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Life Member: The Top
Trial Lawyers in America

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Our last newsletter looked at 'de facto' currency controls now in the US, and how to become a sovereign individual and maintain your independence as governments increasingly act to control our lives. As Americans enjoy traditional celebrations of parades, hot dogs, barbecues, and walks on the beach with friends this weekend, we all need to remember not to take our freedoms for granted.

At times, the world evolves in almost undetectable, long term shifts, and at other times, in observable and dynamic short term swings. Whether we recognize it or not, both have the potential for great impact on the quality of our life. In either case, if you ignore it, it’s at your peril.
Our newsletter today is about……
Many incorrectly believe that globalization and most things international arrived as a result of the Internet (or, as Al Gore’s creation of the Internet).
From a macro perspective, international economics, laws, politics - and yes, trusts – have been around much longer than you probably realize. The big scheme of things generally move in slow increments, but decidedly so. Decisive changes generally occur after major events, like major financial crises or wars. When these defining moments occur, the world as we know it is never the same, and a whole new world order swiftly follows.
For example, for our history buffs, critical in the “big picture” of international events were Spain’s dominance of the world (1494-1648), the French period (1648-1815), the British rule (1815-1919), the British-American period (1919-1945), the American-Soviet rivalry (1945-1989), and the post-cold war period of 1989 to present. All epochs are effectively deemed bookmarks in the history of international relations and economics.

The shifts from one period to another were sometimes abrupt. The rupture point – or pivotal event – for each one of these epochs all follow a crisis in the international arena, and economics and politics are always the influencing factor. Today, through the Internet, tipping points are prone to move at lightning speed.
On a more personal scale we are in the midst of another defining shift happening right before us.
For those more interested in a contemporary micro perspective, money and power can and does move swiftly from region to region. On a personal level, it moves from one individual to another. How much more personal can you get than a business failure, loss of a job, home or spouse, a major law suit, or other devastating event, that wipes out your earnings and sends it off to an unwanted benefactor? Stuff happens. Money Goes.
Money sloshes around the globe like bath water in a wash tub”, so says legendary investor, Jim Rogers.
During the past several decades, in America, people with money were sloshing around too - relocating from the North to the South, according to Forbes Magazine. The reasons were taxes, cost of living, and lifestyle. But in some respects that’s like rearranging the chairs on the Titanic.
Internationally, there is a more profound movement of people and money that you might not notice. And for individuals with measurable assets concerned about safe havens, and people of like kind thinking and means, they should take notice.
So Where’s the Money Today?
If we follow the flow of money, what do we find?
First, we discover that global wealth staged a comeback in 2009 after its steep decline the year earlier. Assets under management increased by 11.5% to $111.5 trillion. This encompasses 62 markets worldwide, representing 99 percent of global GDP, according to the Boston Group’s Global Wealth 2010 Report. However, HSBC chief economist Qu Hungbin, and others, argue that this trend is clearly reversing at this moment.
North America posted the greatest absolute gain in wealth at $4.6 trillion, but the largest percentage gain occurred in Asia-Pacific (ex Japan). Europe remained the wealthiest region, with $37.1 trillion in assets under management, or about one-third of the world’s wealth.
Overall, millionaire households represent less than 1 percent of all households, and owned about 38% of the world’s wealth. The number of millionaire households rose about 14%, to 11.2 million, worldwide.

In numbers alone, currently the US still has the most millionaire households, closely followed by Japan, China, the U.K., and Germany. However, the highest density of millionaire households as a percentage of population live in Singapore (11.4%), Hong Kong (8.6%), Switzerland (8.4%), the Middle East (7.4%), the US (4.1%), Belgium (3.5%), Israel (3.3%) and Taiwan 3%).
Women control about 27% of global wealth, with North America having the highest proportion at 33%.
Non-wealthy households (less than $100,000 in invested assets) represent about 83% of all households. On the other end of the spectrum, households with $5 million or more in wealth represented 0.1 percent of all households, but owned about 21%, or $23 trillion, of the world’s wealth.
Switzerland remains the largest offshore center in the world, accounting for $2.0 trillion, or about 27 percent of all offshore wealth.
However, the propensity today for governments to add and expand banking regulations and restrict offshore investing – especially in the US – will have a significant impact on maintaining and growing assets going forward.

The push for greater transparency will dampen the growth of wealth worldwide – at all levels - as some individuals feeling threatened move their assets out of offshore centers, particularly individuals living in America and Europe.
As many individuals became risk adverse during the GFC, they went searching for temporary safe havens. The bulk of much of those uprooted funds still remains in temporary positions. High net worth investors have emerged more cautious, but have emerged. 
And Who Owns the Stocks?
The amount of wealth invested in equities (stocks) varies around the globe.

Clearly, North Americans hold the highest percentage, with 42% of their assets in equities. Europe follows at 29%, Asia Pacific (ex Japan) 28%, Middle East and Africa 25%, Latin America 18%, and Japan 12%. The global average is 30%.
Why do Americans love stocks so much? And why do they fear diversifying into international investments offering potentially higher returns and greater security? Could it be related to US government scare tactics?
The Outlook for the Future.
Naturally, the growth in global wealth will hinge on the recovery of the global economy. Right now the horizon looks pretty foggy. In some countries economic indicators struggle to point toward a sustained recovery, but its strength is still a matter of wide debate. Some are sending up the warning flag for a double-dip global recession.
Whatever the level of growth during the next 5 to 10 years, in general, wealth will continue to grow fastest in emerging markets, according to the Boston Group’s Global Wealth 2010 Report.

