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Primary Drivers In South American Investment and 4 Pillars Of Understanding South America

As promised, my second article on South America. My first post on the subject caused a lot of confusion. In private messages people were kind of mystified: what does this have to do with us USA patriot libertarian types?

(Edited to include: And please ask any questions at all on the subject I'm here to help and I absolutely LOVE this topic, I find it endlessly fascinating.)

It's going to have everything to do with us and our future. The time has arrived. In the same way we're not dealing with a system that may collapse but ALREADY HAS, it's just getting propped up, South America is happening in a good way now.

The main drivers to South America are ones we already know:

  • The economy here is in deep trouble, it's gonna get worse, it can only get worse.
  • More and more people are shut out of life saving and enhancing medical care here.
  • Laws, regulations and taxes make it harder and harder to start or maintain business here.
  • We have this police state thing threatening our well being here.
  • We live under a threat of all-out martial law.
  • Fukushima.
  • WWOCD? What will our children do?

You know this and you know these are powerful drivers. A lot of us behold this and feel trapped. Some of us behold this and feel inspired to fight and make a stand, Restore The Republic! Most of us feel afraid to some degree or another and this we deem wise. We prep, we practice, we preach and this does indeed give us reassurance but it's hard to get around that feeling of impending doom. Any day could be the day, let's hope it's not today.

South America represents a workable alternative for many of us and it can address each reason above. Since it does, this makes it not just a "will it happen?" but a "gonna happen" and a "is happening".

Read that again because I know for many of you South America might as well be Mars. OK let's look at why: we are bubble people. We live in our world of ideology, we talk to similarly minded people, we listen to ourselves on broadcast, we all see the same youtubes and read the same articles, we are a network, we are a family, we are 100% focused on OUR history and OUR body of laws and OUR Constitution. And that's our job as activists. This is our universe. And we're great activists and educators. Our very ideology asserts that the rest of the world is and should be the rest of the world's problem.

Well the idea of "escape" also makes a lot of sense to people and we're seeing the expat thing get into gear. The whole eco-tourism thing is established. There's some mega lucrative economic activity happening and South American banking still may represent a haven from the far reach of the USA. Add this to the fact that boomers, the elderly benefit-sponges (like myself soon) have basically no retirement, pensions and social security is a Ponzi scheme about to fold, well it doesn't take much to see that this trickle down to South America is about to become a flood. Plus there's stuff liberty minded folk like us can do there that we just can't do here.

Now I expect you think I'm gonna tell you point by point how South America solves all our problems but frankly others have done it right here on the DP, there's a million other places to get the sales pitches and really great information. And there's kind of a format to the expat sites, they all show you palm trees and beaches and just beckon us to join them in paradise. I'm actually kind of a devil's advocate. The downside is conspicuously missing from most of these reports. There's always a down side. And I'm not sure I'm interested in retirement packages, I'm interested in business. I'm into solutions and those are gonna take work. This work will exceed my life and my generation and this will be your work and our children's.

So how do you get into the dirt down there from right up here? How do you start making some informed comparisons in your mind?

There's 4 layers of understanding South America (and any nation in it) I find crucial. These will remain crucial no matter what you do in South America at least for any business/investment or relocation purposes.

  1. Pre-Colombian history.
  2. Geography.
  3. Conquest.
  4. Political economics.

These are your 4 pillars of understanding. Everything else, all news, current events, stuff you read online, all of that sits on top of these 4 pillars. And I can't go into detail on each, we'll have to break these out over time but if I can introduce them to you, you will have them as guideposts for your understanding.

1. Pre-Colombian history.
In a word, this describes the people and the cultures you will be dealing with. Most brown people in Latin America are brown because they have some degree of indigenous heritage and people in large parts of the region still primarily identify TRIBALLY or NATIONALLY according to the political structures before "Columbus discovered America". These were dominated by massive and sophisticated cultures like Inca, Maya and Aztec. Many of these exist today in terms of social organization, language, religion and lifestyle. In some places it's hard to see "government" but there's an older existing social order governing things like land and resource allocation and the resolution of disputes. A lot of expats are making the mistake right now of not understanding these existing structures and the people in these communities. There is a building backlash in some locations, I tell you that for a fact.

2. Geography.
Geography feeds directly into indigenous history because it primarily determines if the local culture is part of the former large, empire model or if they are a small, localized tribe. In higher, drier country we find the resources and mobility to build empires. Lowland equatorial jungles tend to foster smaller, more isolated and less mobile groups. Jungles are hard to travel through and they produce such abundant resources that people don't need to travel far to live. And if you have multiple languages in one country, you can start looking for geographical explanations: is there a river, a swamp or a mountain range between them? Natural borders and boundaries are the explanation for many modern political borders. This is one reason for the odd shape of Chile. The nearly impassible Andes Mountains leave this strip of lowland coast that is Chile and most of what's on the other side is Argentina. Most of Brazil is almost impenetrable equatorial jungle. Nobody fought over it because mounted knights in armor kept sinking into it. These same geographic features dictate borders, the flow of commerce (or the expense thereof) and again, whom you are dealing with, what languages they speak. And we can consider mineralogical and other natural resources to follow geographic patterns. Where are the forests and timber, where's the arable land, where are the minerals and what type they will be is part of our geographic and geological scope.

