The post said that although things are not so good here in Ajijic, Lake Chapala it is the same worldwide and this too shall pass.

The financial crisis in the US is not a solitary situation and most other countries in the world are suffering too. Greece, Italy, England are also not doing so well financially at the moment but the good news is that the best minds in the world are working on a solution to the problem and, if the politicians can agree, some steps will be taken to resolve the financial downturn worldwide.

Surprisingly enough, Canada and Mexico are doing a lot better than most countries. Real Estate is booming in many markets in Canada and houses are still selling right here in Ajijic, Lake Chapala.

The economic climate is not great in the US which does affect us here but we would be smart to consider the growth we are experiencing in Mexico and that we are now indeed a development nation and no longer a third world country.

Yes, things are a little slow in some sectors, but by turning our minds to our own markets things can and are improving.

The US and the world will solve this financial crisis in due course and our job is to carry on until that happens, hopefully, sooner rather than later. The first step would be to realize the lost jobs in the US are not coming back and the so called “job creators” are well aware of this fact.

Globalization and technology have changed things forever and the thing now is to look forward to the areas of the future where new jobs will be created. I saw an excellent piece recently suggested that tourism is down 1/3 in the US because of visa restrictions so tourists are going elsewhere. If some of these restrictions were lifted the tourists would return and so would jobs in the tourism business.

That is one example but there are many more. A very respected man of impeccable credentials, Fareed Zakaria did a piece on jobs which was called “Restoring the American Dream: Getting Back to Work.” You can find this piece on the CNN website. It is very enlightening.

It is always easier to play the blame game but it seems to me it would be more productive to look forward rather than looking back. Better times are around the corner and we still are lucky enough to live and buy and sell real estate in paradise

First: A reality check on Mexico

Mexico is in a unique position to reap many of the benefits of the decline of the US economy. In order to not violate NAFTA and other agreements the U.S.A. cannot use direct protectionism, so it is content to allow the media to play this protectionist role. The U.S. media – over the last year – has portrayed Mexico as being on the brink of economic collapse and civil war. The Mexican people are either beheaded, kidnapped, poor, corrupt, or narco-traffickers. The American news media was particularly aggressive in the weeks leading up to spring break. The main reason for this is money. During that two-week period, over 120,000 young American citizens poured into Mexico and left behind hundreds of millions of dollars.

Let’s look at the reality of the massive drug and corruption problem, kidnappings, murders and money. The U.S. Secretary of State Clinton was clear in her honest assessment of the problem. “Our insatiable demand for illegal drugs fuels the drug trade. Our inability to prevent the weapons from being illegally smuggled across the border to arm these criminals causes the deaths of police officers, soldiers and civilians,” Clinton said. The other large illegal business that is smuggled into the U.S.A. that no one likes to talk about is Human Traffic for prostitution. This “business” is globally now competing with drugs in terms of profits.

It is critical to understand, however that the horrific violence in Mexico is over 95% confined to the three transshipping cities for these two businesses, Juarez, Tijuana and Nogales. The Mexican government is so serious about fighting this, that they have committed over 30,000 soldiers to these borders towns. There was a thoughtful article written by a professor at the University of Juarez. He was reminded of the Prohibition years in the U.S.A. and compared Juarez to Chicago when Al Capone was conducting his reign of terror capped off with The Saint Valentine’s Day Massacre. During these years, just like Juarez today, 99% of the citizens went about their daily lives and attended classes, went to the movies, restaurants, and parks.

Is there corruption in Mexico? YES !!! Is there an equal amount of corruption related to this business in the U.S.A.? YES !!!. When you have a pair of illegal businesses that generate over $300,000,000,000 in sales you will find massive corruption. Make no mistake about the Mexican Drug Cartel; these “businessmen” are 100 times more sophisticated than the bumbling bootleggers during Prohibition. They form profitable alliances all over the U.S.A. They do cost benefit analysis of their business much better than the US automobile industry. They have found over the years that the cost of bribing U.S. and Mexican Border Guards and the transportation costs of moving marijuana from Sinaloa to California have cut significantly into profits. That is why over the past 5-7 years they have been growing marijuana in State and Federal Parks and BLM land all across America. From a business standpoint, this is a tremendous cost savings on several levels. Let’s look at California as an example as one of the largest consumers. When you have $14.2 billion of Marijuana grown and consumed in one state, there is savings on transportation, less loss of product due to confiscation and an overall reduction cost of bribery with law enforcement and parks service people. Another great savings is the benefit to their employees. The penalties in Mexico for growing range from 5-15 years. The penalties in California, on average are 18 months, and out in 8 months. The same economic principles are now being applied to the methamphetamine factories.

FOX News continues to scare people with its focus on kidnapping. There are kidnappings in Mexico. The concentration of kidnappings has been in Mexico City, among the very rich and the three aforementioned border Cities. With the exception of Mexico City, the number one city for kidnappings among NAFTA countries is Phoenix, Arizona with over 359 in 2008. The Phoenix Police estimate that twice that number of kidnappings goes unreported, because like Mexico 99% of these crimes were directly related to drug and human traffic. Phoenix, unfortunately, is geographically profitable transshipping location. Mexicans, just like 99% of U.S. Citizens during prohibition, go about their daily lives all over the country. They get up, go to school or work and live their lives untouched by the border town violence.

