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Simon Black Explains How To Diversify Sovereign Risk

Tyler Durden's picture


Simon Black, aka Sovereign Man, who recently has been a frequent guest on the pages of Zero Hedge, was interviewed by The Daily Crux, and explains why in a world of relentless printing of credit money, and thus a surge in global sovereign debt, sovereign risk is rapidly becoming the first and foremost risk factor for investors. Courtesy of his extended travel experience, Black, who visits 50 countries each year and actually performs due diligence, summarizes his thoughts on all those pundits who base their macro views on a tourism brochure: "I spend my life trying to put my boots on the ground in as many places as possible to really see with my own eyes what's going on in the world and what the opportunities are, rather than take some idiot's recommendation on Fox Business News who doesn't know his ass from his elbow." In addition to getting some more background on Black, who is oddly low-profile in a world filled with media whores, here is one chance to evaluate key risks vicariously courtesy of a man who actually has "been there, done that."

Below is the introduction from Daily Crux editor Justin Brill:

As you take time to relax and reflect this holiday season, we hope you'll also take a moment to think about the coming year.

With America's ballooning debt, the Federal Reserve's reckless "money-printing," and our government's increasing intrusiveness into our daily lives, the risks to you, your family, and your wealth have never been greater.

So this week we sat down with Simon Black of Sovereign Man. Simon and his team specialize in asset protection strategies and global financial intelligence.

Read on to learn why asset protection is no longer just for the very wealthy, but something everyone needs to seriously consider.

Good investing,

Justin Brill
Managing Editor, The Daily Crux


Full Daily Crux Sunday Interview: You're ignoring one of the biggest risks in the world right now

The Daily Crux: Simon, longtime readers of The Crux have seen a lot of information from folks like yourself, Casey Research, and even our colleague Porter Stansberry, about the importance of asset protection.

Yet many still haven't taken steps to protect themselves and their families. Can you explain why this is something that everyone should consider right now?

Simon Black: The way I always explain it to people is... let's say you're an American. You're a U.S. citizen, you're a U.S. taxpayer, you live in the United States, you work in the United States, and you own your property in the United States. Your savings are in the United States. If you own gold, you hold it in the United States.  You have investments in the United States. You structure your company or your business through a corporation registered in the United States. 

Now imagine just one little thing goes wrong. Maybe some bureaucrat who works for a three-letter agency decides that you violated some obscure law. Or maybe your neighbor's knucklehead kid falls into your swimming pool. There's a whole host of things, big or small, that can happen.

If you have all of those assets and interests tied up in the United States, you're in big trouble. Any one of these people, whether it's a judge or a bureaucrat, can just click a couple keys on their keyboard to freeze your accounts and confiscate your assets.

In a lot of these cases, particularly when they're administrative cases, it's a "guilty until proven innocent" system.  What they do is basically assume you're guilty, take away all your assets with which you could prove your innocence, and say, "Well now that we think you're guilty, it's up to you to prove that you're innocent." It's a really scary proposition.

This is what we call sovereign risk. Sovereign risk is when you have all of your assets and interests in one basket, in one country. And as you can see, it's not just a concern for the very wealthy, like many people assume. Nor is it only a concern for criminals, "gold bugs," or those who think America is headed for a dollar crisis... though that's a serious concern as well.

This is something everyone needs to consider... Ask yourself, "What would I do if this happened to me? How would I put food on the table for my family?"

The simple solution to this problem is to diversify... to just spread that risk around a little bit. Fortunately, there are many legitimate options out there, and that's what we focus on at Sovereign Man.

So if you look at the same scenario again, where your neighbor's knucklehead kid falls into your swimming pool and somebody wants to sue you and take your money, take over your business, and take your assets... what happens if your money is in Hong Kong? What happens if your business is structured in Nieves? What happens if you own foreign property instead of U.S. property, and it's owned through a trust in the Cook Islands?

With these types of things, nobody can come after you anymore.

And I'll tell you, in an environment like this – where society is increasingly litigious, and government and individuals alike are increasingly going after people that have any assets whatsoever – you'll sleep a lot better at night knowing those assets and interests are diversified... knowing they're spread across different geographies where nobody can really touch them anymore.

Crux: For readers who may not be familiar with your work, can you give us a little background on yourself and your expertise in this area?

Black: Honestly, I don't like to talk about my background very much. I went to West Point and I used to be an intelligence officer in the army and all that kind of thing, so people try to associate me with some spooky CIA guy, which isn't the case at all.

I guess the easiest way to put it is I'm an international investor and entrepreneur.  I'm what some people would consider a permanent traveler. 

I have no fixed home, I speak multiple languages, and I travel all over the world. I've been to hundreds of countries. I probably go to 50 countries each year. Just this year I've been to six continents. 

I do business all over the world.  I buy property, I invest in things, and I start businesses...  The more interesting and more exotic, the better.

Basically, I spend my life trying to put my boots on the ground in as many places as possible to really see with my own eyes what's going on in the world and what the opportunities are, rather than take some idiot's recommendation on Fox Business News who doesn't know his ass from his elbow.

That's been my life now for the last many years, so I've developed real world expertise in this area. And I've seen that while things in the West are really difficult, there's literally a world of opportunity out there.

