By: Yair Dotan Yadid

The USA was once the greatest… well the greatest of everything on earth (I am referring to good things, not bad things). However, that is now changed. Not because of the economic crisis, but because of what brought on the economic crisis. I think all the reasons for this catastrophic situation can be summed and explained by one dominating reason.

I call it the ENRON SYNDROME: THE ENRON SYNDROME CAN BE DEFINED AS THE CHANGE IN THE ALLEGIANCE OF THE BOARDS OF DIRECTORS OF AMERICAN COMPANIES: THE DIRECTORS ROLE BY DEFINITION IS TO PROTECT THE STOCK HOLDERS’ INTERESTS AND PREVENT THE MANAGEMENT OF A COMPANY FROM ACTING AGAINST THESE INTERESTS. REGRETFULLY THE BOARDS OF DIRECTORS OF AMERICAN COMPANIES NOWADAYS REPRESENT THEIR OWN PERSONAL INTERESTS (MANY TIMES COLLABORATING WITH MANAGEMENT, FOR EXAMPLE BY GIVING 18 BILLION IN BONUSES AT THE END OF 2008) IN CLEAR CONTRAST WITH THE STOCK HOLDERS’ INTERESTS (This idea was developed by my brother who is a business professor, not me. and I believe in giving the credit to the person it belongs to).

This reality can be changed very easily by putting to use all the new communication instruments (mainly internet) and making the board of director’s decisions, regarding management and directors compensation, subject to stock holders’ scrutiny in real time, and creating the mechanism for vetoing “doubtful” decisions.

The question is what can be done, on a personal level, in the meantime, until these changes take place. Keeping money in the bank is not a solution, because the banks, to put it mildly, do not inspire confidence. The answer, then, is to look for other venues of investment, especially if you are at an age nearing retirement.

I would suggest the following formula: BUY A HOUSE IN THE US, TAKING ADVANTAGE OF THE LOW PRICES OF TODAY, AND RENT IT. Then move to another country, where the dollar can buy a lot more than in the US, and live on your US rent.

I recommend the Republic of Panama as the ideal place to live in. I am an Israeli born real estate agent working in the Republic of Panama. I am not a professional financial advisor and give my personal opinion only. So my advice should be checked and rechecked to see if it applicable to you. However I have been living in the Republic of Panama for the last 20 years, and I love the country. As an outsider, I may be more aware of all aspects of its beauty and I hope I can relay to you some of them. So please read on.

The republic of Panama is Paradise on earth. It is considered one of the best places in the world to retire in. There is no one reason for that statement. It is an accumulation of facts that make Panama that special place you will want to live in and while there, love every minute of it.

1. The People:

I had friend from Chile. He was an older guy, of around 73 years old, that lived next to me in the building I was living in at the time. He managed to put in words what I felt about the Panamanian people. He said that all his life, after living in many countries all over the world, he looked for a place to live, where people that he saw for the first -and last time in an elevator, would greet him with a “Hello” or a “Good Morning” when he entered that elevator. He told me that, thank god, at his old age, and after looking for that same thing in many countries across the world, he found that place in Panama.

Another anecdote: I was looking for a house in Gamboa (a small neighborhood near Panama City, on the banks of the Panama Canal, half an hours’ drive from the city), in which I had never been before. I did not know the place so I had to ask for directions. I saw some firemen washing their red fire truck and stopped next to them, asking for directions to the street the house was on. They did not just show me the direction by pointing a finger and telling me when and in which direction I should turn, but took out a map they had there, showed me on the map how to get to where I was going, and even made a sketch of the relevant streets and intersections on the way to the place I was going to. They also offered to accompany me to show me the way. I took the sketch, declined the offer to accompany me, and got to the house I was looking for without a hitch. By the way, so you do not get the wrong impression, I am not a young woman and was not dressed in a low cut dress at the time I was asking for directions from the firemen. I am a 55 year old man. I am telling you that just so you know that I received that help because the people I asked were nice people and wanted to help, and not because of some physical attributes I might have had.

