#390 – The Expat Files: Life, Money, and the American Dream in Latin America

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. Yep, it's me, Johnny here again, this time broadcasting from the Dominican Republic, doing what I usually do, that is contributing to the demise of the fantasy of the American Dream. That is the American Dream as it pertains to North America. But you know, there really is an American Dream and it's not a fantasy and it's shifted south to Latin America. And certainly, all us long term expats know that. Or we wouldn't be long term expats now, would we? And in my case, I'd be back on the treadmill up in Chicago.

[01:03] God, and what a revolt and development that would be. So as for the very real Latin American Dream, the rest of the world, well, they haven't quite figured it out yet. Which as far as many of us long term expats are concerned is probably a very good thing. I mean, history shows that the vast majority of the people don't recognize when their ship is sinking and they go down with it. So what does that mean? Well, Detroit, Cleveland, LA, New York, Miami, you can have them. After all, that's what poor, uneducated, unskilled Latins and Mexican and Central American gangbangers consider to be their American Dream. And by the way, how do you like sharing that with them? You all right with that? Well, you must be because you're still up there. Well, good, then you can stay up there and have your own turf wars with them.

[01:49] Now, if you think I'm being a little excessive here or exaggerating, just look at the facts. According to US government statistics, fully one third of all the illegal aliens in the United States that were caught last year from Salvador, just the little country of Salvador, one third of those caught in the States and put on airplanes at your expense, to the tune of 20 to 30 grand a piece, by the way, were convicted felons, meaning you can pretty much count on the fact that one third of all illegal aliens slipping into the US are gangbangers. How do you feel about that? That my friends is how the numbers break down and numbers don't lie. Only scumbag politicians are awarded that privilege. As for me, I'll just stay right down here in Latin America, off the gringo tourist trail,

[02:39] sipping on my gourmet dollar a cup coffee, though I have to warn you, there is a war going on down here. In fact, I'm watching one right now. It's between two toucans fighting over a mango on the patio. Such a tough life it is down here, you know? Okay, okay, enough of that immigration rant. But you know, people really do get carried away and certainly press a lot of hot buttons when you talk about that topic. Now, continuing with the topic on last week's show, where I was starting to explain that heavily debt ridden and near bankrupt Ecuador is announcing a brand new government sponsored cryptocurrency that's supposed to kick in in December. Let me finish up with that. The article goes on to say, the new cryptocurrency was approved by Ecuador's congress and at the

[03:26] same time they legislated that stateless cryptocurrencies such as Bitcoin were simultaneously banned by Ecuador's national assembly last month. And then it says there's speculation that it's all about getting off the US dollar, which Ecuador has used as its currency since the year 2000 when the economy collapsed completely. Then it says, a financial analyst from Credit Suisse in Switzerland says that Korea's government has tripled social spending since he's been in office and opposition lawmakers say the country has a serious fiscal liquidity problem and it's in desperate need of more money, thus the cryptocurrency concept.

[04:12] Now, presently Ecuador cannot expand its money supply. Unlike the US, the government of Ecuador cannot print money since it uses the US dollar. So it's the market that has complete control over how it circulates. That means the government can only increase its spending on social programs and such by going into debt by floating bonds or increasing taxes or again getting off the US dollar and going to their own currency, then they can turn on the printing presses like every other country does that uses unbacked funny money. By the way, that little end bit was me talking, not the article. Anyway, the article goes on to say, the state is currently 11 billion dollars in debt mostly to China, which buys most of Ecuador's oil.

[05:00] And in the last line of the article it says, let's remember that the central bank of Ecuador has no autonomy since it uses the US dollar. And with the government now creating its own parallel system to the dollar, that opens up all kinds of possibility to financial shenanigans, said independent political analyst Jamie Carrera. So there you have it folks. Little Ecuador wants to copy Kenya. Now, if you remember, on the last show I told you that Ecuador was copying this system being used right now in African fiscal paradoxes like Tanzania and Kenya. So in order to improve economic conditions in Ecuador, they're going to copy Kenya. Now, the average working person in Ecuador makes about 250 bucks a month.