Crux: If there are some readers out there who have decided to take action and protect their assets, how should they begin? Can you give us a couple simple first steps that people can take to get started?

Black: Well, first – and I just told my readers this the other day – I think your colleague Porter Stansberry has put together a very good overview of the importance of asset protection today – along with the basic steps everyone needs to take – in his "End of America" video. I thought he captured it really well, so I've been recommending everyone watch it. [Editor's Note: If you haven't seen the video, you can view it here.]

Now assuming you've taken care of those basics – and I'm sure many of your readers already have – you can begin to focus on sovereign risk. After all, what's the point of making all this money in the stock market or having a bunch of gold and silver, if your government increases tax rates exponentially, starts seizing assets, or decides to make gold illegal again?

To me, that sovereign risk is the biggest risk you face, and so the thing to do is to start diversifying those assets and interests overseas. And I think the best and easiest way for everybody to start doing that is with a foreign bank account.

There are three big reasons why you want to do this. The first is that you instantly get more control over your own money. You can free yourself from the risk of confiscation or having all your assets frozen, because now some of your accounts are overseas.  If the United States, for example, imposes capital controls, you won't be subject to those.

The second reason is that many foreign banks are actually much safer.  Many banks in the United States are still technically insolvent, but you have banks in places like Singapore, for example, which has never had a bank failure, and doesn't have to pump up its banks with funny money. These are banks with very strong and healthy balance sheets, where you're much better off banking than you are in the United States.

And the third reason is you get a lot of exposure to things outside of the U.S. dollar, which – as most of your readers probably understand – is not exactly a sound currency these days.  When you bank overseas, you get into some other currencies that have better fundamentals, so it's an easy way to diversify your assets from the U.S. dollar. 

Best of all, it's surprisingly easy to do. It does take a little bit of legwork to track down and contact  various banks, but almost anyone can do it. We talk about this sort of thing all the time in our letter. And of course, for anyone who wants to keep things as simple and easy as possible, we teamed up with Casey Research to create our Going Global report, that details which banks to call and exactly what to do.

Crux: Sounds good. Any parting thoughts?

Black: Well, the biggest thing I try to get people to understand is much of the western world – and the United States in particular – tends to be a very insular place... sort of inward looking. So it's easy to be influenced by reports from the media and government and think there's doom and gloom all over the world.

But the fact of the matter is, one of the biggest "big picture" things that I would encourage people to understand is the world is a huge place, and there's actually a ton of opportunity out there. I would encourage people to open their minds to the opportunities that are overseas, and not just for asset protection or diversification.

People that are unemployed, for example, and can't find a job... they should realize that there are many places in the world where they could go and find a job right now, whether it's Singapore, Hong Kong, Mainland China, or Chile. There are just so many places where professional, talented people can go and find a job. 

If you're looking for really fantastic investment opportunities, or you're an entrepreneur looking for great business opportunities, why not take a look at one of the thriving economies overseas? Places where the governments make it really easy for you to do business, and they don't tax and regulate you like crazy... There are several of them around the world. 

So I'd really encourage people to just start looking at opportunities overseas. The things they've heard on television and in the newspapers, most of that stuff's not true.

When you actually go and travel overseas, and see with your own eyes, you find out most places are not anything like what you expected, and most of the time it's a fantastic awakening.

Crux: Thanks for talking with us, Simon.

Black: Thank you. Good talking with you.


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Sun, 12/26/2010 - 15:28 | 830644 lynnybee
lynnybee's picture

I like this Simon Black / Sovereign Man !!  ..... what a life to be able to visit 50 countries a year .......

Sun, 12/26/2010 - 17:54 | 830790 Quixotic_Not
Quixotic_Not's picture

"Against the insidious wiles of foreign influence, the jealousy of a free people ought to be constantly awake; since history and experience prove that foreign influence is one of the most baneful foes of Republican Government...Tis our true policy to steer clear of permanent Alliances, with any portion of the foreign world." ~ George Washington

"Bad men cannot make good citizens. A vitiated state of morals, a corrupted public conscience are incompatible with freedom." ~ Patrick Henry

"Americans [have] the right and advantage of being armed, unlike the citizens of other countries whose governments are afraid to trust their people with arms." ~ James Madison

Mon, 12/27/2010 - 12:56 | 831683 DosZap
DosZap's picture


All truisms in their day, now we are the melting pot of Pussydom, and fascist lovers.

Sun, 12/26/2010 - 15:30 | 830649 jimgcpa
jimgcpa's picture

This guy's a blowhard.  If he goes to 50 countries per year, he can only spend an average 7 days per country.  Chances are he doesn't travel every single day of the year so his avg. is probably more like 2 or 3 days in each country.  And he claims to know everything that is happening in those countries by a 2 day visit?  LMFAO!!!!!!

Sun, 12/26/2010 - 17:20 | 830768 Bearster
Bearster's picture

Anyone who can say in one breath "paper money is worthless" and "sign up for my premium service" (which is paid for in paper money is a blowhard, or a hypocrite.

If Black manages to convince anyone that "investing" is a matter of breezing into a new country, drinking for a few days, giving money to someone, and blowing out on the next flight, then he has done that person a grave disservice.