Asia-Pacific (ex Japan) will be the fastest growing region, with wealth expecting to grow at nearly twice the global rate. Not surprisingly, China and India will be the engines of growth in the region, with wealth growing at three times the global rate. Together, they will account for 75% of the increase in the Asia-Pacific region (ex Japan).
Let there be no doubt though, the mantle of manufacturing leadership and the money has definitely shifted east. According to US research firm IHS Global Insight, China is set to overtake the US in the dollar value of its manufactured goods output by next year.

The mercantilist export policy has worked to incentivize global manufacturers to either move to China…..or shut their doors because they cannot compete on unit labor costs. IHS reckons that this year US manufactured goods will account for 19.9% of global output while China-sourced goods will account for 18.6%.

The US has held the lead in this category since 1890, when it assumed the title of "world's workshop" from Great Britain as hard working immigrates arrived by the boatloads looking for their share of the American Dream. Today, the US erects fences and bureaucratic obstacles to keep out what once made America strong.

Is it any surprise that so many today instead seek out the Global Dream?
You might not be aware that the Asia-Pacific region’s number of millionaires already equals Europe, as the region powers ahead, according to a report by Capgemini and Merrill Lynch & Co. 
The number of individuals with $1 million of investable assets in the Asia-Pacific region – home to the world’s two fastest growing economies - rose to 3 million in 2009, matching Europe, and now just behind North America (Canada and the USA combined) 3.1 million, according to the 14th annual World Wealth Report.
As a result, Barclays, Morgan Stanley and UBS have been rushing to expand their private banking services in the Asia-Pacific region. Wealth in the region (ex Japan) is expected to rise at almost double the global pace, the Global Consulting Group says.
With America’s long run at number one, there is now overwhelming evidence of money migrating elsewhere….like bath water sloshing in the wash tub.
Today, there is a shifting of the world's economic balance of money and power from the Western Welfare States to the managed economies of the East. No doubt, for many, challenging times are ahead over the coming years.

It's important to take note of these changes worldwide, and act with a global perspective. In addition to asset protection planning, we have long believed that an international trust is an excellent tool when thinking and acting globally for economic reasons.
Who Manages the Money?
Other than self-managed investments, there are basically seven different investment categories.
First, are the traditional onshore private banks managing assets. Many of the banks also provide loans and mortgages, and operate in a competitive environment. Most of their income is generated through the interest payments you make, and fees and commissions you pay.
Second, are the North American private banks, with roots in providing trust and custody services. Some include loans and mortgages, but they provide their discretionary services through a heavy reliance on the fees and commissions you pay.
Third, are the traditional offshore private banks, sometimes owned by wealthy private families. Their services are generally based upon trust, confidentiality, political and economic security, and tax efficiency. Their services are paid mostly by the fees and commissions you pay.
Fourth, Private-Banking units of international banks, provide both onshore and offshore banking services. They usually offer access to a comprehensive range of global products and services. The fees, commissions and interest income you pay offset the services they provide.
Fifth, Stockbrokers focus on executing transactions for self-directed individuals, and many are full service with a broad range of products. You typically pay for their services from one-off commissions paid for transactions executed.
Sixth, is the Mulit-family office for the upper high net worth clients. Their services are generally very customized, and can include managing a network of other service providers, offering specialist advice, and management and administrative services, which are generally fee based.
Seventh, external asset managers focus on providing independent advisory and planning services. Managing the client relationship is their sole priority, focusing on helping clients make the best investment decisions. However, their services are often not only the fees you pay, but from payments and commissions from third parties whose products they recommend.
Naturally, the difference in services and rate of return margins can vary widely, even operating under similar business and investment environments. And the fees and commissions you pay can greatly impact the net return on your investments.

And whether you personally manage your assets, or they are professionally managed, an international trust is an excellent vehicle for all of these management styles.
Going Forward?
The decisions you make today – where you live, diversification and management of investments, steps to protect assets – will all contribute to the quality of life for you and your family in the years ahead.

Significant changes are happening as you sleep.
The old ways just won’t work anymore. That’s why forward thinking individuals are taking steps today to protect and preserve what they have. Understanding, is the first step. Then taking small, measured steps, is the next step.
Many are staying ahead of the queue and preparing now for the future…..and you can too. Independence Day should be celebrated more than just once per year.
Visit our new web site – it has a familiar look to it – and look for the tips and Past Articles for how you too can benefit as the world around you evolves.
Until next time.
David A Tanzer, Esq.
JD, BSc, Ph.D (Hon)
For more information visit or email to David is the author of “How to Legally Protect Your Assets” and “Offshore Living and Investing.”
David A Tanzer & Assoc., PC.

Vail, CO USA:
Tel. (970) 476-6100
Fax (720) 293-2272

Auckland, New Zealand:
Tel. (64) 9 353-1328
Fax (64) 9 353-1328

Brisbane, Australia:
Tel. (61) 7 3319 6999
Fax (61) 7 3319 6999

(Licensed to Practice Law in U.S. States & Federal Courts;
Assoc. Member Auckland, N.Z. District Law Society - Foreign Lawyer; &
Assoc. Member Queensland Law Society, AU - Foreign Lawyer)
The comments herein are not intended to constitute a legal or tax opinion regarding any specific legal or tax issue as additional issues may exist; does not reach a conclusion with respect to any specific legal or tax issue addressed herein or any additional issues not included; and cannot be used for the purpose of avoiding legal or tax obligations or penalties with respect to issues in or outside the scope of matters discussed herein.
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