that's not part of their plan. In the business world, it's obvious the Chinese are taking over. And it doesn't seem they need or want any help from the locals, the Panamanians, though of course they need the government to get their permits to get started on their businesses.

[15:10] And once they've achieved that, they do everything from the viewpoint of their own ethnic world. The Chinese world. And it seems they're trying to maintain a parallel, separate Chinese style world at all costs. Very strange, but that's the way they do things. And I witnessed a very good sample of this myself. Now like I said before, I'm staying in the very high buck Hard Rock Hotel complex. That place I told you with 62 floors. And I've been here quite a few days now and I haven't seen one Chinese person in this hotel. And that's because I found out there are certain other four-star hotels down here that are Chinese owned and operated, where of course the Chinese contingent with money stay. Like I said, there's two separate worlds in a very small country and the Chinese want it that way. But I was talking about that Chinese TV channel down here now, wasn't I?

[15:58] Anyway, I noticed that between the regular Chinese programs, all of the commercials were Chinese too. Chinese banks, Chinese construction companies, Chinese legal and security firms, and even Chinese doctors and medical offices. Then, to top it off, surprise surprise, there were a group of Chinese beauty parlors sponsoring a Panama national Chinese beauty contest. And sorry all you Latina beauties, it's for Chinese ladies only. And speaking of Latin American TV, which is so pathetic that I only watch to cut up on, I'm here to report that it reinforces the fact that Latins have an insatiable desire for anything gringo. You remember that lag time effect that I always talk about?

[16:44] You know, the time it takes for a popular thing in the United States to finally land here in Latin America? Well, you know what's a brand new super hit down here on Latin TV? Dancing with the Stars. Now, don't ask me who their stars are, I don't recognize any of them. And you wouldn't either. However, you should note that Dancing with the Stars first started up in the States in 2005, a lag time of eight years. And of course, the US wasn't the first to have it either. They actually stole it from the Brits, from a show called Strictly Come Dancing that started in 2004. So the lag time for it to come from England over the big pond was only one year. But as usual, in Latin America it took eight times as long. Now, note that Latin American TV is just filled with terribly bad copies and clones of bad

[17:30] US shows, all of them landing down here five or ten years after the original series started in the States. For example, now they've got very bad clones of things like home repair shows. Remember this old house with Bob Vila and all those other do-it-yourself shows that came after that? They started more than 30 years ago up there. Well, they landed down here about three or four years ago. What a lag time, huh? And now they've got that top model show too, called Latin Top Model, and that had a ten year lag time. And wouldn't you figure they've got Latin American Idol? That landed here maybe 11 years late. And you remember the great race? Well, now they've got the great Latin American race, which only took Latins about seven years to make a very bad copy of a very bad show. And now they've got Latin American fishing shows and real estate shows and Plain Jane

[18:18] makeover shows, cooking competitions and decorator shows. And believe me, that stuff just didn't exist down here five or ten years ago. And that's why it seems to so many of us gringos that Latins do not have a creative bone in their bodies or an original idea bouncing around in their heads. I mean, come on, can you think of anything besides tacos, burritos, tequila, and Montezuma's revenge that first came from Latin America and became an item in the first world? But you've got to give Latins credit for their copy of Dancing with the Stars. Sure, it's a complete ripoff of the American version, but it's the one show they really beat the pants off their first world counterpart. And I don't know why they didn't think of it first. Well, I do know why, they just aren't creative enough. Now remember, compared to North Americans, Latins dance on a completely different level.

[19:05] They're all basically Olympic contenders compared to North Americans. So as you might figure, this Latin American Dancing with the Stars makes the American version that everyone's so crazy about look like a bunch of Girl Scouts. And if there ever was a competition between the US version and the Latin American version, talk about embarrassing. Oh, and just one more thing about watching TV in Panama. Sure, you can get all the US stations too in English. I mean, that's common worldwide now. But as for the local Panama stations, of which there are three or four, well, you cannot help but notice that all the women news broadcasters and weather ladies are so blonde, fair skinned and blue eyed that you think they came from Minneapolis. Yet throughout the whole country of Panama, the only blonde, fair skinned, blue eyed women

[19:51] that you ever meet on the street, in a store or anywhere are first world tourists. Yes, folks, just like all the other 20 Latin American countries in Panama, classism is alive and well. Just have a look at the TV broadcasters and newspaper, magazine and TV ads and commercials. And to reinforce the point, the other day I went to a big home furnishing show. And there too, nearly every female model handing out pamphlets and brochures and demonstrating items was tall with fair skin and light colored eyes with various shades of dyed blonde hair. And I did happen to notice that these girls with their deep blue and green eyes were wearing those colored contacts I mentioned on a show a few months ago. An eye for one can tell real eye color from fake because they just don't look natural.