I should say that agree 100% with his assessment that everyone should diversify their sovereign risk.  There was an old parable about putting your eggs into different baskets.

But I think he is way too US-centric in his assessment of the coming disaster.  Every paper money system including Singapore is going up in smoke.  The world's reserve currency will burn down last.  Short the USD (or not!) accordingly.

Mon, 12/27/2010 - 00:02 | 831178 virgule
virgule's picture

I like his writings, but I tend to concur with you on that one. You haven't even counted the jet-lag between these 50 countries. I travel to 10-12 countries per year, and I can assure you, it's quickly tiring.

How much real business can you get done in a 3-day visit anywhere? You can do some fact finding, but you're not going to build a solid business foundation.

Maybe he's a financial advisor - tons of those traveling around the world trying to pick some crumbs from your pocket ;-)

Mon, 12/27/2010 - 15:41 | 831959 pazmaker
pazmaker's picture

Although, I don't agree with some of your comments I have seen on other threads, you are spot on here.

I don't know know why you were junked, maybe people have a hard time with the math?    365 days/50 countries = 7.3 days per country  plus travel time.... means this guy spends at maximum 4-5 days per country and he has businesses in how many countries?

If these businesses are going so well why are you trying to sell me your newsletter Mr Black?

Sun, 12/26/2010 - 15:35 | 830658 lynnybee
lynnybee's picture

! Porter Stansberry, End of America video ...... I clicked on the link in the posting & get nothing !   also, I googled it & when I click on that link get nothing !   DID THE U.S. GOVERNMENT CENSOR THIS VIDEO ? or, am I not knowing where on the net to find this ?

Sun, 12/26/2010 - 15:42 | 830663 French Frog
Mon, 12/27/2010 - 13:48 | 831757 Bananamerican
Bananamerican's picture

i'm as gloom/doomy as the next but my B.S. detector went off listening to Porter's presentation. He "padded" things...Is that really even necessary in 2010/11?

Sun, 12/26/2010 - 15:40 | 830660 fiftybagger
fiftybagger's picture

The Petrodollar Explained


Sun, 12/26/2010 - 15:41 | 830661 centerline
centerline's picture

When the SHTF, I am not sure very many places won't be hit hard.  The last place I would want to be is in a major population center - Singapore or Hong Kong would scare me in this regard.  Got a feeling that China is going to get pounded straight back to the stone age too.  South America?  Hmmm.  Maybe...

Sun, 12/26/2010 - 16:36 | 830729 BorisTheBlade
BorisTheBlade's picture

Shit has already hit the fan and being distributed in slow motion all over the place. The safest place is behind the fan, not in front of it, thus going with the flow isn't a good idea either - think of places very few think of, quiet, outside of mainstream attention and limelights. Comfortable to park some money, relatively hard to get in and relatively easy to get out. Not sure if usual tax-friendly jurisdictions would do the job this time - government is too hungry for taxes.

Sun, 12/26/2010 - 15:48 | 830669 lynnybee
lynnybee's picture

thank you dear friends .... believe it; i'm not that computer savy & am still learning / love ZEROHEDGE ... I learn so much.  Holiday regards !!

Sun, 12/26/2010 - 15:51 | 830675 French Frog
French Frog's picture


We're all friends in here


Sun, 12/26/2010 - 15:52 | 830676 RobotTrader
Sun, 12/26/2010 - 16:03 | 830689 sabra1
sabra1's picture

being canadian, i will gladly allow all of you to place your money into my bank account! yours truly, M. Bezler.

Sun, 12/26/2010 - 16:09 | 830696 DosZap
DosZap's picture


Your not foreign, your part of the beast as you will soon see.

Not a nickels diff between the two.

Sun, 12/26/2010 - 16:21 | 830711 Amish Hacker
Amish Hacker's picture

Canadian accounts (not your personal account, sabra) seem like a good idea, but I wonder... It's not against the law to open a foreign bank account, though it's illegal not to report it on your 1040. In other words, your assets won't really be hidden from the US government's grasping claws when the shtf. And I'm not sure it's even possible for Americans to open a brokerage account in Canada (this is based on what I was told a couple of years ago, though, please, someone correct me if I'm wrong).

If you're going to try to stash assets abroad, be sure it's in a country that won't just roll over and cooperate with the IRS. "Neutral" Switzerland? Don't make me laugh.

Sun, 12/26/2010 - 20:52 | 831018 ZeroPower
ZeroPower's picture

You need a Canadian address to be able to do so. Doesnt matter if its a vacation home up North or your aunt's place...

Mon, 12/27/2010 - 06:27 | 831382 Azannoth
Azannoth's picture

The only sure way of escaping the IRS is to stop being a US citizen

Sun, 12/26/2010 - 19:40 | 830948 Blano
Blano's picture

Canada is the 51st state.  Sorry.

Sun, 12/26/2010 - 16:11 | 830698 woolybear1
woolybear1's picture

yes, a blowhard. if things get that bad there will be no place to run. the usa will probably remain the best the glue factory.

Sun, 12/26/2010 - 17:59 | 830811 dizzyfingers
dizzyfingers's picture

Not making a pun...but if the like-minded stick together we'll all be better off.

