TRAVELS, CONSULTATIONS, INSIGHTS, UPDATES
Returning to the Mediterranean to meet with
businessmen, investors and potential new clients, we found a climate of
uncertainty and fear for the future.
Unemployment for youth in southern EU countries
is reaching 50%. Tourism is way down, as EU citizens face higher taxes and
drastic cuts in pensions. Restaurants are one-quarter full, and often open only
weekends. But coffee houses, the cheapest place for leisure, remain full.
Italians and Greeks are taking their summer
holidays as weekends at a nearby beach or ferry-ride away. Even in peak season,
hotels are discounting heavily. Vacationers are using public transport rather
than renting cars if they didn't bring their own.
Many Mediterraneans look now to the U.S. as a
place where jobs and careers for their children are possible. Their future at
home remains gloomy. They have lost faith in their governments, who they see as
stealing their money, or at the least, mismanaging it.
The euro remains strong however, as northern
Europe successfully produces and exports goods and services the rest of the
world wants. Therefore, in spite of EU problems, tourism is still not a
bargain, and expensive for foreigners. It is not, as expected, filling the gaps
in the local economies.
There are indications that the Russians and
Chinese, especially those with hot capital, are moving in to purchase assets in
real estate that impoverished locals are ready to sell at attractive discounts.
In spite of the negative reality on the streets of southern
Mediterranean countries, the stock markets show a different reality. The stock
market is a forward looking mechanism, and European stocks, especially those companies
servicing the upper middle and higher classes are getting buyers these days.
Investment advisors point out that while clothing companies are sinking,
accessory and shoe companies, especially high-end ones, are flourishing.
Consumers will buy several 20 euro feel-good trinkets over time, but will not
buy a 100 euro dress.
The same holds true for gourmet foods. Markets I visit
everywhere have crowded stands of pistachios, sesame delicacies, and the best
Kalamata olives. Whole lambs ready for roasting are selling well. Cooking shows
are avidly watched, as many as four at a time airing on local TV, as
restaurants stay empty.
Enterprising youngsters start up falafel and
freshly-squeezed orange and carrot juice stands in Israel, spicy gyro
operations in Greek bus stops and back streets, and aromatic onion pissaladiere
tarts at take-away counters in busy pedestrian alleys in southern France.
Greece, with a population of 16 million, is projected to
receive 17 million visitors this year. It is a huge opportunity to seduce the
visitors into regular annual visits, but the cutbacks in infrastructure and
government service expenditure means garbage is not being collected as
regularly, roads and sidewalks are not repaired, and the welcome mat, such as
tourist maps and advisors in the local towns are less available. The threats of instant strikes, especially
on the island ferries and public transport are further tourist deterrents.
For the first time, I am hearing Europeans speak openly of
losing faith in the local future and talk again, as in the last century, of
America as the land of opportunity for their children. It is to be seen if the
resurgence in international interest in European stocks will contradict this
negative mentality. Immigration flows, land values, investment opportunities
all flow from this answer.
The Mediterranean Middle East has different dynamics than
Europe. Populations are younger. There are catalysts of international energy
flows and international banking, and tourism is growing rapidly, with attendant
construction and employment growth. Governments in Israel, Malta, even Tunisia,
spend on infrastructure – whether on new public buses, light rail, or tourist
port facilities – and it brings the tourists back to spend more and create
jobs. Airports and buses have free wi-fi, electronic information boards prevail
at even local terminals, and the fast walking pace of youth reveals their
ambition and confidence that they have a place in the future. New private and government partnerships in
Tunisia are creating entire new towns of middle-class housing and shopping
facilities, even while lavishly decorated camels are lined up at the cruise
port to give visitors a ride and an exotic taste of the past.
Gross figures of earnings, consumption and employment will
not give a true picture, due to the huge split between the widely separated
classes. So statistical averages between the classes are deceptive, and mask
what many see as a dangerous and possibly violent social situation arising from
the desperate plight of southern European youth. Furthermore, it has been
suggested that the Germans are withholding economic data as the September
election date nears, not wanting to frighten voters. So reading the streets and
talking to the ordinary people remains the best indicator of economic health.
WSGA participated in a CONFERENCE CALL with USCIS and the
SEC (Security Exchange Commission) April 3, 2013.
The SEC Anti-Fraud section, which uncovered the fraudulent
Chicago EB-5 project, reported that the affected investors will get their funds
back shortly. The SEC is rigorous in overseeing all aspects of the EB-5
process, as these investments are regarded as securities. Under the Security
Exchange Commission Act of 1934, the SEC regulates investment advisors, broker
dealers, lawyers, accountants and anyone involved in securities who has a U.S.
The important message here is that EB-5 investors dealing
with brokers that do not have a U.S. base or presence, and who therefore are
operating outside of this strict SEC oversight, must accept the risks of
accepting advise and placing funds outside of U.S. scrutiny.