Does Panama have its share of crooks and criminals and all the “bad guys” that any other country has? Of course it does. But the everyday Joe and Jane are nice people. This fact was demonstrated very clearly when the dictator Noriega was in power. The democratic forces in the country held many rallies and demonstrations against the dictatorship. However, all political activity stopped from Thursday afternoon to Monday morning. People were so easy going that they did not spoil their weekend for some “insignificant” theme like freedom. By its people being so easy going, Panama was spared the bloody conflicts of other countries in Central America, and the reconciliation process, after Noriega was ousted, was fast and almost totally painless.

2. The climate:

Panama is a tropical country. It is 8 degrees north of the equator (the geographical definition of a tropical country is any country that is less than 10 degrees north or south of the equator). It is a long and narrow strip of land (the part most narrow is where the Panama Canal cuts the country in half, and its width there is about 60 miles only) lying from east to west. On its north shores are the Atlantic Ocean and the Caribbean Sea, and on its south shores - the Pacific Ocean. As a tropical country, it is never cold in Panama. On the contrary, most of the days are very warm. In Panama City there is no oppressive heat, like in the desert, but the temperature is around 30 degrees Celsius (86 Fahrenheit) during the day. The humidity is also high. However if you leave the city and go into the country side, no more than an hour and a half drive from the city, you can get to areas, that are a little further away from the oceans, and are on a little higher elevation than sea level, and get to THE BEST WEATHER IN THE WORLD: One of the best places to live and enjoy that “best weather in the world” is SORA. Sora is a small town, 18 kilometers (11 miles) North West from the main highway. The access road is a two lane road and is in very good repair. It is around 550 meters (1,800 feet) above sea level. From some parts of it, there is a beautiful view of the Pacific Ocean, and from other parts there is beautiful Mountain View. IN MOST OF THE HOUSES IN SORA THERE IS NO HEATING OR COOLING APPARATUS, BECAUSE THERE IS NO NEED FOR ANY, ALL YEAR ROUND. During the day the temperature is around 27 degrees Celsius (80.6 Fahrenheit) and at night it goes down to around 23-24 degrees Celsius (73.4 – 75.2 Fahrenheit). Because of its elevation, during the hours of the day there is usually a soft breeze coming from the sea that caresses the face and keeps the body cool. Of course there are other places similar in the Republic of Panama, but SORA is a place where there are lots for sale, a place I know personally, and love, and that is why it told you, my readers, about it.

3. The Economy:

I will not tire you by giving you an Economic analysis of the Panamanian economy (I am not qualified). Besides, the US economic crash proved that economic analysis is, to put it mildly, not an exact science. So I will leave the right to make big mistakes in their economic analysis to the professionals and will limit myself to give you some basic information that I think may be of interest.

Panama’s economy is based on service rather than production. There are hardly any big factories. The biggest I can think of right now, are the factories of the companies that manufacture cement.

The legal currency in Panama is the US dollar, a fact that gives the Panamanian economy a lot of stability, and saved the economy from that crazy run of hyper inflation that plagued many Latin American countries in the past two decades.

The Panama Canal is one of the main sources of income of the Panamanian government. The Canal is going now through a very important phase of widening, making it deeper, and building new locks so it can service bigger ships. This mega project (together with other major mega projects) will inject big quantities of money into the economy Panama, and this is one of the things that, in my opinion will help Panama pass this world wide economic slowdown better than other countries will.

However, the biggest income source of the Panamanian economy is not the Canal. It is tourism: The tourism industry can be divided into commercial tourism and leisure tourism. The business tourism comes mainly to the Panama Free Zone. Panama has the second biggest trade Free Zone in the world (after Hong Kong). Many business persons come to Panama from all over Latin America to buy in the Free Zone. The Free Zone is a relatively small area where several thousand companies conduct their business. These companies import merchandise (mostly from the Far East, mainly from China) and sell this merchandise all over the Latin American continent. Its big advantage is that because of the big concentration of companies in a small area, it is very comfortable to conduct business. There is no time lost on transporting oneself from one store to another. A person that comes to buy, after entering the Free Zone, does not have to use a car in order to get from one company to another. This person walks the short distances between the different companies, and has a huge variety to choose from in any given type of merchandise (shoes, jeans, kitchen appliances and so on) - a complete variety of merchandise he or she may need in order to resupply his or her department store.