These same protectionist news sources have misled the public as to the real danger from the swine flu in Mexico and temporary devastated the tourism business. As of May 27 2009 there have been 87 deaths in Mexico from the swine flu. During those same five months there have been 36 murdered school children in Chicago. By their logic, if 87 deaths from the swine flu in Mexico warrants canceling flights and cruise ships to Mexico, then close all roads and highways in the USA because of record 43,359 automobile related deaths in the USA in 2008.

What is just getting underway is what many are calling the “Largest southern migration to Mexico of people and real estate assets since the Civil War” A significant percentage of the Baby Boomers have been doing the research and are making the life changing decision to move out of the U.S.A. The number one retirement destination in the world is Mexico. There are already over 2,000,000 US and Canadian property owners in Mexico. The most conservative number of American and Canadian Baby Boomers who are on their way to owning property in Mexico for full or part time living in the next 15 years is over 6,000,000. Do the math on 6,000,000 people buying a $300,000 house or condo and you will understand why the U.S. Government is trying to tax this massive shift of money to Mexico through H.R. 3056. The U.S. government calls this “The Tax Collection Responsibility Act of 2007″. Those who will have to pay it are calling this the EXIT TAX.

Mexico: A better economic choice than China

Another large exodus from the U.S.A is high paying skilled jobs. The job shift in automobile sector, both car and parts manufacturing, is already known by most investors. In the last few months as John Deere and Caterpillar have been laying off thousands of workers in the U.S.A., and hiring equal numbers in Mexico. The most recent industry that is making the shift is the aerospace manufacturers. In the city of Zacatecas there is currently a $210 million aerospace facility being built. With the 11 U.S. companies moving there, it is estimated to provide over 200,000 new high paying jobs in the coming years. One of the main factors for the shift in job south to Mexico instead of China is realistic analysis of total production, labor and delivery costs. While the labor costs in China are 40% less on average, the overall transportation costs and inherent risks of a long distance supply chain, and quality control issues, gives Mexico a distinct financial advantage.

Mexico’s real economic future

Mexico has avoided completely the subprime problem that has devastated the U.S. banking industry. The Mexican banks are healthy and profitable. Mexico has a growing and very healthy middle and upper middle class. The very recent introduction of residential financing has Mexico in a unique position of having over 90% of current homeowners owning their house outright. U.S. banks are competing for the Mexican, Canadian and American cross border loan business. It is and will continue to be a very safe and very profitable business. These same banks that were loaning in a reckless manner have learned their lesson and are loaning here the old fashioned way. They require a minimum of a 680 credit score, 30% down payment, and verifiable income that can support the loan. In most areas of Mexico where Baby Boomers are moving to, with the exception of Puerto Penasco (which did not have a national and international base of buyers), there is no real estate bubble.. The higher end markets ($2-20 million) in many of these destinations are going through a modest correction. The Baby Boomers market here is between $200,000 and $600,000. With the continuing demand inside the Bay of Banderas, that price point, in the coming years, will disappear. This is the reason the Mexican government is spending billions of dollars on more infrastructure north along the coast all the way up to Mazatlan.

The other major area where America has become overpriced is in the field of health care. This massive shift of revenues is estimated to add 5-7% to Mexico’s GDP. The name for this “business” is Medical Tourism. The two biggest competitors for Mexico were Thailand and India. Thailand and India’s biggest drawback is geography. Also recent events, Thailand’s inability to keep a government in place and the recent terrorist attack in Mumbai, have helped Mexico capture close to half of this growth industry. In Mexico today there are over 56 world class hospitals being built to keep up with this business.

Mexico is currently sitting on a cash surplus and an almost balanced budget. Most Americans have never heard of Carlos Slim until he loaned the New York Times $250 million. After that it became clear to many investors around the world what Mexicans already knew: that Mexico had been able to avoid the worst of the U.S. economic devastation. Mexico’s resilience is to be admired. When the U.S. Federal Reserve granted a $30 billion loan to each of Mexico, Singapore, South Korea, and Brazil, Mexico reinvested the money in Treasury bonds in an account in New York City.

According to oil traders, Mexico’s Pemex wisely as the price of oil shot to $147 a barrel put in place an investment strategy that hinged on oil trading in the range of $38-$60 a barrel. Since the beginning of 2009 Mexico has been collecting revenues on hedged positions that give them $90-$110 per barrel today. Mexico’s recent and under reported oil discovery in the Palaeo Channels of Chicontepec has placed it third in the world for oil reserves, right behind Canada and Saudi Arabia.

The following is a quote from Rosalind Wilson, President of the Canadian Chamber of Commerce on March 19, 2009. “The strength of the Mexican economic system makes the country a favorite destination for Canadian investment”.

OPPORTUNITIES: WHY PUERTO VALLARTA & THE RIVIERA NAYARIT

The answer is simple and old fashioned: SUPPLY AND DEMAND.

The area of Puerto Vallarta/Riviera Nayarit inside the Bay of Banderas is an investor’s dream. This area has the comprehensive infrastructure in place, world class hospitals and dental care, natural investment protection from the Sierra Madre Mountains, endless future water supply, low to nonexistent crime, international airport, and limited supply inside the Bay, first class private bilingual schools and higher than average appreciation potential. Like many areas in Mexico there is large demand for full and part time retirement living and a lot of construction underway to meet this demand. Pre construction of course is where the best bargains are available.