Sun, 12/26/2010 - 16:26 | 830717 Glasgow Gary
Glasgow Gary's picture

Black, who visits 50 countries each year and actually performs due diligence, summarizes his thoughts on all those pundits who base their macro views on a tourism brochure.

I'm sorry but do people not spot the trademark newsletter techniques that Black uses to attract subscribers? I think what you mean is: Black writes about visiting other countries and peppers his essays with standard fare such as "visiting friends in Buenos Aires, doing some business, and oops I'd write more but I have a plane to catch." C'mon. Who are we kidding? And besides, Black's take on the current macro situation and developments in opther countries is hardly unique. We all agree the USA is in deep trouble. But so are most of the other big regions in the world. Post-collapse (if that's your thing) the natural resources of North America are actually huge. What's the relationship, btw, between these newsletter writers and ZH?


Sun, 12/26/2010 - 18:38 | 830856 Motorhead
Motorhead's picture

Black claims he as a graduate from West Point and a former MI officer.  The fact that he's not still in the US Army shows that he didn't totally "drink the Kool-aid", so I guess that should count for something.

Mon, 12/27/2010 - 13:51 | 831764 Bananamerican
Bananamerican's picture

fair questions GG...

Sun, 12/26/2010 - 16:59 | 830748 malikai
malikai's picture

I saw things as getting bad in the states in 01 and by 04 I had decided it was time to go. At the first opportunity I elected to transfer to the London office of the company I worked for. I've never looked back, but I do miss the states from time to time.

1. Sovereign risk is a big deal. Will all of you shoot your way out of the FBI raiding your houses for gold when the next gold standard is set and your gold is confiscated "to save the nation"?

2. Being tied fully to the US makes you part of the system. If you disagree with the politics and there is a drastic shift to the political right (under whatever guise), everyone on this board is likely to be considered a "domestic extremist" or some other machination of political enemy, and may find themselves in a camp somewhere some day. Being able leave on the outset of troubles may just save your neck. And don't count on Canada and Mexico being suitable refuge, especially if you haven't already made arrangements. Being financially prepared and having a plan ahead of time, combined with recognizing when to go may be the best thing you can do for your family.

3.  How would you really deal with the bands of gangs running around robbing and killing if TSHTF? The police won't last very long and even the army will be powerless when they suffer desertions due to clearly immoral orders, famine, and worst of all, having no value in their pay or benefits.

4. Do you want your children to grow up in 1920s Germany? Do you like the prospects of your children coming of drafting age just as the next world war may begin? We all know that war and Keynesian economics go so well together.

I personally would rather give my children more choices. In the worst case scenario, they may be part of the survivors, if we are lucky. In the best case scenario, they may have an order of magnitude of the opportunities than I have had and will be able to fully see themselves as citizens of Earth, rather than some single country which may at any time, turn against them. They may in fact be truly free.

Sun, 12/26/2010 - 17:38 | 830781 banksterhater
banksterhater's picture

The UK has been the best US military partner in crime, not a record to be proud of, continuing to this day. If there are bank runs, they will shut all access to accounts in other countries for Americans. I have a friend in Costa Rica, they impounded his account to pay US taxes, froze it last year, imagine if you're in any international bank, you are screwed, and the UK will be first to comply, Blair is just as guilty of War Crimes and the US, now he's fixing mideast peace LOL! fool asshole.

Sun, 12/26/2010 - 17:57 | 830808 malikai
malikai's picture

I doubt a run on treasuries would cause the US to seize foreign accounts held by overseas Americans. Such a task would be very expensive, large, and wouldn't yield very good results as there isn't that much American wealth overseas relative to the overall economy. This not to mention the fact that many of the elite themselves have put some of their own wealth overseas. If you can show me a multimillionaire who does not have a swiss or isle of man account, or gold holdings overseas, I'd eat my own tongue. Now, do you think the Rothschilds or Morgans or even Paris Hilton would quietly agree to surrendering their only remaining tangible wealth? I doubt it.

Sun, 12/26/2010 - 18:02 | 830815 dizzyfingers
dizzyfingers's picture

I think you're overlooking the fact that you'll be alone, without funds, with no one to turn to, no money for a lawyer if any local lawyer would take your case, and don't forget much of the world operates on the legal system that presumes guilt until the person proves innocence. How do you do that if you have fled your own country?

Sun, 12/26/2010 - 18:10 | 830825 malikai
malikai's picture

You have just described the US legal system to me.

Sun, 12/26/2010 - 17:12 | 830756 SF beatnik
SF beatnik's picture

No one ever mentions Pugsley's Alpha Strategy. Buy rice and beans, now, while they're cheap. Hunker in your bunker, right here in the US.

Pugsley says every American should store 20,000 rounds of ammo. And he offered much advice regarding what items can be stored for future use. Walmart is still giving stuff away virtually for free. You won't need so much cash or gold if you have all the toothpaste, underwear and socks you'll ever need.

Three months ago I bought an '07 cargo van. I could live in it if I had to.

Some of you guys at Zero are rich. But many of us can't afford to just leave for Paris, much as we might like to.

Tip of the day: buy a storage freezer and fill it with food items you like that don't require refrigeration. (They'll keep you going for three months. If the grid goes down, it might stay down. Few survivors....)