Informal reports from the U.S. Citizen and Immigration Service suggest that due to high demand, the 10,000 visa quota for EB-5 authorized visas for 2013 will be met and filled earlier in the year than previously. This suggests that those planning to enter the EB-5 process submit their applications as soon as possible in order to be eligible in 2013. As the EB-5 Program gains in popularity, 2014 could be an even more crowded year, with the visa quota depleted even earlier.
My recent consulting with top-rated investment advisor Louis Navellier probed emerging global trends and money flows, the declining U.S. dollar, the rise of ETF's and the continued attractiveness of equities. He emphasized the timeliness of investing in emerging markets, as well as in global companies with earnings outside of the U.S., as when translated into dollars total earnings will increase significantly. For our EB-5 investors the cheapening dollar makes an EB-5 investment particularly favorable at this time.
I spent an afternoon with Mark Wells, Financial Planner with Asset and Financial Planning, Ltd., exchanging ideas about managed portfolios once our investor is settled in the U.S. As a long-time portfolio strategist, Mark has focused on a healthy balance between growth and income, depending upon the investor's age and risk profile. He has identified a very targeted group of three portfolios, with a global reach, and an impressive return far in excess of industry norms and with a four or five star Morningside rating.
We agreed that bond yields are at an all time low and are sure to rise, so bonds are not a good investment. Therefore equities, especially high-dividend paying ones in fields such as energy pipelines servicing the new U.S. energy discoveries, and real-estate investment trusts (REIT's) in health services buildings and shopping centers provide an attractive low-risk-high yield opportunity. Mark provides a comprehensive investment service to our clients, including complete portfolio reviews every quarter. I will introduce our interested clients personally to Mark to discuss their objectives.
MY STUDIES AND CONSULTATIONS ON INTERNET ISSUES,
INTERNATIONAL MEDIA LAW, EUROPEAN UNION LAW
Undertaking a focused law program at Oxford in several areas of emerging law, as tested in the EU courts, I explored, with top international Oxford Professors in the field, the constantly-tested balance between freedom of speech and protection from libel. While in residence at centuries-old Magdalen College, I had personal tutorials with the top experts from Europe, the UK and Asia, exploring and writing about the ramifications of existing law on the challenges of Internet governance.
Some months ago I presented a paper at an international conference discussing the opportunities the internet provides for instant business linkages among the diasporas of ethnic immigrant communities everywhere. This ethnic linkage, and the trading opportunities based on trust that it nourishes, actually gives ethnic minorities, once linked, an advantage over many native populations in their own land. The Chinese, Indian, Pakistani, Israeli, Iranian and Russian diasporas have made much use of this concept. Those coming to the U.S. under EB-5 will further strengthen their international networks while creating U.S. jobs and investment flows.
At the Inns of Court in London I dined in the great hall, and met with Members of the House of Lords who have debated extensively on issues of control of the freedoms provided by the Internet. As the international Internet touches every aspect of business today, and affects our clients in their daily lives, it is important to be current on these issues.
EUROPEAN LAW continues to evolve daily. It is clear from recent EU High Court rulings that EU Law is supreme over all national laws in the member countries. Our clients involved in international business must be aware in issues of contracts and ruling jurisdictions for disputes that they must be up to date. Our advisors, upon demand can offer guidance.
Studied Global Law at Oxford University, U.K. Aimee Cernicharo, Immigration Attorney, specializing in asylum claims, in discussions about potential upcoming immigration reforms.
TRAVELS IN THE MEDITERRANEAN and MIDDLE EAST -
ITALY, TURKEY, ISRAEL, CYPRUS, GREECE
My most recent trip around the world
confirmed what my investment meeting with Louis Navellier revealed. Emerging
markets are poised for continuing growth again, Europeans continue to spend,
keeping their economies alive, and the U.S., with record low interest rates and
an underemployed workforce is bouncing back.
Some interesting signs: European cruises
continue their sold-out position, with minimum discounting. My cruises were 50% European, 25% Asian,
mostly Chinese and Korean, and 25% U.S. and Latin America. All were spending
generously on side trips at every port.
Naples is busy. Although situated in the
traditionally depressed south, its port reflects national manufacturing and
shipping, and both are active. The bakeries are stocking expensive pastries and
most are sold out by early afternoon. New art galleries are opening downtown
and, even in the off season, hydrofoils leave regularly every hour to the
tourist islands of Capri and Ischia.
Rome is, as always, the “eternal city.”
There are probably more Chinese tourists there than any other nationality
crowding the historic sites like the Coliseum.