I would offer a word of caution for investors in Mexico. Do not be seduced by the endless natural beauty that is everywhere, both inland in colonial towns and along thousands of miles of beach. Apply conservative medium and long term investment strategies without emotion. The demand for full and part time living by American and Canadian Baby Boomers is evident throughout the country. The top two choice locations are ocean front, and ocean view. The third overall choice, which is less expensive, is inland in one of the many beautiful colonial towns or small cities.

Mexico, with the world’s 13th largest GDP, is no longer a “Third World Country”, but rather a fast growing, economically secure state, as the most recent five-year history of its financial markets when compared to the U.S.A.’s financial markets suggests.

DOW JONES AVERAGES MAY 2004 10,200 – MAY 2009 8,200 20% LOSS IN 5 YEARS

MEXICAN BOLSA MAY 2004 10,000 – MAY 2009 23,000 130% GAIN IN 5 YEARS

Surprisingly enough as we watched the Dow Jones Index plummet 512 points yesterday we still find the economies in both Canada and Mexico are growing and even flourishing in many parts.

Real Estate is booming in Toronto and Vancouver, Canada and we are lucky enough to be busy here in Ajijic, Lake Chapala even though it not the “busy season”.

They say the definition of insanity is doing the same thing over and over again expecting a different result. It would seem then that perhaps looking south of the border during these times of financial unrest could make a lot of sense for a better life and easier retirement.

I would suggest going north of the border but I am partial to our almost perfect weather in Ajijic, Lake Chalapa which is 75 degrees and sunny 99 percent of the year. Having lived in Toronto, Canada for many years I cannot say the same thing about the Canadian weather.

For those on fixed incomes it would make sense to have your limited income go as far as possible and the cost of living here is much less than it is in the US or Canada.

One of the many reasons Mexico’s economy is thriving is because many now skilled workers are returning home from the US as the jobs are scarcer or non- existent. This influx is stimulating the economy as the infrastructure continues to improve.

We see it ourselves. Things are very different here than when we moved to Ajijic, Lake Chapala over 17 years ago. We now have world class technology available at competitive prices which makes doing business anywhere in the world possible.

Products and services are now available to us that in the past were unheard of and things continue to get better every year.

Some people like to view Mexico as a third world country but we have always seen it as a developing nation and I think if you do your due diligence online you will find out that Mexico could be the place of the future for growth and stability.

Retirement can be stepping into the great unknown but now with everything Mexico has to offer in terms of economic growth, excellent affordable healthcare and realistic real estate opportunities this might be the place for you. It is certainly has been for us and for that we are very grateful for every wonderful day we spend in our paradise in the sun.

Ask questions and find it if Mexico has everything you need and want in a retirement opportunity.

Our favorite expression is “Most people come for the weather but stay for the people”.

I thought this was supposed to be a global economy an international market, if you will.

Today I wanted to extract some money from my Canadian checking account and tried to do it from two different credit cards from my bank and from my “Client Card”. I was told by my ATM that they could not connect with my financial institution and/or my PIN was incorrect.

When I returned home, frustrated from trying to access my money there was an urgent call from my bank to call them immediately. I did so forthwith and was told there had been some suspicious activity on my account. After a series of security question to prove I was, indeed, who I said I was I told them the “suspicious activity” had been me trying to get the ATM to spit out some money on some card.

Once the nice chap, George, from my bank, was assured there was no funny business going on and no attempted crime had been perpetrated he set about trying to rectify the situation for me.

As is turns out this was easier said than done. I had received a new “chip” credit card but could not activate said card and I had not yet received the new PIN. George ascertained that the PIN had been ordered June 24th and even with the recent postal strike in Toronto the PIN should have reached me by now. Giving me another PIN, of course, was out of the question so he very kindly arranged to send me a new card and new PIN by courier to my home in Ajijic, Lake Chapala.

My other credit card with the same bank was not set up for withdrawals and my “Client Card” had been blocked as I had tried to use my PIN 3 times which, evidently, means you are out (of luck). So I asked the Client Card department (who George has transferred me to as this was out of his jurisdiction) to reset my PIN so I could proceed extracting funds as I had originally set out to do.

This is when things fell apart. It would appear that the only way to reset your PIN for your “Client Card” is to go to your branch in Toronto and proceed with the resetting process in person . Obviously, “Client Card” is a misnomer if you expected any privileges as a client for over 50 years with this same bank and, therefore, I would think worthy of some special dispensation particularly as one was in Mexico and getting to the branch in Toronto would be a bit of a challenge.

I asked if there was a bank here in Mexico in association with my bank in Canada but, alas, there was not. So be warned once you have tried to use your PIN three times it can be automatically blocked and there is no way to unblock it short of travelling up north.

As many people now live all over the world some full time some part time I would have thought it would behoove the Canadian banks to accommodate these clients/customers.

I do appreciate all the security measures and the call from George and his valiant effect to make things right but as it came down to it PIN wise things were out of his control.

I have no idea if American banks operate the same way with regards to blocking PIN’s but it might be worth the question to your bank so you can avoid my fate.

Fortunately, I took money out on another credit card from another bank and happily went on my way.

I guess the moral or this story is that if you are going to live abroad I recommend you have more than one credit card.

Go to www.newamericamedia.org and enter the above title in search. Very interesting and positive information about our country.