The leisure tourist is a person that comes to Panama to enjoy its great weather, its amazing beaches and its very unique wild life and ecology. For Example, Panama has the biggest variety of birds in the world; Panama is the bridge between the cold northern part of the American continent and the warm south. In the fall, migrating birds have to fly over it going south, and in the spring, these same birds have to fly over it going back north. Panama has a lot to offer the person who comes to “fry” his body on its beautiful beaches, to enjoy its natural treasures, or to lose his money in its many casinos. IT IS VERY HARD NOT TO HAVE FUN AS A TOURIST IN PANAMA.

As I said above, I do not want to give a boring economic analysis of the real estate situation in Panama. However I would like to comment on it, because nobody can disregard this issue at the present. The building boom Panama enjoyed in the past four years has not yet been affected by the crash in the US, as far as apartment prices are concerned. However, nobody thinks this crisis will pass by, without leaving its mark. The first to suffer will be the land owners that wanted to sell their land to developers. I think they will not find too many buyers at the present, so they will probably not sell, and wait for better times. There will be bargains to find if a land owner is really desperate and wants to sell at any price. However the majority will not sell if they cannot receive the high prices they have become accustomed to before the crash (which were still bargain prices in comparison to Costa Rica for example). As far as apartment prices are concerned, in my opinion, there will be a price reduction of the high class apartments, which will come to not more than 25% decrease (I repeat – it is only my opinion). In the middle price range the reduction will reach 10% - 12%, and in the low priced apartments there will be no price change.

An American couple that wants to live in Panama can get an apartment in Panama City or in the interior of the Republic for very reasonable prices.

Because the buck takes you further along the road to happiness in Panama than in the US, it is very logical to move to Panama, especially in these hard times. In order to demonstrate just how much further the buck takes you along the road to happiness in Panama than in the US, please ask yourself, who in the USA can afford a maid that will come to his house five days a week or will live there, in the house, and take care of all the daily house chores. In Panama most middle class families have a maid. In the US it is only the very rich that can afford a maid on a regular basis. I know that many Americans, for some reason, do not like to have a maid. Maybe having a maid is regarded by them as exploiting that person. This point of view is totally wrong. The maid enjoys having a steady income as much as you will enjoy having your house taken care of. Another reason I would recommend taking a maid, apart from the added comfort of living a maid can provide, is that having to talk with your maid will force you to learn Spanish. Take a maid and be nice to her - that is all. It is a win win situation.

Working as a maid is very common in Panama. The lucky ones find good families and work with them for many years (30 – 40 is not uncommon). The maids become an integrated part of the house hold and are considered many times as friends or even as part of the family.

Again, two examples:
I was sitting at a friend’s house, and his maid came in after walking the dog. I asked him since when does he have a dog, and he answered that the dog is not his, it’s the maid’s dog. The maid was a “live in” maid, but she had satisfied her love for animals and had her own dog.

Another example, a good friend of mine, told me that she is looking for a nice used car to buy. She told me that the car is for the maid’s son. I asked how come she wants to buy a car for the maid’s son, and she explained that the boy grew in her house as a brother; his mother came to them looking for a job with a baby in her arms when my friend was just a young girl, and her parents decided to accept her. She told me that when they were growing up she, her brother and her sister and the maid’s son were treated the same. After all, it was impossible for any human being to give candy to her and her two siblings and at the same time deny candy from the fourth child because he is the maid’s son; it was impossible to tell her and her two siblings to go wash before their bedtime and not to insist with the maid’s son to act the same way. So gradually the maid’s son stopped being “the maid’s son” and became an additional brother to her. And now that he is all grown up, he needs a car because he is starting collage, and she will get one for him.

What I was trying to show with these two stories is that having a maid does not mean that you are degrading anybody; It is up to you to make sure you are not.

I will stop writing here, because if I do not, you will get bored and not read my next article. What I was trying to do in this one is to make you aware of some of the opinions I hold, that can help you get out of a hard situation, and at the same time show you the Republic of Panama, through the eyes of one of its many lovers.

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