Another American Concerned About The Us Dollar

[jing jing]

It seems most Thailand-based expats favor Singapore and Hong Kong as their "offshore" banking centers of choice. This may be at least partially due to their relative proximity to Thailand, as well as the availability of user-friendly accounts with all the popular features, i.e. internet banking and proper ATM/debit cards. I've also heard some discussion in expat circles of banks based in Isle of Man and Jersey, which apparently are advantageous to UK citizens for tax reasons. I'm wondering if these banks, as well as the SGP and HK-based ones, offer the same degree of tax "invisiblility" to US citizens as they do to our UK-domiciled brethren?

In short, how does offshore banking in the Isle of Man compare with Singapore and Hong Kong for US taxpayers?

[Gary A]

I really think the sub-prime debacle is way overblown. The non performing loans on mortgaged property are still secured by the properties.

The war in Iraq will be over someday and those billions upon billions spent there will be going back into the US economy.

That said, I find myself with more assets here in Thailand than in the US. I fear that may end up being a mistake. I have much more faith in the USA than I do in this wannabe dictator oriented country.

[gregb]

Personally, I feel you haven't given enough thought to the fact that during the coming global recession, all fiat currencies will be a bad bet. The USD certainly has much further to fall down. People who think it is bad now ain't seen nothing yet.

Unfortunately, the continued decline of the USD will drag other currencies lower also in real terms (real meaning measured against tangible commodities).

I would recommend you seriously consider at least 25% of your assets in gold or precious metals. Historically, up until the last decade, financial planners always said 5% - 10%. Only recently did gold lose its luster, and I think recent movements have shown that to be a huge mstake and it is now time to revisit the old ways. During uncertain times, gold is always the safe bet.

You can either do the Streettracks ETF direct from Singapore, or else you can actually invest in the TMB Asset Management Gold Fund here in Thailand. The Thai way is obviously less attractive from a long term hold position, but it has the advantage that it comes with an ATM card so it is almost liquid.

Gold will beat most currencies in real terms, so however you diversify, make sure precious metals are adequately represented in your portfolio.

Of course, no Thai lady would ever shy away from 100 baht in gold chains. :-)

[Blazer]

Two words: Icelandic Bonds

Icelandic Bonds

[LaoPo]

I really think the sub-prime debacle is way overblown. The non performing loans on mortgaged property are still secured by the properties.

I don't think so:

Today:

Citibank dropped below $ 30 for the first time in 5 years !

Fannie Mae dropped -10% and Freddie Mac dropped -7.7% and

Countrywide, where it all started traded below $ 10 at $ 8.70 now, losing some -10%. High this year $ 45, now at $ 8.62...

It remains to be seen if Countrywide can be saved.

And in the UK the shares of Northern Rock rocketed some +28% in the hope a Virgin lead group is able to rescue NR.

Just a question of paying back the full loan - estimated at up to 25 billion pounds - in two or three years.

Peanuts...

It's not over yet or overblown...

LaoPo

[Iolare]

Just checking back in with a quick update from Singapore. I can select short term time deposits and get better rates of interest than shown in my OP Both OCBC and DBS are quoting better rates than HSBC. Thanks for those suggestions. On two month time deposits it looks like I’ll get around 8% on NZD, better than 6.5% on Assie D., almost 6% on Pound, over 4% on Canadian, and better than 4% on Euro. I haven’t tried negotiating for even better rates yet, as the appointments are today.

As a side note, it’s a nice morning here in Singapore, I’m in a high rise hotel overlooking the river. It’s quite a contrast to LOS in that no one’s squatting on the river and everything looks so orderly. Not many motorbikes, and everyone seems to actually follow traffic rules. Reminds me of Vancouver.

[zorro1]

Two words: Icelandic Bonds

Icelandic Bonds

what makes them special?

thanks

[Naam]

I'm wondering if these banks, as well as the SGP and HK-based ones, offer the same degree of tax "invisiblility" to US citizens as they do to our UK-domiciled brethren?