Mexico is in a unique position to reap many of the benefits of the decline of the US economy. In order to not violate NAFTA and other agreements the U.S.A. cannot use direct protectionism, so it is content to allow the media to play this protectionist role. The U.S. media – over the last year – has portrayed Mexico as being on the brink of economic collapse and civil war. The Mexican people are either beheaded, kidnapped, poor, corrupt, or narco-traffickers. The American news media was particularly aggressive in the weeks leading up to spring break. The main reason for this is money. During that two-week period, over 120,000 young American citizens poured into Mexico and left behind hundreds of millions of dollars.

Let’s look at the reality of the massive drug and corruption problem, kidnappings, murders and money. The U.S. Secretary of State Clinton was clear in her honest assessment of the problem. “Our insatiable demand for illegal drugs fuels the drug trade. Our inability to prevent the weapons from being illegally smuggled across the border to arm these criminals causes the deaths of police officers, soldiers and civilians,” Clinton said. The other large illegal business that is smuggled into the U.S.A. that no one likes to talk about is Human Traffic for prostitution. This “business” is globally now competing with drugs in terms of profits.

It is critical to understand, however that the horrific violence in Mexico is over 95% confined to the three transshipping cities for these two businesses, Juarez, Tijuana and Nogales. The Mexican government is so serious about fighting this, that they have committed over 30,000 soldiers to these borders towns. There was a thoughtful article written by a professor at the University of Juarez. He was reminded of the Prohibition years in the U.S.A. and compared Juarez to Chicago when Al Capone was conducting his reign of terror capped off with The Saint Valentine’s Day Massacre. During these years, just like Juarez today, 99% of the citizens went about their daily lives and attended classes, went to the movies, restaurants, and parks.

Is there corruption in Mexico? YES !!! Is there an equal amount of corruption related to this business in the U.S.A.? YES !!!. When you have a pair of illegal businesses that generate over $300,000,000,000 in sales you will find massive corruption. Make no mistake about the Mexican Drug Cartel; these “businessmen” are 100 times more sophisticated than the bumbling bootleggers during Prohibition. They form profitable alliances all over the U.S.A. They do cost benefit analysis of their business much better than the US automobile industry. They have found over the years that the cost of bribing U.S. and Mexican Border Guards and the transportation costs of moving marijuana from Sinaloa to California have cut significantly into profits. That is why over the past 5-7 years they have been growing marijuana in State and Federal Parks and BLM land all across America. From a business standpoint, this is a tremendous cost savings on several levels. Let’s look at California as an example as one of the largest consumers. When you have $14.2 billion of Marijuana grown and consumed in one state, there is savings on transportation, less loss of product due to confiscation and an overall reduction cost of bribery with law enforcement and parks service people. Another great savings is the benefit to their employees. The penalties in Mexico for growing range from 5-15 years. The penalties in California, on average are 18 months, and out in 8 months. The same economic principles are now being applied to the methamphetamine factories.

FOX News continues to scare people with its focus on kidnapping. There are kidnappings in Mexico. The concentration of kidnappings has been in Mexico City, among the very rich and the three aforementioned border Cities. With the exception of Mexico City, the number one city for kidnappings among NAFTA countries is Phoenix, Arizona with over 359 in 2008. The Phoenix Police estimate that twice that number of kidnappings goes unreported, because like Mexico 99% of these crimes were directly related to drug and human traffic. Phoenix, unfortunately, is geographically profitable transshipping location. Mexicans, just like 99% of U.S. Citizens during prohibition, go about their daily lives all over the country. They get up, go to school or work and live their lives untouched by the border town violence.

These same protectionist news sources have misled the public as to the real danger from the swine flu in Mexico and temporary devastated the tourism business. As of May 27 2009 there have been 87 deaths in Mexico from the swine flu. During those same five months there have been 36 murdered school children in Chicago. By their logic, if 87 deaths from the swine flu in Mexico warrants canceling flights and cruise ships to Mexico, then close all roads and highways in the USA because of record 43,359 automobile related deaths in the USA in 2008.

What is just getting underway is what many are calling the “Largest southern migration to Mexico of people and real estate assets since the Civil War” A significant percentage of the Baby Boomers have been doing the research and are making the life changing decision to move out of the U.S.A. The number one retirement destination in the world is Mexico. There are already over 2,000,000 US and Canadian property owners in Mexico. The most conservative number of American and Canadian Baby Boomers who are on their way to owning property in Mexico for full or part time living in the next 15 years is over 6,000,000. Do the math on 6,000,000 people buying a $300,000 house or condo and you will understand why the U.S. Government is trying to tax this massive shift of money to Mexico through H.R. 3056. The U.S. government calls this “The Tax Collection Responsibility Act of 2007″. Those who will have to pay it are calling this the EXIT TAX.

Mexico: A better economic choice than China

Another large exodus from the U.S.A is high paying skilled jobs. The job shift in automobile sector, both car and parts manufacturing, is already known by most investors. In the last few months as John Deere and Caterpillar have been laying off thousands of workers in the U.S.A., and hiring equal numbers in Mexico. The most recent industry that is making the shift is the aerospace manufacturers. In the city of Zacatecas there is currently a $210 million aerospace facility being built. With the 11 U.S. companies moving there, it is estimated to provide over 200,000 new high paying jobs in the coming years. One of the main factors for the shift in job south to Mexico instead of China is realistic analysis of total production, labor and delivery costs. While the labor costs in China are 40% less on average, the overall transportation costs and inherent risks of a long distance supply chain, and quality control issues, gives Mexico a distinct financial advantage.