And have a sense of adventure. This could fun.  More fun that sitting in  in some crappy corpo cubicle waiting for Saturday.


Sun, 12/26/2010 - 17:52 | 830792 dizzyfingers
dizzyfingers's picture

Nice reality check. I've checked around a bit, have been around a bit, and believe that the best plan is to stay here, do some of the things you mention (you didn't mention stockpiling water -- that's important) and either sitting tight or if located in a "problem" area (near big city/cities), perhaps retreating somewhere more rural, with worldly goods in tow or in van. South America, Asia, islands anywhere, Europe, Mexico, Canada? Nope; unless one has relatives, no one in any of those places gives a rat's ass about any of us and wouldn't care if we lived or died. That might be true some places in the US too so think carefully about your retreat, but at least here we are citizens together -- whatever that may come to mean -- and will not automatically be perceived as outsiders. Being locked out might not serve the purposes of those who find themselves out there needing to get back in.

Think Frances Marion and suchlike.

Sun, 12/26/2010 - 18:03 | 830816 huggy_in_london
huggy_in_london's picture

You people have been watching too many hollywood movies.....

Sun, 12/26/2010 - 19:23 | 830922 doolittlegeorge
doolittlegeorge's picture

you can never watch too many Hollywood movies.  Wrong "lesson" from said movie could be a problemo as they say.  Still "just because you're paranoid doesn't mean they're not coming for you."  Which reminds of a movie script i've been working starts with this guy who....

Sun, 12/26/2010 - 17:17 | 830761 if
if's picture

Spending only a few days in each country helps him conclude that Cuba might be ideal for expats.  A country where the sovereign risk extends from your assets to your ass.  

Sun, 12/26/2010 - 17:30 | 830773 Fake Jim Quinn
Fake Jim Quinn's picture

If the sh*t hits the fan the USA will default on foreign debt as the initial step. If USA defaults on foreign debt, anyone worry that those governments will seize private assets of US citizens? I believe they would, with relish. But I could be wrong

Sun, 12/26/2010 - 17:43 | 830785 banksterhater
banksterhater's picture

OF COURSE! Americans won't be safe anywhere, they are linking banks internationally, eventually Americans will have a target on our foreheads in any country anyway, it's almost that way already. That's what the oligarchy wants, serfs making asian wages deep in debt and agreements with countries like Canada not to harbor us.

Sun, 12/26/2010 - 17:51 | 830793 Quixotic_Not
Quixotic_Not's picture

“Whenever the legislators endeavor to take away and destroy the property of the people, or to reduce them to slavery under arbitrary power, they put themselves into a state of war with the people, who are thereupon absolved from any further obedience.” ~ John Locke

 "No free man shall ever be debarred the use of arms...The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants." ~ Thomas Jefferson

"Those who give up essential liberties for temporary safety deserve neither liberty nor safety." - Benjamin Franklin

Sun, 12/26/2010 - 17:55 | 830799 dizzyfingers
dizzyfingers's picture

You're not wrong, and they might sieze US citizens and mistreat them in nasty ways too. Stay here; be one of the critical lovers of the USA.

Sun, 12/26/2010 - 18:04 | 830819 malikai
malikai's picture

I'd rather take my chances in the unknown than stand in the face of clear tyranny. The Jews that survived the holocaust did so because they either left Germany before it began or they were the last in line for the furnace. I'd rather be the type that left early.

Sun, 12/26/2010 - 19:20 | 830919 malikai
malikai's picture

You may be right. However, you could make it particularly hard for that to happen if you are smart with your asset placement. The point here is diversification. The idea being that if the US collapses, but Turkmenistan does not, then your wealth in Turkmenistan may still be there. Same vice-versa, or insert any other country or multiples of countries. The particular emphasis should be on a country /not/ closely tied with the US empire, which will likely weather the storm. There are many such countries on this wet rock.

Sun, 12/26/2010 - 20:40 | 831004 gwar5
gwar5's picture

I think everybody would carve up the "old" USA like a bigger version of the old Soviet Union, but with some caveats. Mainly, everybody else is going to be broke, too. But we are still the world's gold superpower. So, maybe we should secure it to the West Point facility to get the gold away from creditors, and away from the FRBNY, by moving it from their basement vault.

Our government can confiscate property, but it will be "legal" in the form of new taxes, fees, and taking of private pensions, ala Argentina. They might also give up our natural resources to creditors, which is what I thought these recent aggressive Federal land grabs were for -- collateral.

Our government currently uses other country's banking systems as enforcement to collect for the US IRS.  Our creditors could just do the same thing to us, using our banksters. The Fed, not congress, controls the brand new "Consumer Protection Agency" and this little agency instantly tracts all digital transactions each individual makes.

China could buy the fucking dip after the US equity bloodbath and they'd control USA, inc., courtesy of the Bernank.  We're not allowed to use our own coal, but they could ship our coal and gas over there.  They've already sold us down the river, why not go all the way?

If I was China, or another large creditor with an army, I would tell other countries globally to keep hands off American assets. I would take those assets for myself, or, use "diplomacy" to extract desired resources in exchange for the assets. The manuevering is probably going on now. This week, it was announced China doubled up the speed of their aircraft carrier construction, which is an announcement that sends a pretty powerful signal.