U.S. citizens and U.S. persons (you can be a U.S. person and liable to pay taxes on your worldwide income/capital gains whithout being a citizen) are since a few years shortchanged worldwide as most of the banks have acquired "qualified intermediary status", i.e. reporting to the IRS et al each and every move of their U.S. clients.

[Naam]

Two words: Icelandic Bonds

Icelandic Bonds

what makes them special?

the high yield currency (ISK) is used by carry traders and therefore quite volatile.

[sonicdragon]

Two words: Icelandic Bonds

Icelandic Bonds

what makes them special?

the high yield currency (ISK) is used by carry traders and therefore quite volatile.

And the economy of iceland has a big structural problem - namely a huge current account deficit, which combined with large foreign currency denominated debts leads to these two words: "high risk"

[thaihome]

I'm wondering if these banks, as well as the SGP and HK-based ones, offer the same degree of tax "invisiblility" to US citizens as they do to our UK-domiciled brethren?

U.S. citizens and U.S. persons (you can be a U.S. person and liable to pay taxes on your worldwide income/capital gains whithout being a citizen) are since a few years shortchanged worldwide as most of the banks have acquired "qualified intermediary status", i.e. reporting to the IRS et al each and every move of their U.S. clients.

US taxpayers are also required to file Form TD F 90-22.1 (REPORT OF FOREIGN BANK AND FINANCIAL ACCOUNTS) with Treasury Dept each year if aggregate value of foreign accounts exceed $10,000.

TH

[Naam]

And the economy of iceland has a big structural problem - namely a huge current account deficit, which combined with large foreign currency denominated debts leads to these two words: "high risk"

the only positive fact about investments in Iceland Kronar is that quite a selection of AAA rated debtors can be found. ISK was a rewarding short term play for the first half of 2007, especially when bought vs. USD. otherwise one has to take into consideration that the country has less inhabitants than Pattaya

[tc101]

I really think the sub-prime debacle is way overblown. The non performing loans on mortgaged property are still secured by the properties.

I don't think so. Those properties were over valued. There will be lots of them on the market. They will sell for less than the loans on them. There also will be the expense of selling them.

I am in the USA now. Smart people are saving money now to buy cheap houses in a year or two. Housing futures and the best estimates I have seen show housing prices declining for the next 4 years.

[jetjock]

I really think the sub-prime debacle is way overblown. The non performing loans on mortgaged property are still secured by the properties.

I don't think so. Those properties were over valued. There will be lots of them on the market. They will sell for less than the loans on them. There also will be the expense of selling them.

I am in the USA now. Smart people are saving money now to buy cheap houses in a year or two. Housing futures and the best estimates I have seen show housing prices declining for the next 4 years.

I closely follow what is happening in the US housing market and agree with you. I do not think we have hit a bottom yet in the housing market and think we are still looking at 3 or 4 years of a declining or at the very least, a non appreciating housing market. Due to the fact more and more people are still seeing their teaser rate ARM's go up and their home values plunge to less than their loans, I think the number of foreclosures will continue to increase which means that the mortgage meltdown still might have a way to go. I recently listened to Donald Trump's take on the housing market and he seems to feel that sometime in the next year or two will be a great time to do some bottom shopping for US real estate.

[Blazer]

Somewhat correct about Icelandic Bonds being risky, but I would say moderately rather than high risk with a good return. None of the issues pointed out above are new to Iceland, but the bonds have yielded consistently good returns. The key is diversify.

Edited November 27, 2007 by Blazer

[disgruntled]

What about China's currency? Isn't it sure to appreciate eventually? There must be some currencies out there which are stabile. Oil is God now. If the world keeps growing like it does the stuff won't cheapen much. It could go much higher in my view. China puts 7 -8 million cars a year on their roads. Most countries seem to be going the capitalist way. To me oil looks pretty secure. "They aren't making any more land." In some places land prices must be pretty secure.