Mexico’s real economic future

Mexico has avoided completely the subprime problem that has devastated the U.S. banking industry. The Mexican banks are healthy and profitable. Mexico has a growing and very healthy middle and upper middle class. The very recent introduction of residential financing has Mexico in a unique position of having over 90% of current homeowners owning their house outright. U.S. banks are competing for the Mexican, Canadian and American cross border loan business. It is and will continue to be a very safe and very profitable business. These same banks that were loaning in a reckless manner have learned their lesson and are loaning here the old fashioned way. They require a minimum of a 680 credit score, 30% down payment, and verifiable income that can support the loan. In most areas of Mexico where Baby Boomers are moving to, with the exception of Puerto Penasco (which did not have a national and international base of buyers), there is no real estate bubble.. The higher end markets ($2-20 million) in many of these destinations are going through a modest correction. The Baby Boomers market here is between $200,000 and $600,000. With the continuing demand inside the Bay of Banderas, that price point, in the coming years, will disappear. This is the reason the Mexican government is spending billions of dollars on more infrastructure north along the coast all the way up to Mazatlan.

The other major area where America has become overpriced is in the field of health care. This massive shift of revenues is estimated to add 5-7% to Mexico’s GDP. The name for this “business” is Medical Tourism. The two biggest competitors for Mexico were Thailand and India. Thailand and India’s biggest drawback is geography. Also recent events, Thailand’s inability to keep a government in place and the recent terrorist attack in Mumbai, have helped Mexico capture close to half of this growth industry. In Mexico today there are over 56 world class hospitals being built to keep up with this business.

Mexico is currently sitting on a cash surplus and an almost balanced budget. Most Americans have never heard of Carlos Slim until he loaned the New York Times $250 million. After that it became clear to many investors around the world what Mexicans already knew: that Mexico had been able to avoid the worst of the U.S. economic devastation. Mexico’s resilience is to be admired. When the U.S. Federal Reserve granted a $30 billion loan to each of Mexico, Singapore, South Korea, and Brazil, Mexico reinvested the money in Treasury bonds in an account in New York City.

According to oil traders, Mexico’s Pemex wisely as the price of oil shot to $147 a barrel put in place an investment strategy that hinged on oil trading in the range of $38-$60 a barrel. Since the beginning of 2009 Mexico has been collecting revenues on hedged positions that give them $90-$110 per barrel today. Mexico’s recent and under reported oil discovery in the Palaeo Channels of Chicontepec has placed it third in the world for oil reserves, right behind Canada and Saudi Arabia.

The following is a quote from Rosalind Wilson, President of the Canadian Chamber of Commerce on March 19, 2009. “The strength of the Mexican economic system makes the country a favorite destination for Canadian investment”.

OPPORTUNITIES: WHY PUERTO VALLARTA & THE RIVIERA NAYARIT

The answer is simple and old fashioned: SUPPLY AND DEMAND.

The area of Puerto Vallarta/Riviera Nayarit inside the Bay of Banderas is an investor’s dream. This area has the comprehensive infrastructure in place, world class hospitals and dental care, natural investment protection from the Sierra Madre Mountains, endless future water supply, low to nonexistent crime, international airport, and limited supply inside the Bay, first class private bilingual schools and higher than average appreciation potential. Like many areas in Mexico there is large demand for full and part time retirement living and a lot of construction underway to meet this demand. Pre construction of course is where the best bargains are available.

I would offer a word of caution for investors in Mexico. Do not be seduced by the endless natural beauty that is everywhere, both inland in colonial towns and along thousands of miles of beach. Apply conservative medium and long term investment strategies without emotion. The demand for full and part time living by American and Canadian Baby Boomers is evident throughout the country. The top two choice locations are ocean front, and ocean view. The third overall choice, which is less expensive, is inland in one of the many beautiful colonial towns or small cities.

Mexico, with the world’s 13th largest GDP, is no longer a “Third World Country”, but rather a fast growing, economically secure state, as the most recent five-year history of its financial markets when compared to the U.S.A.’s financial markets suggests.

DOW JONES AVERAGES MAY 2004 10,200 – MAY 2009 8,200 20% LOSS IN 5 YEARS

MEXICAN BOLSA MAY 2004 10,000 – MAY 2009 23,000 130% GAIN IN 5 YEARS

–I myself am made entirely of flaws, stitched together with good intentions and a few wires and pins.

–Yo mismo estoy hecho completamente de defectos, cosidos entre sí con buenas intenciones y unos alambres y clavijas.

–
Bob Miller

Robert P. Miller, PhD
535 Westfield Rd, Suite 100
Charlottesville, VA 22901

Being a family of dog lovers when were first introduced to Cesar Millan (The Dog Whisperer) we absorbed avidly all the information and training he was teaching us about the problem with any dog is the “energy” of the human.

All any dog gets from us is our smell and our “energy”. Cesar teaches us to be calm and assertive so our dogs will be calm and submissive and reach the balance that will make their lives happy. If we are nervous, frustrated, angry, weak, sad or any other negative emotion our dog will pick up on this and reject us as a suitable pack leader and take over that role themselves. This is not something they want to do or are comfortable with but our negative energy leaves them no choice.

There are many lessons we can learn from Cesar and another one which resonated with us is that “you don’t necessarily get the dog you want you get the dog you need”. Our dogs can teach us many things but as we struggle with the positive energy that will help us have balance for our dogs it will also give us balance. As we become calm and assertive our lives will also change for the better as we rid ourselves of some very draining negative emotions.