The other thing to consider: if (when) the dollar collapses as the world's reserve currency, China would be positioned to get the world's resources anyway, on the cheap, due to our impotency. I think they just want resources for the next century. If their domestic market develops, export prices won't matter so much.

The North Koreans will still be eating dirt in ten years but we'll think of them as middle class by then and be asking them for recipes!



Mon, 12/27/2010 - 00:15 | 831188 trav7777
trav7777's picture

riiight...the mighty chinese navy.

China's growth opportunity is in exporting cancer and pollution.

Do you idiots REALLY believe it is so difficult to set up polluting factories with old technology in order to manufacture plastic shit?  I mean, SERIOUSLY?

Any 3rd world nation will suffice for this; China has nothing special.

Mon, 12/27/2010 - 14:13 | 831800 Bananamerican
Bananamerican's picture


Mon, 12/27/2010 - 06:20 | 831374 malikai
malikai's picture

The North Koreans will still be eating dirt in ten years but we'll think of them as middle class by then and be asking them for recipes!

Well, if you're interested. I have a wicked recipe for house cat and grass stew.

Mon, 12/27/2010 - 08:37 | 831429 Snidley Whipsnae
Snidley Whipsnae's picture


The concept of diversification went so well for American buy and hold stock investors that now we are told that we should buy into foreign securities/businesses when all fiat currencies are in extremis.

I think PMs and ride it out are the best options for the vast majority of least, those of us that cannot afford to do our own due diligence in the markets that we are being encouraged to invest in.

If it sounds too good to be true, it usually is.


Sun, 12/26/2010 - 18:03 | 830817 gwar5
gwar5's picture

We knew it already.....

"Just imagine how much lower the US stock market returns will be once Bernanke is forced to find his monetary manhood.  When that happens it is going to be a bloodbath in the US.”  --Michael Pento, Dec. 2010


Yikes! ... And when The Bernank finds his monetary manhood he'll no doubt Bang Dae-Ho.

Mon, 12/27/2010 - 14:15 | 831801 Bananamerican
Bananamerican's picture

so Go Long Shalom Dong!

Sun, 12/26/2010 - 18:15 | 830835 Landrew
Landrew's picture

I am going to be working in La Serena, Chile for several months in the spring. I thought I might look at property there. Any ideas on this? I have set up a few dates with several ladies hoping this would get me insight into living there a little faster.

Sun, 12/26/2010 - 18:16 | 830837 sensei
sensei's picture

I am not one who envisions a MadMax type collapse of everything.  But for those who think that is what is coming Chris Martenson has the best advice I've seen.  Small, closeknit communities in fertile agricultural areas with liveable climates will be your best bet. (Rural Georgia anybody?) 

10 acres in the middle of nowhere in the Montana wilderness is NOT where you want to be if everything collapses.  Near unliveable winters without the miracles of oil, short growing season, nobody near enough to establish trade and barter, etc...  The hardy would survive, but it would be a tough life.

One other thing Chris doesn't often mention, but I think he is should is to look for areas where people tend to be self-sufficient.  The area I live in now fits Chris's community description perfectly.  The only problem I see is the HUGE percentage of the population that chooses to be non-productive.  Foodstamps, WIC, Medicaid, CHIPs, subsidized housing, the various Native American welfare programs, ad infinitum. 

Some of the folks on these programs are there temporarily until they get back on their feet; the majority though have no desire to care for themselves beyond acquiring a big screen TV and scoring the next hit of their drug of choice (booze, meth, weed, vicodin, percocet, etc...)  These people not only don't want to take care of themselves, they DON'T KNOW HOW. 

If/when the social safety nets break down, these folks are going to get violent.  

Sun, 12/26/2010 - 18:27 | 830849 Fake Jim Quinn
Fake Jim Quinn's picture

+1. Useful info, thanks sensei. Reading between the lines, the unproductive part of the country will want the fruits of the producers. So as much as we all like PMs, I'm afraid the best PM is lead when wrapped in a full metal jacket

Sun, 12/26/2010 - 19:52 | 830962 Blano
Blano's picture

"the unproductive part of the country will want the fruits of the producers."

That's already going on.  Old news IMHO.

Mon, 12/27/2010 - 03:18 | 831300 Dave
Dave's picture

If you own gold/silver you better invest in some lead if you plan to

keep it. As the parasites get hungry they'll get ugly. I don't envision

a Mad Max scene but something resembling the riots of the '60's met

with heavier "security" forces culminating into who knows what.

Stay low, go fast...

Sun, 12/26/2010 - 18:19 | 830842 Mark Beck
Mark Beck's picture

A few points:

Wheres the beef?

Simon Black talks about sovereign risk, but not about the mechanics of currency debasement.

Porter Stansberry talks about predicting a failure in Freddie and Fannie, and even GM as a basis of expertise, overall not very impressive. These where fairly easy balance sheet disasters. One mearly had to look to find overexposure or undercapitalization. Also, not a lot of insight as to the progression of currency debasement as a time line to justify the next "12 month" assertion. 