3. Conquest.
Conquest is the process of making a land and a people your chattel and subjects. Spain was the primary dominator and that's why most of the continent speaks Spanish to this day. Pretty much for the same reasons we speak English as opposed to French. And like King George, the King and Queen of Spain (Ferdinand and Isabella) were giving away land grants to their various loyal servants, usually nobility, and these nobility were in turn granting out administrative roles over their grants and these form the modern borders of the nations we see now. With occasional tweaking. A bit of adjusting went down over the 400 odd years since. However there's a few standouts. Brazil, massive Brazil, resource rich Brazil was a Portuguese franchise. The Dutch held some choice property in the Caribbean circle in little Suriname, Netherlands lost a Guyana to the Brittish (who also scooped our eency-peency Belieze), and France had a strong presence in the Caribbean along with (French) Guyana on the mainland. This is why these languages are still spoken on the Northeast coast of South America. And it also has a lot to do with the complexion and makeup of certain peoples or demographies. In these areas which might not have apparently had the golden treasures of the Inca empire but they were excellent for plantation agriculture and Europe was fast gaining a taste for sugar and other tropical delights as well as rice. Which is really hard to grow in Europe. And the didn't find the locals as well suited (or in plentiful enough numbers after conquest and enslavement) for the job. They very logically started importing slaves from Africa in very large numbers to make up the gap. This makes places like Suriname and the Guyanas about as linguistically and ethically diverse a place as you can find on the planet especially with later successive waves of Asian immigrants. And the influence of Caribbean culture is pervasive. Bob Marley is every bit as home on the coasts as in Jamaica. The cuisine, incidentally, reflects this. Wow. However there isn't this deeply enculturated tribal identity we find inland. Contrast this with Argentina, a land not well suited to plantation agriculture really, not nearly as many natives or slaves were required so most were exterminated. Argentina is the whitest, most European of all South American nations in my opinion for this reason. With continued immigration into Europe it might even be more European than Europe at this point. Take a random picture in an Argentinian city and there's a good chance you will simply say it looks like someplace in Europe. Geographic boundaries also reflect the competitive interest of the various land grants which evolved into states as the various grantees jockeyed for the choice resources and then attempted to maintain them. Eventually all but 3 of these grants evolved into contemporary nations. There's still 3 protectorates under European rule. The USA has Puerto Rico in similar servitude as well as the Virgin Islands. Basically South America is a post-feudal continent and these patterns remain to this day. It also solidifies the present borders as being political constructs by virtue of their very formative existence.

4. Political economics.
If you hear a dirty buzzword your economics training might be similar to mine, it's kind of a socialistic take on economics but as these nations gained independence, all of them have experimented with socialism to some degree even if that experimentation involved insurrection and civil war. This is ironic as most of the liberators who fought for independence were ardent republicans and sought to establish republican political models. Socialism as an ideology hadn't evolved yet. Later on, massive inequality and pervasive poverty saw these republics battling Marxist insurgencies which cost much blood and the scars still remain in the form of mass graves and veteran guerrilla fighters. But this is the layer of understanding that brings us closest into range for investment and other purposes. It includes the various regimes that push and pull for control and their contrasting policies. Some of these nations are re-embracing free markets, reducing government control and allowing things to flourish. There are some real miracle turn-arounds such as Chile, Panama and Costa Rica. To a lesser extent, Ecuador. Contrast this with Venezuela, another equatorial nation with just TONS of oil and due to socialist meddling in free markets, their poor and middle class are forced to buy staples like rice, beans and milk on the black market or in neighboring (and freer market) Colombia. In fact it's possible that after long struggle, South America will finally be John Maynard Keynes' grave. The free nations are just leaving the others in the dust and the example couldn't be more apparent than now.

These are the basics of understanding any one of these nations. And you'll find that each of these nations exists in a special relationship to it's neighbors, the continent, the region (Caribbean inclusive) and it's relationship to the global economy. It will always be in context and you need to orient each initiative or consideration along these four quadrants of understanding. Then you know a lot more about who your are dealing with and their likely agenda. Knowing this, you can make the deals that are good for you and that are likely to be stable over time.