I had occasion to unwittingly put this positive calm assertive energy into practice the other day at the bank.

We needed to pick up some business checks at our bank in Chapala which should have been a straightforward undertaking. For those who have lived in Ajijic, Lake Chapala for any amount of time you know this is not always the case. There is no guarantee that any transition at the bank will be straightforward.

We knew the checks were indeed ready so our daughter tried to pick up the checks with the appropriate signed authorization. She was told only my husband or I could pick up the checks with our passports in hand.

My husband then tried but the bank customers were overflowing out onto the street and he had another appointment. He was also worried as he only had his driver’s license with him and not his passport.

The task then fell to me, armed with my passport, to try to pick up the checks as we now were totally out.

I drove to Chapala and was pleasantly surprised to obtain a parking space close to my bank. I walked in and sure enough the bank was still filled with waiting customers backing onto the street. I first thought I would try later and then I made another decision.

I strode purposely right through the bank to the customer service offices and told the first person I saw that I was here to pick up my checks and how might I go about accomplishing that feat. She asked me to sit down and would attend to it right away. I put my passport on her desk and she returned with the checks in hand which I duly signed for and she activated them on her computer for immediate use. I also needed to cash one of my new checks so I went to the head of the preferred customer line and was served immediately. The teller did not even ask for my passport!

The entire production took ten minutes and I was happily on my way back to Ajijic checks in hand.

The moral of this blog is that a positive personal energy will elicit a positive result. Try it! It works.

The first good thing is that we will be able to make a turn onto the carretera without waiting several minutes. Parking in Ajijic, Lake Chapala will be easier and we are left to enjoy our magnificent ‘rainy season’ in peace.

This is also a good time for the real estate market for several reasons. One is that some vendors feel that they might have missed their chance to sell so prices may be more flexible. Also buyers who come in the “off-season” are generally serious and not just kicking tires as it were. Realtors may be a little less busy and, therefore, able to spend more quality time with potential buyers.

Reservations are usually not needed in restaurants now so last minute dining in the establishment of your choice is easier.

You will be able to park at Superlake.

There, of course, is a down side to the “snow birds” leaving particularly for those who operate businesses in Ajijic, Lake Chapala.

Ours is a cyclical economy. In some years a business may not feel the dip in population but other years the dip may be felt acutely. Businesses do seem to survive, however, to work another day when the “snow birds” return sometime after American Thanksgiving in November.

Our population continues to grow and more permanent residents flow in as things do not improve fast enough up north and Mexico does have a very stable economy along with the myriad of other assets such as the people, weather and beauty.

I do wish our visiting population could experience the joys of the “rainy season” which are spectacular. This season is from June 15 – October 15. The first mournful cry of the “rain birds” (not really a bird but large insect) heralds the imminent arrival of the “rainy season” in about six weeks.

Some friends have reported hearing the first “rain birds” which means we should have an early “rainy season”. This is very good news for those of us not “going home” as we are lucky enough to be home.

First: A reality check on Mexico

Mexico is in a unique position to reap many of the benefits of the decline of the US economy. In order to not violate NAFTA and other agreements the U.S.A. cannot use direct protectionism, so it is content to allow the media to play this protectionist role. The U.S. media – over the last year – has portrayed Mexico as being on the brink of economic collapse and civil war. The Mexican people are either beheaded, kidnapped, poor, corrupt, or narco-traffickers. The American news media was particularly aggressive in the weeks leading up to spring break. The main reason for this is money. During that two-week period, over 120,000 young American citizens poured into Mexico and left behind hundreds of millions of dollars.

Let’s look at the reality of the massive drug and corruption problem, kidnappings, murders and money. The U.S. Secretary of State Clinton was clear in her honest assessment of the problem. “Our insatiable demand for illegal drugs fuels the drug trade. Our inability to prevent the weapons from being illegally smuggled across the border to arm these criminals causes the deaths of police officers, soldiers and civilians,” Clinton said. The other large illegal business that is smuggled into the U.S.A. that no one likes to talk about is Human Traffic for prostitution. This “business” is globally now competing with drugs in terms of profits.

It is critical to understand, however that the horrific violence in Mexico is over 95% confined to the three transshipping cities for these two businesses, Juarez, Tijuana and Nogales. The Mexican government is so serious about fighting this, that they have committed over 30,000 soldiers to these borders towns. There was a thoughtful article written by a professor at the University of Juarez. He was reminded of the Prohibition years in the U.S.A. and compared Juarez to Chicago when Al Capone was conducting his reign of terror capped off with The Saint Valentine’s Day Massacre. During these years, just like Juarez today, 99% of the citizens went about their daily lives and attended classes, went to the movies, restaurants, and parks.