Sun, 12/26/2010 - 18:41 | 830861 Fake Jim Quinn
Fake Jim Quinn's picture

And the punch line with a yacht at the end, and the unattainable secret unless you buy the subsription has the same exact feel of the 2007 real estate huckers that were advertising all over the place.

We all have to be careful to separate the site contributors who are trying to legitimately help people, and those who are using legitimate fear as a way of separating people from their hard earned assets

Mon, 12/27/2010 - 04:52 | 831332 GoldBricker
GoldBricker's picture

Amen, Phony Jim.

As an expat living in Europe for the last dozen years, I can attest that it's not easy to establish yourself abroad, especially in a non-English speaking country. Black's stuff makes it sound as if all you have to do is waltz in to wherever, buy some property, start a business, etc. How easy is that to do for a foreigner coming to the US? Well, it's harder in most countries than it is in the US.

My take on it is that Black is selling a pipe dream for those who wish they could get out but don't have the millions necessary to buy their way in to some foreign residency. If you have that kind of money, you hire a local lawyer or consultant; you don't need Black.

Here's my free tip for you ZH'ers who want out: start a course in Spanish at your local community college and read up on some possible destinations. After a year of study (when you can carry a conversation), then visit one of those places. Why Spanish? Because it gives you the biggest selection of countries for a single language. Finally, don't think it'll be easy. But it is possible, and you get better at it with each passing year.

Sun, 12/26/2010 - 19:02 | 830887 Mark Beck
Mark Beck's picture

More elaboration.

Wheres the beef?

Simon Black talks about sovereign risk, but not about the mechanics of currency debasement. His comments show no real insight. Sorry, but there it is. Should probably just hang out at the bars around the FRBNY.


Porter Stansberry talks about predicting a failure in Freddie and Fannie, and even GM as a basis of expertise, overall not very impressive. These where fairly easy balance sheet disasters. One mearly had to look to find overexposure or undercapitalization. Also, not a lot of insight as to the progression of currency debasement as a time line to justify the next "12 month" assertion. Especially when you look at the slide provided showing China's divesting time line. It is clearly going to take China more than 12 months to reach such goals.

There also seems to be a little disconnect in the motive to make money, at the same time as the currency is destoryed. Making money relative to what? and what form does this money take in conversion? , and where do you live in order to make the conversion viable?

Also, the noting of economic hardship and the effects of debt to the average public were not very effectively linked to cause and effect of fiscal and monetary policy.

I guess it was assumed that the reason banks would close, is a run on these banks. But, how exactly in the precsence of the FDIC, which we know has an unlimited credit draw from the TREAS/FED.

Also, it was just assumed the FED would lose control of rates, even though I can see very shortly that the FED will be in the position to manipulate the buy of T's and just return interest to Treasury. So we would be paying interest to ourselves if the world accepted dollars in some fashion.

The FED could conceivably float all of the debt churn, albiet with some price inflation. But, we have seen that the monetary effects are historically delayed. 

I guess I was most dissipointed in PS not making a connection between state default risk and the FED. So how does this unfold?

The video had a lot of teaser linkage but without any real connection or insight.

So what is the worlds safest asset ( I will assume it is to maintain real worth)? Obviously, not US Treasuries. Well it depends.

In closing my real problem with the PS video is it presents the actions of billionaires as an indication of what you should or can do, and this is simply not reality. The options for dealing with a currency crisis are directly related to your net worth. Especially exposure to companies owned and operated in the US during a severe depression.

So everyone's plan could be specific to one's particular needs. I do agree, however that it is important to be proactive and take action.

Mark Beck

Sun, 12/26/2010 - 18:45 | 830867 lynnybee
lynnybee's picture

.....does anyone here have any idea when the official currency devaluation will occur ?   I've heard sometime this spring, another article i read said the second half of 2011 .......... i've got traveling to do in EUROPE & am worried about being "stranded" over there in the rioting ! ....... but, then, that might make a good travel story :  "Elderly Grandma Swept Away in the French Riots ! "

Sun, 12/26/2010 - 19:39 | 830942 Mark Beck
Mark Beck's picture

The larger step in devaluation will only come after crisis. But until then it happens every time the FED embarks on another QE program you are losing value. It is just a matter of when this loss kicks in.

Predicting a trigger for the crisis will be hard to pin down, and even if we did the time line could be wrong. Meaning you may not be able to act per a plan. So what is important is preparation and vigilance. When certain events happen that are critical to your plan you should act and not wait.

For me critical recent events are:

Confirmation that the FED has lost in the battle to inflate housing.

Bernanke's assertion that recovery may not be self sustaining. A.K.A. a lost battle with short term housing deflation (my guess). His assertion that he can control inflation 100%. Which is obvious BS. Based on the FED balance sheet, control over price inflation is not only unpredictable, but probably unworkable if tightening followed the same time line as expansion. No one knows the FED's power to control inflation given sovereign volitility.

Absolutely no fiscal restraint what so ever.


In looking at the macro state of affairs I am very concerned, but for some time now I have been focusing on the fiscal situation of the state's. I think we could see the system collapse from within. That is, state debt collapse.

One interesting way to look at the situation is the states can no longer afford the central government. That is, the waste in real worth is fundamentally a shift from the states to DC. The states cannot print like the FED. So the pressure will be felt at the state level first.