All of this deals with what's in place right now. How we might hope to positively influence this scene and even envision constructing our own environment within it will continue this discussion. This discussion is in motion right now with real people, real resources and real investment so none of this is purely academic. It's reality. As we continue we'll begin to evaluate some of these nations along these lines and we'll also be able to develop our own custom-tailored risk/reward indexes for opportunities in them.

***********************
UPDATE: Allison Bricker has kindly invited me to do a weekly presentation on The Allison Bricker Show to help spread the word! We'll figure out how to let you know when.
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Short version. We'll be doing a tour for investors to South America this summer. Check www.SouthAmericaInvestment.com for continued articles and more info.

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Don't worry about the weather in South America it's just soybean

Abnormal weather patterns on the Northern continent correspond to heating patterns in the Southern continuent it seems. Parts of Brazil and Argentina are experiencing issues with soybeans and corn (respectively) as heat induces "soybean rust" fungus and inhibits pollenation of corn and other crops further South in Argentina.

South America produces about 50% of GLOBAL soybean production. In addition to being oil-producing plants, soy is a major protein source for all kinds of things, especially prepackaged foods, sports and diet foods (those awful chalky powder muslce drinks), people love soymilk (I prefer ricemilk for general chugging), it's a wonderfully useful plant.

Farmers up here are looking at South America almost constantly. We have reversed growing seasons. The success or failure of one in any given season effects the decisions the other makes on what to plant. The markets follow the same intel.

Interesting eh?

There is nothing strange about having a bar of soap in your right pocket, it's just what's happening.

Venezuela in the news again--richest poor country ever

Venezuela is just reaching pathetic levels. You know they found more oil there than they have in Saudi Arabia right? When they began to develop it they didn't have the resources or know how to extract it so they have to bring in outside expertise. Kind of. That's after they tried buying Citgo outright and they screwed that up pretty good. But they finally did some deals, got the oil flowing.

So much oil that transport bottlenecks not because they can't load it onto ships fast enough but because they literally didn't have enough of their dollars (Bolivars) to conduct transactions in such huge numbers. They literally had to wait for money to get spent back into their economy to have anything to transact. Classic and very literal liquidity crisis.

There's only one thing to be done: inflate the currency. Nobody really feels like advancing too much credit because Hugo Chaves had this way of nationalizing (stealing) things at whim. But he figures he'll be smart and throw the poor people who elected him a bone and he puts price controls on all the basic food stuffs like rice, beans, flour.

Now as he starts inflating the currency he doesn't allow prices on staple foods to budge. Pretty soon the people that grow the food don't want to sell it in Venezuela. Now the poor in Venezuela are paying 10X the exchange rate for food. If they can get it which means they are lucky enough to be near a border. And the present admnistration still won't let food prices be market dictated.

Now they are going to try another fix by reducing their lending rates to try and take pressure off the liquidity situation but this will touch off more devaluation and this big deal they had with this Vietnamese firm to drill oil just fell through. Everybody loves the oil, it's just that nobody wants to get paid in their stupid Bolivars.

Venezuela's policy has literally made it hard to sell oil at any price. Incredibly, all that wealth is just sitting there useless while people go hungry in the streets.

There is nothing strange about having a bar of soap in your right pocket, it's just what's happening.

Not as many questions as I'd anticipated.

Uncertainty. Doesn't compute here. Outside world?

A large portion of "the movement" is side-stepping politics, government, rules, we're moving ahead. Given what we all know, we feel it's time to start literally building the future and building us into it.

The whole offgrid thing reflects this. Go off grid and suddenly you are back on nature time and nature ways. Most people cease all but highly local politics when they unplug and we are a FACTORY for off grid.

It's been said that the difference between a Libertarian and an anarchist is two election cycles. Guess where we are now? Voluntarism and agorism are trending up and across political divides.

I'm not one to tell anybody to give up here or say it's not worth it. It is. South America is hopefully an ALTERNATIVE that a lot of us can use. And now the whole world is waking up to that fact.

There is nothing strange about having a bar of soap in your right pocket, it's just what's happening.

I'll be checking this out

I'll be checking this out smudge, don't think that cause i haven't had a chance to dive in means we aren't interested. just need to fit it in. Maybe tonights evening read....will get back to you.

Be Your Own Media!!!

I look forward to that Woodman

In a movement of individuals you stand out as an individual. Very interested to hear what you have in mind.

There is nothing strange about having a bar of soap in your right pocket, it's just what's happening.

FiresofFreedom's picture

Cool info smudge

As someone who is looking for new ways to invest I could definitely get into the idea of investing in south america, do you know of any good online resources to buy affordable land in south america?

Absolutely, there's affordable property in South America

I'll be bringing some options to market but there are SO MANY. Basicaly after you run a "profile" of your interests (I'll be talking about that in coming weeks) we'll then see how to basically go shopping for the nation that best suits your purposes. Then one of the best ways to start feeling around a specific nation from here is to start checking out it's expat scenes online.