And they are young. One sees many Asian couples, students, and more independent travelers than those Asians traditionally travelling in groups. Gathering on the Spanish Steps or at the
Trevi Fountain, they are keeping the shops alive and the taxis busy. Hotels are
sold out in the popular locations. Newer locations, like the Trastevere
district near the old Jewish Ghetto, have their cafes and restaurants full. There
is a three hour wait in line to get into the Vatican museums or the cathedral
itself. In spite of Italy’s economic difficulties, interest rates on bonds are
declining as confidence returns.
bus trip through the Rome suburbs shows well-maintained homes, lines in front
of the movie theatres, coffee shops full, and streets very well maintained. The
recently upgraded central train terminal is crowded with travelers watching the
electronic boards, buying tickets electronically, and lining up for information
in electronically controlled lines. The multitude of food services there equals
or surpasses, in quality and quantity, that at any international airport, and
equally expensive – but they are all crowded.
In Turkey, the Istanbul Bazaars are full
of locals buying the expensive spices and home accessories. Turkish chains of
sweets stores, selling pistachio halvah, nougats, and almond candies all have
line-ups at the cash counters.
The freshly-caught fish sandwich vendors near the boats under
the Galata bridge– sizzling grilled fish on a hot bun with onion and tomato, five
dollars each, sell out each batch as soon as it’s ready, as do the barbecued
chicken and lamb stalls around the port, 10-15 dollars a plate with pita and
spicy Turkish salad. It means the middle class, in a population that is one of the youngest in the world, is alive and well and spending.
Booming secondary cities like Izmir and
Antalya are building service economies on top of the tourism trade. Condos are
going up everywhere, and shiny new trams link the expanding suburbs to the
center city. New appliance and home furnishing stores can be seen everywhere
from the tram ride. (The driver is a young, well-groomed attractive woman in
uniform, manipulating the electronic controls while maintaining cell phone
contact with her dispatcher.) Women in
this Muslim country visibly occupy positions of control.
Antalya already has eight million tourists
a year, justifying a carefully restored old harbor area with winding narrow
streets filled with artisanal shops, boutique hotels and coffee houses,
competing with McDonalds and Starbucks nearby. At least thirty old-fashioned
wooden tourist ships crowd into the tiny harbor, bordered with expensive
artisanal ice cream and yogurt stands.
Israel has a new rapid train line, with a
stop just outside the gate of the Haifa port. It connects, in comfort, most of
the northern locations of the country, from the crusader port of Acre south to
Tel Aviv and Jerusalem. The recent discovery of the huge offshore gas fields
has the Chinese bidding to provide and fund a high-speed rail link across the
Negev desert, to transport the fuel for export from Ashdod on the
Mediterranean, avoiding the problems of the Suez Canal, providing stimulus for
development and settlement in the southern desolate part of the land.
The Russians and Canadians are already
there to provide the technical infrastructure for the extraction. The
geopolitics of energy will change the power structure of the middle east forever,
as it is foreseen that the Israeli fuel will be fed by pipeline to Cyprus and
on to Greece and the rest of Europe. As the U.S. becomes energy self-sufficient
by the end of the decade, Saudi Arabia will be sidelined. An era of increasing
Chinese-Israeli cooperation and joint development in food technologies,
agriculture, and pharmaceuticals and transportation is to be anticipated.
The falafel (deep-fried ground chick-peas) on pita, with
do-it-yourself stuffings of cole slaw, pickled beets, onions, tahini sauce and
hot peppers, the national dish, is alive and well in the Jerusalem bus
terminal. They give out free samples to tempt and entice the crowd to buy more
– and it works. The shwarma, the other
national dish adapted from the Turks, is now mostly chicken, grilled on a
vertical spit and sliced, when crisp, onto hot pita with the same stuffings. If
you look hard, you can still find lamb, but the chicken, garlicky and tasty,
and healthier, is taking over, as in New York and Athens. The British Doner
Kebab vendors, the mainstay of Oxford students, still use a mixture of lamb and
beef on request, but is more expensive.
From the Haifa port, not far from the
Bahia Gardens that tumble elegantly down the hill, one can see the rapidly growing Israeli
version of Silicon Valley. Apple now does much of its design and development
work there, and Microsoft has extensive facilities there also. With nearby
beaches, a favorable climate, and a Mediterranean café culture, it is
attracting talent from everywhere, but especially from the Technion, Israel’s
Institute of Technology just a short distance up the hill to its growing
Crete is the largest island in Greece. It
already attracts the lion’s share of tourists. Heraklion, the main port and
capital, has lost much of its historical presence, except for the massive fort
at the harbor, to too rapid growth and change. Crete’s agriculture supplies
much of Europe, and the port is a major revenue and jobs generator. But a short
bus ride away, reveals ancient harbor towns like Rethymnon, and Chania, farther
away. They are the tourist magnets, surrounded by endless beaches, high
mountains and challenging ravines to climb. The future success of Greece will
depend, in some part, upon the country’s ability to develop sustainable tourism,
create high-level jobs at the managerial level, encourage entrepreneurship with
a sound banking system to build upon tourism drawing from around the world.
Investment to fund entrepreneurship will not come until a stable political
system, with the confidence of the electorate, is established. Turkey is
already further ahead in funding its tourist infrastructure and encouraging