Is there corruption in Mexico? YES !!! Is there an equal amount of corruption related to this business in the U.S.A.? YES !!!. When you have a pair of illegal businesses that generate over $300,000,000,000 in sales you will find massive corruption. Make no mistake about the Mexican Drug Cartel; these “businessmen” are 100 times more sophisticated than the bumbling bootleggers during Prohibition. They form profitable alliances all over the U.S.A. They do cost benefit analysis of their business much better than the US automobile industry. They have found over the years that the cost of bribing U.S. and Mexican Border Guards and the transportation costs of moving marijuana from Sinaloa to California have cut significantly into profits. That is why over the past 5-7 years they have been growing marijuana in State and Federal Parks and BLM land all across America. From a business standpoint, this is a tremendous cost savings on several levels. Let’s look at California as an example as one of the largest consumers. When you have $14.2 billion of Marijuana grown and consumed in one state, there is savings on transportation, less loss of product due to confiscation and an overall reduction cost of bribery with law enforcement and parks service people. Another great savings is the benefit to their employees. The penalties in Mexico for growing range from 5-15 years. The penalties in California, on average are 18 months, and out in 8 months. The same economic principles are now being applied to the methamphetamine factories.

FOX News continues to scare people with its focus on kidnapping. There are kidnappings in Mexico. The concentration of kidnappings has been in Mexico City, among the very rich and the three aforementioned border Cities. With the exception of Mexico City, the number one city for kidnappings among NAFTA countries is Phoenix, Arizona with over 359 in 2008. The Phoenix Police estimate that twice that number of kidnappings goes unreported, because like Mexico 99% of these crimes were directly related to drug and human traffic. Phoenix, unfortunately, is geographically profitable transshipping location. Mexicans, just like 99% of U.S. Citizens during prohibition, go about their daily lives all over the country. They get up, go to school or work and live their lives untouched by the border town violence.

These same protectionist news sources have misled the public as to the real danger from the swine flu in Mexico and temporary devastated the tourism business. As of May 27 2009 there have been 87 deaths in Mexico from the swine flu. During those same five months there have been 36 murdered school children in Chicago. By their logic, if 87 deaths from the swine flu in Mexico warrants canceling flights and cruise ships to Mexico, then close all roads and highways in the USA because of record 43,359 automobile related deaths in the USA in 2008.

What is just getting underway is what many are calling the “Largest southern migration to Mexico of people and real estate assets since the Civil War” A significant percentage of the Baby Boomers have been doing the research and are making the life changing decision to move out of the U.S.A. The number one retirement destination in the world is Mexico. There are already over 2,000,000 US and Canadian property owners in Mexico. The most conservative number of American and Canadian Baby Boomers who are on their way to owning property in Mexico for full or part time living in the next 15 years is over 6,000,000. Do the math on 6,000,000 people buying a $300,000 house or condo and you will understand why the U.S. Government is trying to tax this massive shift of money to Mexico through H.R. 3056. The U.S. government calls this “The Tax Collection Responsibility Act of 2007″. Those who will have to pay it are calling this the EXIT TAX.

Mexico: A better economic choice than China

Another large exodus from the U.S.A is high paying skilled jobs. The job shift in automobile sector, both car and parts manufacturing, is already known by most investors. In the last few months as John Deere and Caterpillar have been laying off thousands of workers in the U.S.A., and hiring equal numbers in Mexico. The most recent industry that is making the shift is the aerospace manufacturers. In the city of Zacatecas there is currently a $210 million aerospace facility being built. With the 11 U.S. companies moving there, it is estimated to provide over 200,000 new high paying jobs in the coming years. One of the main factors for the shift in job south to Mexico instead of China is realistic analysis of total production, labor and delivery costs. While the labor costs in China are 40% less on average, the overall transportation costs and inherent risks of a long distance supply chain, and quality control issues, gives Mexico a distinct financial advantage.

Mexico’s real economic future

Mexico has avoided completely the subprime problem that has devastated the U.S. banking industry. The Mexican banks are healthy and profitable. Mexico has a growing and very healthy middle and upper middle class. The very recent introduction of residential financing has Mexico in a unique position of having over 90% of current homeowners owning their house outright. U.S. banks are competing for the Mexican, Canadian and American cross border loan business. It is and will continue to be a very safe and very profitable business. These same banks that were loaning in a reckless manner have learned their lesson and are loaning here the old fashioned way. They require a minimum of a 680 credit score, 30% down payment, and verifiable income that can support the loan. In most areas of Mexico where Baby Boomers are moving to, with the exception of Puerto Penasco (which did not have a national and international base of buyers), there is no real estate bubble.. The higher end markets ($2-20 million) in many of these destinations are going through a modest correction. The Baby Boomers market here is between $200,000 and $600,000. With the continuing demand inside the Bay of Banderas, that price point, in the coming years, will disappear. This is the reason the Mexican government is spending billions of dollars on more infrastructure north along the coast all the way up to Mazatlan.

The other major area where America has become overpriced is in the field of health care. This massive shift of revenues is estimated to add 5-7% to Mexico’s GDP. The name for this “business” is Medical Tourism. The two biggest competitors for Mexico were Thailand and India. Thailand and India’s biggest drawback is geography. Also recent events, Thailand’s inability to keep a government in place and the recent terrorist attack in Mumbai, have helped Mexico capture close to half of this growth industry. In Mexico today there are over 56 world class hospitals being built to keep up with this business.

Mexico is currently sitting on a cash surplus and an almost balanced budget. Most Americans have never heard of Carlos Slim until he loaned the New York Times $250 million. After that it became clear to many investors around the world what Mexicans already knew: that Mexico had been able to avoid the worst of the U.S. economic devastation. Mexico’s resilience is to be admired. When the U.S. Federal Reserve granted a $30 billion loan to each of Mexico, Singapore, South Korea, and Brazil, Mexico reinvested the money in Treasury bonds in an account in New York City.