Expats got online to communicate and pass information back and forth right after the military it seems. They kinda tie into the international traveler circuit so they network like crazy. Not just USA expats but Europeans by the bushel. That brings you better into affordability but to obtain the best deal you will probably need a good realtor or proxy buyer with their feet on the ground and your interests at heart.

Incidentally, real estate is something to be looking at for sure. Given trends, hoo boy. Word is out on Chile. For real entry level stuff we'll be looking at where it's gonna happen next. Plus to round out the scenario you have to factor in whatever kind of entry fees and visas and permits for various kinds of activity. Each nation has it's own policy. In some it's pretty easy to establish "residency" and in others it's not.

Much as I hate to say it but cooperative buying is a sound strategy: teaming up with a frew friends to go in on some land or even a business.

There is nothing strange about having a bar of soap in your right pocket, it's just what's happening.

what do you think of Central America

like costa rica etc

I think Central America is sad.

Central America bore the brunt of Ronald Reagan's version of the war on drugs and it set off a regime of terror and bloodshed, brutality as bad as anything we hear about from any place in the world, and these aren't scars in the region, these are still open wounds.

It's a tragedy. But I won't even consider leading a group there with the exception of Costa Rica. There's all kinds of neat stuff going on there, it's one of the hottest eco-tourist scenes globally. A huge % of the nation is undeveloped and protected. There's all kinds of organic farming, permaculture, major hippy mecca type of stuff. I think the important thing right now is to understand how small Costa Rica is, how desirable it is and how fast property values are going to rise. That's a long term trend I'm looking at: expat communities price out locals.

There is nothing strange about having a bar of soap in your right pocket, it's just what's happening.

Oh yeah and close. Close is Costa Rica, the Caribbean

Forgot that part. Costa Rica is close, so is Panama, Colombia on the good list, Ecuador on the so-so list, forget about Venezuela and I don't talk about Brazil because I don't understand Brazil (or speak Portugese). Plus there's the Caribbean which ranges from just-forget-about-it expensive to pretty cheap.

Hop off from Atlanta or Houston and you are looking at 2-4 hour flight times. That makes hippety-hopping easy. And you can bet it makes shipping stuff up and down more affordable.

There is nothing strange about having a bar of soap in your right pocket, it's just what's happening.

Great post

Well done Smudge Pot
I enjoyed your post. It is always good to look at things in historical context. It helps to understand the present when you looking into the past.
There are a number of things I loved in Living in SA.
The warmth and innocence of the people
How well behaved/mannered children are
The family and community centered lifestyle
How happy people are in general even if they have modest facilities

These are just a few thing that i like in Ecuador.
There are many things that I didn't like first and then I got used to it.
There is no perfect place we need to look at things on balance.

I think it is a very beneficial to experience other cultures, countries and people even if one is not looking at relocating to another country.

I guess we'd have to disclose....

Helios has been helping me dig deeper into Ecuador and we're going to be hearing more from him. He does come in as kind of a perfect example of why you want to think in terms of these 4 pillars. See, there's a potential problem brewing in Ecuador and it's an expat-driven issue. Actually it's not a potential problem for Ecuadorians, it's a real one. The question is how long it takes before it's a problem for expats and how will this situation be resolved?

There's some interesting test case examples we'll have the opportunity to examine. And another heads up: he's going to be a big help to those of us starting or running our own businesses.

There is nothing strange about having a bar of soap in your right pocket, it's just what's happening.

You get my vote for post of the year Smudge

Smudge Pot wrote:
The economy here is in deep trouble, it's gonna get worse, it can only get worse.

I cannot stop laughing. You described how f***'d our economy is in 3 different tenses in the same sentence!
Best statement ever!

Good info too btw, thanks.

Alas for me and Pine Top Elementary

As a child, for some reason I was militantly anti-education. I bore an utterly irrational hated for the whole program. We're talking 8 years old and I'm already an anti-establishmentarian. Grammmar was one of the things I resented most and I simply refused to learn it, I cannot tell you what a gerund is or a preterite plueperfect and this was intentional. Now I see it has this happy side effect of giving you a laugh.

I think we both walk away strangely gratified. I am honored by your response.

There is nothing strange about having a bar of soap in your right pocket, it's just what's happening.

South America Q&A on the Treubig Show tonight.

I'll be hopping on and you can call in with any questions, comments, insights.

There is nothing strange about having a bar of soap in your right pocket, it's just what's happening.

USA! We're Number 12! Where's Chile besides South America?

or in a bowl?

Number 7 as ranked by Heritage Foundation for global economic freedom.

There is nothing strange about having a bar of soap in your right pocket, it's just what's happening.