Your original basket of currencies idea seems pretty good to me as well. Does that bank offer any middle eastern currencies? Seems like some of those countries are looking pretty good with the oil supplies they have for the near future. And the more money they make off the oil the less they'll want the radicals living in their midst to be around to ruin their parties, another bonus of money flowing in.

[Naam]

Somewhat correct about Icelandic Bonds being risky, but I would say moderately rather than high risk with a good return. None of the issues pointed out above are new to Iceland, but the bonds have yielded consistently good returns. The key is diversify.

that depends in what currency and time periods you are thinking. in €UR terms ISK bonds yielded MINUS 10% in the last six months.

[sonicdragon]

What about China's currency? Isn't it sure to appreciate eventually?

Not *eventually* - now, in fact. I've been recommending CNY for a while.

There must be some currencies out there which are stable.

I recommend CHF, CNY and SGD

Oil is God now. If the world keeps growing like it does the stuff won't cheapen much. It could go much higher in my view. China puts 7 -8 million cars a year on their roads. Most countries seem to be going the capitalist way. To me oil looks pretty secure. "They aren't making any more land." In some places land prices must be pretty secure.

They are in Hong Kong - the harbour shrinks at an ever-faster rate :-)

As for oil, this was discussed yesterday on another thread here. Obviously it's not a simple matter, but one thing that will keep a lid on the price is shale oil.

[Jingthing]

Given the latest news about predictions of the baht strengthening ANOTHER 15 percent after the Thai election this December, how many of us like me are feeling like this:

[jetjock]

Just like the OP, I am another American concerned about the dollar. There is an FDIC insured bank here in the US called Everbank where I can buy single currencies or a basket of currencies available in 3 or 6 month deposit account. I am thinking about buying a basket of currencies but am having a difficult time choosing which basket as there are 8 choices available. Below is a list of the choices. The interest rate listed for each basket is for a 3 month depost. Anyone have any thoughts and reasons why that might help me choosing which basket might fare best in the next 3 months.

Multi-Currency CDs Currencies Rate APY

Commodity

Combining currencies of four countries whose economic growth is closely tied to the price of commodities.

25% - Australian dollar

25% - Canadian dollar

25% - New Zealand dollar

25% - South African rand 5.51%

Euro TraxSM

Comprised of European countries with current account surpluses and the potential for appreciation in the underlying currencies.

40% - Euro

20% - Norwegian krone

20% - Swedish krona

20% - Swiss franc 2.17%

Pacific Advantage

Consisting of a mix of currencies in the Pacific region.

40% - New Zealand dollar

20% - Hong Kong dollar

20% - Japanese yen dollar

20% - Singapore dollar 2.93%

Pan-AsianSM

Consisting of a mix of currencies in the Pan-Asian region.

40% - Australian dollar

20% - Hong Kong dollar

20% - Japanese yen dollar

20% - Singapore dollar 2.68%

Petrol

Combining three of the largest non-Middle Eastern oil-producing and exporting nations.

33.3% - British pound

33.3% - Mexican peso

33.3% - Norwegian krone 3.85%

Prudent Central Bank

Combination of four currencies that are backed by these country's Central Banks.

25% - Australian dollar

25% - British pound

25% - Euro

25% - New Zealand dollar 4.32%

Viking

Consisting of currencies from the Nordic countries of Norway, Sweden and Denmark.

40% - Norwegian krone

30% - Danish krone

30% - Swedish krona 2.27%

World EnergySM

Combining currencies of four countries whose economic growth is closely tied to energy-based commodities.

25% - Australian dollar

25% - British pound

25% - Canadian dollar

25% - Norwegian krone 4.32%

Edited November 27, 2007 by jetjock

[tc101]

I have also been thinking about Everbank CDs and would like to learn more.

[Jingthing]

For the dollar optimists among us, here is how to profit from a STRENGTHENING dollar. Feels good just saying that:

http://members.forbes.com/forbes/2007/1015/058.html

[jetjock]

I hope Jingthing is correct but although I am bullish on the dollar for the longer haul, in the short haul I am bearish especially over the next few months with the probability of another US interest rate cut. In my personal case, it is probably best for me to diversify more into foreign currencies in any event and that is why in my previous post I mentioned that I was interested in hearing from people more knowledgeable than myself in what currencies look best for the short time. The bank I previously mentioned called 'Everbank' here in the US also offers a Dollarbull Accout for people that are bullish on the US dollar. These are some of the details of the account that I excerpted from their site.