[05:47] And you know, Kenya has a minimum wage of about 250 bucks a month too, but guess what? In the real world, it's not enforced and nobody pays that much. So the fact is, the average Ecuadorian is much better off than the average Kenyan. And the fact is, the average Kenyan doesn't even have windows in his house, much less running water. Nor by the way in Kenya do most people have store-bought shoes. So let's copy Kenya, right? Anyway, the point is here. Actually it's two points. One, along with creating their own sure-to-fail cyber currency, because there's no limit placed on the amount of it that can be created by the government, which is a sure sign it's going to blow up in their faces. So you can bet that the government will turn on those virtual printing presses.

[06:35] And that's totally unlike cryptocurrencies like Bitcoin that have an absolute limit to the amount that can never be produced. So in order to crowd out all the other cryptocurrencies, Ecuador just went ahead and outlawed every other cryptocurrency like Bitcoin. So think about this for a second. In the year 2000, the government of Ecuador switched over to the US dollar because they completely destroyed their own economy and their own currency. So now we're supposed to believe with this new cryptocurrency coming and the banning of all others, the government's going to have more fiscal restraint and be more responsible and not once again destroy the economy and the currency. Not to mention this very minute, Ecuador is one of the 10 countries in the world

[07:21] with the worst credit rating and the biggest debt to GDP ratio. They're broke, heavily in debt, can't print any money because they use the US dollar, and they want to create a cyber currency. What's wrong with that picture? How convenient, huh? I guess I won't be buying any equi coins or cadet coins or whatever they're going to call their idiotic cryptocurrency anytime soon. How about you? Oh, and by the way, the joke on the street in Ecuador goes something like this. Listen, we owe the damn Chinese like 15 billion dollars. We're not broke if you check out the treasury. The government's got tons of zeros. It's the 15 they're missing. Yuck, yuck, right? I know, I know. You're thinking that joke was lost in translation somewhere,

[08:08] but I'm telling you, that's typical bad Latin humor. Like I mentioned in the past show, Latins have very low standards in the humor department too. Now, I suppose it's a virtue that they laugh at pretty much any old dumb joke, which is a great advantage for those utterly horrible Latin comics making a living out there. But that's another story for another day. Though I've often thought that it would be a great expat gringo business opportunity if you knew enough Spanish and had the wave-os to get up on stage down here and tell a few jokes. I've got to admit, I've never seen that done. Now, with the gringo advantage and all, and all the hotels, bars, and clubs, and resorts down here in Latin America, can you imagine a 100% gringo American like yourself who spoke Spanish

[08:55] getting up on stage and doing a bit of stand-up comedy? I'm telling you, it would be a no-brainer. All you'd really have to do is translate and rehash all the bad and stupid ethnic jokes you've heard since childhood. In fact, I remember once expat Eddie and I tried out that hypothesis at a strictly Latin neighborhood party in Salvador. In a middle-class subdivision Eddie lived in a few years back. What we did was we took a couple of Polish jokes and we just switched the principles to Nicaraguans, Costa Ricans, and Salvadoranians. And we really brought down the house. We had them begging for more, if you can believe it. And those jokes were beyond stupid. So we did prove a point. Anyway, like I said, no one's done it, so it's wide open territory. Now, if you don't think I'm serious about this,

[09:42] I know a few club owners down here, and I've brought up the possibility to them. I said, how would you like to book a 100% gringo stand-up comic who does his gig in Spanish? And you know, every bar and club owner I've ever mentioned that to says, you mean you know one? When can he start? I'm not kidding. Their eyes just light right up. And I'm telling you, you could do a nice tour and bring down some real first world gringo money too. And the trick is, of course, there's no enough Spanish to pull it off. Now, where were we? Oh yeah, talking about Ecuador. Okay, here's another thing about Ecuador I'm sure you never knew. Get this now. Goldman Sachs, yes, Goldman Sachs, gave Ecuador 400 million US dollars in exchange for part of the country's gold reserves.