A reaccuring theme is to hear about how DC will have to bail out the states. But, this is not sustainable, and also does not talk to the fact that it is the states which are the real contributor to growth in the form of private tax on labor. The most efficient use of state tax on labor is to not send any of this money to Washington. In other words the historical drivers of growth no longer exist. It is now a matter of a fight for limited resources in the form of limited (finite) tax on labor. In such an environment, debasement driven GDP is meaningless.

Mark Beck

Mon, 12/27/2010 - 04:11 | 831318 Dave
Dave's picture

Very well put. I'm in complete agreement. Now in your opinion which

will be the first state to secede? Please don't say Texas.

Mon, 12/27/2010 - 09:26 | 831464 Snidley Whipsnae
Snidley Whipsnae's picture

Excellent observations Mr Beck.

I would like to add: If China is forced into a hard landing by raising rates to tame inflation, and a consequent depeg from the dollar, inflation in China will roll back onto US shores in the form of higher prices for Wally World and all things made in China.

Sun, 12/26/2010 - 20:42 | 831005 Reese Bobby
Reese Bobby's picture

First Google search for "barton biggs" & "protected both your wealth and your life" reveals The World's Most Valuable Asset is: a working farm.  Green acres is the place to be...

Mon, 12/27/2010 - 03:28 | 831303 Dave
Dave's picture

You better know how to work a farm with a mule because diesel fuel

won't be feasable John Deere ain't building solar tractors yet.

Sun, 12/26/2010 - 23:03 | 831126 lincolnsteffens
lincolnsteffens's picture

The Daily Crux/Porter Stansberry

I've got big doubts about both. I watched Stansberry's so called video. Major scare tactics to frighten you into subscribing to his rag. Didn't I read he had some problems with overstating rewards of his recommendations? The few times I looked at the Daily Crux articles I got part way through and decided it wasn't worth the time to read more.

Mon, 12/27/2010 - 03:29 | 831304 BlackSea
BlackSea's picture

You're not alone.

Sun, 12/26/2010 - 23:37 | 831154 AchtungAffen
AchtungAffen's picture

Moving to China, Chile or whatever if unemployed is nice and good, except when you have a family...

Mon, 12/27/2010 - 03:51 | 831311 Dave
Dave's picture

Reality check. If you move to another country you better have money.

Just showing up and getting a job only works in the U.S. Most countries

enforce work visas and will deport you immediately or throw you in

jail if you're caught.

Mon, 12/27/2010 - 00:19 | 831192 trav7777
trav7777's picture

yeah some of us have kids in school and can't get passports for them.  It'd have to already be madmax in order to get out.  Just need to marry a nice brazilian girl and then I can have citizenship and get property in Parana

Mon, 12/27/2010 - 03:38 | 831307 Dave
Dave's picture

You can get a passport for your kids. If you do nothing else at least

do that while you still can.

Mon, 12/27/2010 - 00:29 | 831203 proLiberty
proLiberty's picture

Swissquote has accepted accounts of US Persons.  Their web site works and has English, French and German language options. They have access to many exchanges and instruments.   see:

Mon, 12/27/2010 - 20:50 | 832496 technovelist
technovelist's picture

Yes, that sounds like a great idea.

Um, wait:

"The sub-funds enter into OTC derivative transactions which expose the sub-funds to counterparty credit risk. The counterparty for such OTC derivative transactions will presumably be Goldman Sachs International (the “Counterparty”)."

Perhaps not, then.

Mon, 12/27/2010 - 15:51 | 831987 Common_Cents22
Common_Cents22's picture

how about sovereign society and escape artist, anyone have input on those sites?

Mon, 12/27/2010 - 16:44 | 832103 creviceCaress
creviceCaress's picture

one day is fine the next is black....

so if you want me off you back...

cmon and let me know...

should i stay or should i go...?



Mon, 12/27/2010 - 17:32 | 832208 creviceCaress
creviceCaress's picture

been reading this doomer tribble for bookoo long time, who's got the lowdown on the likely script they'll end up making the movie about?  martenson? kunstler? ruppert? jones?  maybe they'll get together and share the profits?


the bottome line for the USanians is how prepped are THEY to do whatever it is they're gonna do when they do it.  collapse is a will there be a black swan dive where it's too mega for THEY to co-opt into the normal shock doctrine procedure and anarchy starts to unfurl....or, engineered false flag- type shenanigans where a set amount of hysteria's let loose to ease in the bootjacks........another way to see it is how in-control of 'things' do those THEY people really have?  if the screens go dark tomorrow and that's that, it'll hurt, lots of suffering, famine......but i dont see that.  some say i tend to rather over-estimate the power of the u.s. spectacle...if it's controlled, the only way they'll be able to clamp down is with one or more components of an NBC "attack"(nuke-chem-bio)...or FRN/currency collapse/economic melt.  econo/currenc meltdown is a workable sit., however if there's NBC involved you'll be dead soon or you'll be herded wherever it is they wanna take you since you accepted gas masks and protective gear/inoculations......


if you dont like those prospects, go somewhere that isn't an NBC usually means a place with a #3 world status...guffaw....isn't the .us. a third world nation now? 

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