When the U.S. dollar strengthens—you benefit.

WorldCurrency Certificates of Deposit - DollarBull

Diversifying with foreign currencies could be a smart move. But benefiting when the U.S. dollar strengthens against a selected foreign currency could be a smart strategy. That's what the EverBank® DollarBull® Certificate of Deposit is all about .DollarBull CD

When the U.S dollar does well so do you. Over 15 major currencies to choose from.

Available in 3, 6, 9, and 12-month terms.

Returns based on potential appreciation in the U.S. dollar against a selected foreign currency. However, if the selected foreign currency keeps the same position or appreciates versus the U.S. dollar, you will experience a loss of principal.

Available in all major currencies, including some from emerging markets.

minimum deposit of $10,000.

FDIC insured for bank insolvency.

[Jingthing]

I don't pretend to know what the dollar will do or when, but over the fullness of time what goes down goes up, what goes up, comes down, unless the thing is DEAD.

Edited November 27, 2007 by Jingthing

[kdvsn]

I have also been thinking about Everbank CDs and would like to learn more.

The main problem with Everbank is that for any given currency they pay about 1% to 2% less per year than that if you bought a CD from a bank in that currency's home country. Additionally, you lose about 1% on exchange rate skimming when you change from USD into the given currency and another 1% when you change back or change into a another currency. Except that they aren't FDIC insured, the CurrencyShares ETF funds FXE. FXF, FXB, FXF are a better vehicle (better yield and the exchange rate will be whatever the price of the ETF is). One thing to note too is that if your money isn't in an IRA or 401k then it can be tax inefficient to hold individual CD's or the CurrencyShares ETF's as compared to holding an international bond fund or international equities. With the Everbank CDs and CurrencyShares ETFs, you pay your full income tax rate on all the interest earned and if the currency appreciates and you cash out you cannot treat the profit as capital gains, it gets taxed as ordinary income (reportable on Form 4797 and line 14 of Form 1040 instead of on Schudule D).

[Iolare]

Another day, another update from the OP. I won’t say it’s a nice morning today in Singapore because just after I posted that yesterday it started to rain. I like DBS bank the best, and will open the accounts with them, although each of the banks put on an impressive presentation.

Has anyone tried currency linked investments? That’s an investment product that employs a hedging strategy with two currencies over a fixed term of at least a week, but can be longer, months or up to a year. They’re quoting an 8% return linking NZD and USD. That's not a quarantee, and I’m getting the feeling that this might be a better investment for the bank than for me. I’m still thinking I like the basket of currencies better, but I’d like to know if any of you have any experience with currency linked investments?

I’ve got some time to sort this out because I’ve got to arrange a recommendation letter to be couriered in from one of the banks that I currently do business with as part of the process to open the accounts here. That will take me into the weekend, so I won’t be pulling the trigger until next week.

[Naam]

Prudent Central Bank

Combination of four currencies that are backed by these country's Central Banks.

25% - Australian dollar

25% - British pound

25% - Euro

25% - New Zealand dollar 4.32%

is this a joke?

[Naam]

Has anyone tried currency linked investments? That’s an investment product that employs a hedging strategy with two currencies over a fixed term of at least a week, but can be longer, months or up to a year. They’re quoting an 8% return linking NZD and USD. That's not a quarantee, and I’m getting the feeling that this might be a better investment for the bank than for me.

right you are!

[kdvsn]

Prudent Central Bank

Combination of four currencies that are backed by these country's Central Banks.

25% - Australian dollar

25% - British pound

25% - Euro

25% - New Zealand dollar 4.32%

is this a joke?

Prudent is a relative term.

Edited November 28, 2007 by kdvsn