[10:31] So all you expats who found your little paradise in Ecuador, are you okay with that? I'm sure over in Ecuador, it's kind of a dirty little secret. And if the average guy in the street knew about it, he'd be truly pissed off. I mean, come on, what sovereign country in the world is okay with a huge corrupt financial institution like Goldman Sachs owning a chunk of their national patrimony? I mean, come on, that means the government of Ecuador is actually beholden to Goldman Sachs. Just like the US is beholden to China for holding all those T bonds, right? But it's a double whammy for Ecuador. They're on the hook to China for most of their national debt too. Okay, and while we're talking about South America, let's talk about Uruguay for a second. A place, by the way, five or ten years ago,

[11:18] I really did recommend. But now, again, especially after you hear this, I don't think it should be on your list anymore either. For such a small country, it's got a huge percentage of people working for government. At last count, about 30%. That's like one in three people working for government. It's almost impossible to believe, but it's true. Now, Cuba is the only other country in Latin America that beats it by far. And half the people, that's 50% of the people in Cuba, work for the government. Now, the thing is, in Latin America, as in the US, everyone else's dream is to work for the government too because they pay twice what the average salary is in the private sector. And on top of that, you can be a lazy-ass slug and you'll never get fired. Sound familiar?

[12:05] However, down here in Latin America, you gotta love the fact that government employees are fat, lazy slugs. For us, gringos and expats, it really has its advantages. Sure, it takes a long time and a lot of lines to stand in if you're gonna do anything at all having to do with the government. Like, for example, starting a business and getting some permits, getting a driver's license, filing your taxes. But remember, that's what your lawyer is for. Once you get over that hump and you get your paperwork and let's say you start a brick and mortar business, it really is smooth sailing from there. Meaning, once the paperwork's done and your doors are open, chances are you'll never ever have to deal with the government again. I mean, come on, they'll never come out and inspect you, that's for sure, unless, of course, some of your clients die from

[12:50] ethyl alcohol poisoning or something. And even then, once is often not enough. You'd probably have to have multiple fatalities before anyone from the government inspection office comes and pays you a visit. Now, the exception is if you're well on the gringo tourist trail like in Costa Rica. In that case, the local governments and municipalities are known for picking on gringo establishments quite a bit. Since when you're on the gringo tourist trail, you're known strictly as a dollar sign to the locals. And of course, that includes government officials, especially when Christmas time comes around when they know gringos are soft touches for a little bribe or extortion money. And I know, because it happened to me 20 something years ago in Costa Rica. But you knew that already, right? All right, all right, back to Uruguay.

[13:36] Now, as you might imagine, with a third of the population working for government, socialism runs rampant, in fact, it's practically galloping. Since a third of the voting population counts on the government for their jobs, they always vote for scumbags who promise even more government. Now, where have I heard that before? Hmm. So Uruguay's got creeping socialism, but you can't exactly say it's on steroids. That would be Venezuela. The fact is, all Latin countries are basically socialist, as are all countries in the world these days. It's human nature for people to vote for the scumbag who promises them the most handouts from government. So how far is Uruguay down that path? Well, it's beyond what most long-term expats I know are willing to tolerate, that's for sure.

[14:22] And you don't have to believe me on that score. Just go down there and live for a while, get your boots on the ground, you'll see what I mean. Anyway, to drive the point home a bit more, here's a sad news article that just came out of a big Buenos Aires newspaper, entitled, Uruguay bans all cash payments over $5,000 as of next year. And by the way, that's all cash payments on anything. And what that means is, if you decide to give, let's say, $10,000 to your brother or your mother in cash, you're breaking the law. And if you break the law like that, they'll confiscate your cash and hit you with a big fine too. And with multiple offenses, you go to jail.

[15:09] So I'll read this article now, and you tell me if you want to move down to little Uruguay. Talk about big brother. Anyway, Uruguay yesterday sanctioned its financial inclusion law, which will ban cash payments worth more than $5,000 US as of May 1st of next year. Property transactions and car purchases, for example, will thus have to be made through banking mechanisms only. That means every transaction over $5,000 will now be recorded and registered. This measure will especially affect thousands of Argentines who have snapped up properties across the river plate recently, primarily in the summer favorite destination of Punta del Este.