[20:40] And there is a huge market down here for those fake colored contacts since nearly everyone in Latin America is born with dark brown or even black eyes, which actually is another part of our gringo advantage. Because even if we don't have what they call ojos clados, which means clear eyes, and that would be blue, green, gray or hazel eyes, that doesn't matter because Latins have this firm belief that all gringos somehow have potent genes for those clear eyes that will be passed on through their babies. And sort of on that subject, let's talk about fashion. Now being that most of Latin America is tropical or subtropical, even in the Alte Plano, you don't get any snow. Under those conditions, as you might imagine, men and women do not wear heavy clothes. And Latin women are known for dressing slinky, sexy, and sometimes a bit scantily, as compared

[21:30] to first world women that is. And I've spoken to a lot of newbie expat women, they'll occasionally comment to me, but not in front of my girlfriend, that they feel the Latin women are kind of skanky, not by their actions but by how they dress. And they do dress sexy any chance they get. And by the way, I'm talking about off the tourist trail now, because on the tourist trail like in Costa Rica, there truly is a high percentage of skanky girls. Anyway, off in a first world ladies idea of sexy clashes with the Latin American girls. However, soon expat gringas get over it, once they get a feel of the culture down here and realize it's totally normal. And another thing, Latin women just love wearing stupendously tall high heels, any chance they

[22:15] can get. And sure, most Latin women will tell you, it's a real battle wearing those things all day and it hurts, but you see they're in competition with each other and they're always competing for height. Now, you must know, nearly every expat woman that comes down to Latin America is taller than your average Latin woman by 3 or even 4 inches. And that's why wherever you go in Latin America, especially evenings out and dress up events, it's very common to see women in such high heels that they tower over their own men. Which by the way is not something you generally see up in the States. And I remember some months ago when my sisters were down in Latin America, we were sitting in a restaurant. And as the Latin ladies walked by in their stupendous high heels, my sisters would shoot bug eyed looks at each other, not saying a word but you knew exactly what they were thinking.

[23:03] Like how in the hell is it possible they can even walk in those things? I really think it's something they have to work up to as young girls, because if you've ever been down here in Latin America, you know, the streets and sidewalks are just littered with cracks and potholes, a minefield enough for people wearing flat shoes. So how do the ladies do it? Especially at night and after a few drinks, to which I say, how did Stevie Wonder learn how to play the piano? Anyway, last week I told you I was going to make a little stop at the Decameron Resort in Panama, just to check it out, to see if it was up to the standards of some of the newer Decameron's I've been to, since the one in Panama here is about 10 years old. Well first I have to tell you it's on a very nice beach and all that, but the design is very standard and basic. It was definitely one of the earlier designed Decameron's, so it isn't exactly luxury,

[23:50] and it is showing some wear and tear around the edges. The usual lack of Latin maintenance. So it wouldn't be one of my choices to hang out for months at a time, but the chain has more than 40 all inclusive resorts, and some of them are quite new and really nice. But one thing I've noticed, and you've got to be ready for this if you go to this particular Decameron, it seems this place is a magnet for heavy and obese Latin Americans. And not that I'm picking on fat or heavy people here, I'm just telling it like it is. In fact, every time my skinny girlfriend and I would sit down at a dinner table, she'd nudge me and say, hey Johnny look, there's a thin person, that makes what, four of them today? And since these all inclusive resorts are all you can eat, I don't know how Decameron makes money at that place. In fact, like my girlfriend said, the only fit looking, thin people at the whole place,

[24:39] which has 2000 double occupancy rooms, believe it or not. Anyway, she commented that the only fit looking, thin people in the whole place were some of the little kids under 12 years old, and a dozen or so young men and women who danced and sang at the nightly show in the outdoor theater. In other words, employees, not guests. So again with the lag time, as soon as the Latin middle classes get ahold of a little money, they dive head on into all our bad first world habits, like junk food and sedentary living. But we knew that, look at Mexico. And by the way, my second day at that Decameron, I thought I was having a deja vu experience. I ran into two big guys, first worlders, with Harley t-shirts and tattoos, just about like the two Harley guys I reported on, when I last spoke of my visit to the Decameron in

[25:27] Salvador. In fact, what really caught my eye was the t-shirts these guys had on. On the back of their identical shirts, it said Harley Davidson Milwaukee, which of course is where their plant is, and on the front of their shirts there was an American flag and that standard image of Uncle Sam, with big bold letters that said, America will prevail. And so when I walked up to those guys standing at the snack bar by the pool, I just had to ask, do you really believe what it says on your t-shirt? And one of the guys said, what do you mean? And I said, obviously you're a gringo like me, down here at the Decameron, and I don't think America's going to prevail, that's why I'm here. And then he looked down at the letters on his t-shirt and laughed and he said, oh this, oh we just bought these in about 10 other t-shirts in the market in Panama City.

[26:14] If it fits good, I don't care what a t-shirt says. Then I said, so you're not Harley guys? Oh yeah, we have Harleys. But hell, we don't buy our accessories or our bling at real Harley shops. That stuff's too damn expensive. Then I asked, what brought them down to the Panama Decameron, expecting to hear that they bought that all-inclusive year package for eight grand. They said they didn't buy a membership yet, but were checking it out. However, so far they had no luck, even though they said they'd been approached numerous times by people running around, trying to get them to sit for a 20-minute spiel on the details and the costs of the membership. But the problem was for them, neither of them spoke enough Spanish to figure out the ins and outs of the deal. And when they heard me speaking Spanish to one of the bartenders, their eyes suddenly lit up and soon I was their best friend.

[27:01] Now I'm not a very good instant best friend, and they wanted me to walk over with them to the hotel salon and be their personal interpreter for the spiel, which I wasn't about to do, so I weaseled out of it. But then I thought, what a great gig for a bilingual interpreter. Just think of all the gringles that would love to get in on that plan, but don't know enough Spanish to understand the spiel, how to negotiate, and what questions to ask. The money-making possibilities for an expat who knows a little bit of Spanish are limitless here. See what I mean? South of the border, down Mexico way. You've been listening to The Expat Files, living in Latin America, coming to you twice a week from somewhere south of the border. Email me, theexpatfiles at gmail.com.

[27:47] And don't forget to check out expatwisdom.com to sign up for your free reports on Latin America. See you next time. Nos vemos.