According to oil traders, Mexico’s Pemex wisely as the price of oil shot to $147 a barrel put in place an investment strategy that hinged on oil trading in the range of $38-$60 a barrel. Since the beginning of 2009 Mexico has been collecting revenues on hedged positions that give them $90-$110 per barrel today. Mexico’s recent and under reported oil discovery in the Palaeo Channels of Chicontepec has placed it third in the world for oil reserves, right behind Canada and Saudi Arabia.

The following is a quote from Rosalind Wilson, President of the Canadian Chamber of Commerce on March 19, 2009. “The strength of the Mexican economic system makes the country a favorite destination for Canadian investment”.

OPPORTUNITIES: WHY PUERTO VALLARTA & THE RIVIERA NAYARIT

The answer is simple and old fashioned: SUPPLY AND DEMAND.

The area of Puerto Vallarta/Riviera Nayarit inside the Bay of Banderas is an investor’s dream. This area has the comprehensive infrastructure in place, world class hospitals and dental care, natural investment protection from the Sierra Madre Mountains, endless future water supply, low to nonexistent crime, international airport, and limited supply inside the Bay, first class private bilingual schools and higher than average appreciation potential. Like many areas in Mexico there is large demand for full and part time retirement living and a lot of construction underway to meet this demand. Pre construction of course is where the best bargains are available.

I would offer a word of caution for investors in Mexico. Do not be seduced by the endless natural beauty that is everywhere, both inland in colonial towns and along thousands of miles of beach. Apply conservative medium and long term investment strategies without emotion. The demand for full and part time living by American and Canadian Baby Boomers is evident throughout the country. The top two choice locations are ocean front, and ocean view. The third overall choice, which is less expensive, is inland in one of the many beautiful colonial towns or small cities.

Mexico, with the world’s 13th largest GDP, is no longer a “Third World Country”, but rather a fast growing, economically secure state, as the most recent five-year history of its financial markets when compared to the U.S.A.’s financial markets suggests.

DOW JONES AVERAGES MAY 2004 10,200 – MAY 2009 8,200 20% LOSS IN 5 YEARS

MEXICAN BOLSA MAY 2004 10,000 – MAY 2009 23,000 130% GAIN IN 5 YEARS

When you live in Mexico you can truly enjoy the good life.

Just across the border from the U.S. , Mexico is now “closer than ever” – that’s a motto used by the Mexican Tourism Association – and as many expats are choosing to live in Mexico, we couldn’t agree more.

What does that mean exactly? Well, in terms of physical proximity, Mexico is the closes southern neighbor to the U.S. and a NAFTA partner, with all the good roads, high-speed communications, and top notch health care that you’d expect up north. Those who move to Mexico find living and doing business there to be very easy.

Mexico is served by a large number of international airports with regularly scheduled flights from all over the world. But imagine having the option of driving from the U.S. or Canada to explore this magnificent country in your own car, at your own pace. Imagine returning to the U.S. and not having to worry about skyrocketing airfare or – perish the thought – disrupted air service caused by strikes, weather or other delays.

By living in Mexico you will be ble to enjoy its rich culture and customs.

Previous administrations did little in the way of infrastructure improvements, but President Filipe Calderon seems committed to allocating funds for new and expanded road, ports and telecommunications infrastructure. This goes hand in hand with increased privatization, which will allow concessions in the national airport network and the telecommunications sector. The idea is that all of those improvements will further encourage and facilitate commerce.

A low cost of living in Mexico means a high quality of life.

Everyone seems to agree: the quality of your life improves when you live in Mexico. Things take longer so you’ll need to learn to slow down. Goods and services cost less so you can afford the kinds of luxuries only the very wealthy enjoy up north like a maid, a cook and gardener. When you can afford to hire help, all of a sudden you have time to read, time to volunteer at the local school or orphanage, time to golf, relax on the beach and most importantly – time to savor life

The key to smart shopping in Mexico is local shopping. You’ll pay about 50 cent a kilo (2.2 lbs.) for fresh fruit like mangos, oranges or pears. A kilo of avocados sells for about $1.55 which is what you will pay for one avocado in the U.S. While it is true that you can find just about any product you’re used to having up north from Campbell’s Soup to Tide it’s also true that you’ll probably pay more for the convenience of a brand name. It you shop at the local produce markets and the store where the locals buy you are sure to pay less for your goods.

Live a long life in Mexico with its first rare health care.

You will find that, in general, health care in Mexico is very good and in many places it is excellent. Most doctors and dentists in Mexico received at least part of their training in the U.S. (and many U.S, doctors have trained in Mexico, notably in Guadalajara). Many continue to go to the the U.S. or Europe for ongoing training.

Every medium to large city in Mexico has at least one first-rate hospital. A big plus is the cost of health care in Mexico is generally one half or less than what you might pay in the U.S. The same foes for prescription drugs. Those manufactured in Mexico cost, on average, about 50% less than the same drugs in the U.S.

Visits to dentists are an attractive draw for travelers to Mexico, since quality dental work costs a fraction what it does in the U.S. or Canada. Many dentists and other medical doctors in Mexico speak English.

The paradox for Mexico’s increasing modernity and its attractiveness is that things still move a bit slower. You can enjoy a relaxed and refreshing lifestyle, like some out of a 19th century travelogue and yet it isn’t half a world away.
That is a plus that other destinations with this kind of weather, culture and lifestyle just cannot match.

Living in Mexico is truly a return to kinder, gentler times.