[15:56] According to the Uruguayan daily, El Pais, if a property is bought with funds located in another country, the deeds will have to include details on how the transaction was made, including account numbers and the names of the buyer and the bank where the funds came from. Not only that, recipients of income from rent contracts already in place before May 1st of 2015 will have to declare a bank account and all the pertinent details of that account, to which the funds should be deposited. Then it goes on to say, management firms, lawyers and notaries fees, as well as the commissions of real estate agencies, will also have to be made electronically,

[16:43] should they exceed the $5,000 limit. In addition, all taxes will have to be paid electronically from now on regardless of the sum that is owed. In a press release from the Uruguayan government, the law was said to have been enacted to make financial operations more transparent. The measure was partly designed to improve the country's credit ratings too, said a government spokesman. Say what? Now if that isn't government claptrap for you. Yeah, and that's me saying that. Anyway, the article goes on to say, Argentines have long flocked to Uruguay for their tax evasion maneuvers. Due to their neighboring country of Uruguay's, traditionally more lenient controls.

[17:29] But now the tax evasion phenomena was augmented by the recent severe restriction of Argentine domestic US dollar holdings. Then the article goes on to name some recent high profile tax evasion cases, where Argentine citizens were caught stashing US dollars in Uruguay. Most recently, star tennis player Juan Martin del Porto was confirmed this week to be under investigation for alleged income tax evasion that cost the state coffers more than a million pesos. The judge in the case will look into whether de Porto diverted revenue from advertising and cash prizes as a tennis player from tournaments to a company set up by his parents in Uruguay. And in another case, just this August 12th,

[18:17] agents working for the Federal Public Income Administration, with a little help from a custom sniffer dog, found $86,500 hidden by an Argentine who was trying to leave the country for Uruguay. The passenger was carrying the cash in a backpack and was about to leave the Bukebas Ferry terminal in Buenos Aires for Colonia del Sacramento, Uruguay when apprehended. So what's my take on this? Well, you know, even in the first world, you can pay cash for just about anything. There's no law against it, at least I don't think there is. Not yet, but it's going the way of Uruguay for sure. That said, I know that some places of business where you live up in Boston or Cleveland or Seattle won't take cash over a certain amount.

[19:03] Like it's somehow not as good as a check or credit card. Duh. And I know banks up there have a small limit on the amount of cash you can deposit or take out, to which I say, screw them and keep your cash at home. Bury it in your backyard if you have to. I mean, hell, you're getting about zero interest on it anyway, right? So why bother giving it to those crooks? If banks pay no interest, why do people give it to them? What do they take us for? Morons? I guess so. So then, where do you have your excess cash? What expat Eddie calls running money, by the way. Where do you have yours? In a hat box up in the attic or in the bank at zero percent interest? That should be a no-brainer, but is it?

[19:50] Don't you see that that $5,000 cash limit law in Uruguay is a lot more restrictive and big brother-ish than even the currency restriction laws that you're subjected to up in the States? From what I understand, you're still able to buy, let's say, a car from your neighbor or your friend or your mother or even give away large cash money gifts to your kid or even a street bum, if you like, in any amount up in the States, at least for now. People might think you're nuts, but you can still do it, I think. Though I understand if you're driving around in the States with, let's say, $5,000 or $10,000 in your car, even if it's on the front seat right next to you, with the bank wrappers on it, and you get pulled over for some reason, the cops will probably take your money and you'll never get it back. Or you'll have to jump through hoops

[20:36] and even go to court to get it. In fact, there's thousands of cases like that all over the internet, especially lately. Look it up, and it's happening in Europe too, especially at border crossings. However, if you're down here in Latin America driving around with $5,000 or $10,000 in your car and you get pulled over and the cops see it, chances are great that if you're off the gringo tourist trail, your gringo advantage will kick in heavily and you'll be able to walk away with the dough, but you'll probably have to tip the guy of Benjamin. Or three. However, if you were a local Latin and you had $5,000 or $10,000 in a car with you, now there's a completely different story. The dough would probably disappear and you'd never hear about it on the 6 o'clock news. And the driver, while there's no telling what's going to happen to him, depends on the circumstances. Now you hear about stuff like that

[21:22] every once in a while down here, but it hasn't, in my experience, happened to any gringos, only locals. Maybe because some of them, the narcos mostly, are dumb enough to haul around large amounts of cash, while still pulling the usual Latin driving stunts. You know, and I've mentioned this before, running red lights and stop signs, cutting across three or four lanes at a time and going down the wrong way, down the one-way street, all that stuff. In fact, just last week, I was in a big bottleneck traffic jam and it looked like there was an accident and I thought someone was dead on the road, as usual. Generally, when that happens, it's a motorcyclist or a pedestrian. In any event, when I got close enough to see the police barricades, I noticed there were no dead people

[22:07] and no smashed up cars. Oh, but there was a car pulled over all right and torn apart, an expensive black SUV with heavily blacked out tinted windows, which is completely normal to see when you're driving down here in Latin America. Later on, I found out it was a red-letter day for those traffic cops and a very bad day for the driver of that expensive car. Turns out that cops pulled over that big SUV for more than likely breaking multiple laws at once because you don't get pulled over down here for just one simple infraction. One is almost never enough for a cop to make the effort. And upon questioning the driver and giving him a ticket, he just seemed way too nervous. So they checked the car out

[22:53] and discovered five million U.S. dollars stashed in the back of that car. And again, this was on a pretty busy road, a two-lane highway. And what happened to the driver? Well, get this. He just took off running and was never heard from again. At least, not in the last week anyway. But I'm sure he's probably dead by now since it had to be connected to some kind of narco or drug deal. A really big drug deal. Now, you gotta figure anyone responsible for driving five million dollars around and losing the load along with the car, how much you want to bet that guy's not in the bottom of a ravine right now. Oh, and here's another thing. Of course it made the news because, you know, five million bucks

[23:38] is not like five or ten thousand. That's for sure. But here's the word on the street. There is a rumor going around that there was more like seven million bucks in the back of that car. So in the end, everyone got paid. If you know what I mean. Which is another reason why everyone wants to work for the government down here. And by the way, my advice is that you never drive around with large sums of cash in your car anyway. Why take a chance, you know? Though, some people have a brick and mortar business and they're going to be hauling big sums of money around. No, not five million, but maybe a couple of grand at a time anyway. And if you come down here and start a business, that very well could be you. And I'll tell you, ex-pat Eddie knows best on that count since he's had so many restaurants

[24:23] and has dealt in so much cash. And he's got two very good suggestions for people who have to carry cash around in their car down here in Latin America. He says, one, change your route and your times of transport weekly or even daily. And two, keep your mouth shut. Don't tell anyone your actual transport plans. Not your wife, not your mother, not your priest, not your dog. And like ex-pat Eddie says, a big mistake that a lot of Latin businessmen make is that they hire a bodyguard to ride with them when they're hauling cash. And when they get robbed or knocked off, it's always because that guy was connected with some bad boys. Or he opened his mouth with his drinking buddies as men tend to do.

[25:10] Down here when something bad happens, it's always the bodyguard that's the suspect, not the butler. So remember, if you hire a guard with a gun to accompany you, even if he's from a so-called certified bonded security service, remember that guy's probably only making about four or five hundred bucks a month. Note that down here in Latin America, the top echelon bodyguards, I'm talking about the ones that guard presidents only make about a thousand bucks a month. And how do I know that? Because I know a guy who does that for a living. Okay, I know, I know. I really got sidetracked on that one. But speaking of Uruguay, after all I've said about it today, I think you know how I feel about becoming an ex-pat there. Okay, now if you remember a couple of shows ago I was talking about

[25:55] that big bad old train from Nicaragua going all the way up through Mexico that's dropping off all those illegal aliens so they can escape through to the states. Remember that train? It's called the Beast. Now the fact is, five Latin journalists who heard about that stowed away on that train to see what it was like. One of them working for a paper in Miami, no less. And what they found out is that this train brings more than a half a million illegal aliens a year all by itself, just on that one train coming from Nicaragua. Anyway, this train meets up with other trains and network of trains in Mexico. And the Mexicans call these trains train de la morte, death trains. And here's another thing

[26:40] that's well known because remember, the majority of illegal immigrants in the states get caught at one time or another and shipped back and then they come back again. It's like a revolving door. So they have stories to tell and I've heard some of these stories direct from the horse's mouth. A percentage of that money that illegals pay coyotes to take them across always goes to corrupt US border guards. They're paid not to pop off a few rounds at the coyotes and their charges as they sneak into the country. So what are the current rates? What are the coyotes charging? Well, if you're a Mexican, you can go all the way up to the edge of the border completely legally. All the coyote has to do is get you through to a safe house on the other side. They charge anywhere

[27:26] from 500 to 1,000 bucks. I'll give you more details on that next time, so stay tuned. 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 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.