By DON WINNER for Panama-Guide.com - I've said it before a dozen times, the only people who are really taking a risk in the Panamanian real estate market are the speculators. Everyone is playing the "what's going to happen" game in this economy, and thankfully Panama is in an excellent position to weather the storm quite nicely. Bank reserves have tripled in the past three years, the economy grew 11.5% in 2007, should come in at around 9.2% for 2008, and is expected to continue the run of growth in 2009 at about 7.5% or better. Demand for real estate in Panama has fallen sharply with the onset of the global crisis as retirees worriedly pour over the reports on what's left of their 401K's and retirement investments. They can't sell their empty nests and it's harder for potential buyers to obtain mortgages in a tightening credit environment. Unemployment is on the rise, car makers are being laid off, and in general we're looking at a period of tough times in the US, Europe, and Asia, a malaise that will most certainly cause significant economic harm in Panama and the rest of Latin America. But here's the good news... (more)

Oh, Woe Is Me... Not so much. There are a whole raft of things working in Panama's favor that will help this relatively tiny Central American nation come through the storm with flying colors - such as;

The Banking System is Solid: Foreigners love to bitch and complain about the Panamanian banking system; it's hard to open an account, they need a lot of paperwork, you have to put down 20% or 30% in cash to get a mortgage, you have to have life insurance, etc. In fact, the Panamanian banking system is relatively skittish compared to the guys in the United States who played fast and loose and who are now getting hurt. Panamanian banks didn't play those games, and the banks are in great shape. That means there won't be any local failures or collapses like those in New York and London. Those same things we like to bitch and complain about are the things that kept the Panamanian banking system out of the muck.


The Financing Is In Place: If you look out upon the skyline of Panama City and you see a construction crane, that means those developers and builders have already secured financing to build their projects. For the most part they had to sell about 50% of the units in pre-construction sales contracts in order for the banks to turn loose the funds. Generally speaking, builders don't start to build unless they have financing, and banks won't finance unless they have reduced their risk to practically zero. Banks love zero risk.


The Profit Is In The Other 50% - Builders and developers make their money on the second half of sales, after the building is built (or while it is being built). The first 50% is just to pay the cost of construction and to get things done. The second half is the income. So guess what? If market forces bring down prices and builders reduce prices to "dump" the remaining inventory, then that just means they end up making less profit in the end but so far no one is losing any serious money. The banks are covered, the builders are covered, and the buyers get a nice place for a lower price. Where's the pain?


Cement Doesn't Rot: All of the high-rise condominiums in Panama are made out of poured concrete, cement, ceramic tiles, glass, and steel. They still have all of the wonderful features that made them attractive in the first place, such as sweeping views of the Bay of Panama, a great location right in the middle of the city, modern design, fantastic social areas, security, etc. Anyone who bought one of these units can just sit tight and wait for a few years for things to turn around and the relative value of these properties will return promptly. The builders can literally sit on unfinished inventory and simply wait for the market to turn around. When it does, they can put these units back on the market. In the meantime, they can just sit there, and so what? The builders will realize their profits later. Between now and then they will probably be able to eat. Thanks for being worried.


First Out Of The Gate: The fundamentals which created the "Panamanian Miracle" are still in place for the most part, and it's the international situation that's throwing some cold water on the fire. Sooner or later things will turn around, and when that happens you'll see that Panama has weathered the storm in fine shape. Really smart investors will bottom-feed here and there to look for opportunities as they arise with an eye toward the midterm future. The $5.25 billion dollar (plus) expansion of the Panama Canal is going full speed and will continue through 2014. The Panamanian economy is still solid and stable, and there are several significant infrastructure projects ongoing that are stimulating the economy. Some sectors will take a hit, others will hold fast, and still others will grow during this global recession. But when the smoke clears, Panama will be very well positioned to right to the head of the pack, again.


The Richest Country in Latin America? Really? No, not yet. Actually, using data from the end of 2007, Panama was the 7th richest country in Latin America behind Chile, Mexico, Venezuela, Brazil, Uruguay, and Argentina. Historically speaking, Panama was both helped and hurt by the domination of the United States for all those years. The Panama Canal brought jobs and stimulated the economy, but only to a certain point. Now, with the reins removed and with Panama cashing in on their newfound position as toll-taker for world shipping, the Panamanian economy is smartly stepping forward and improving in all measurable areas. Before too long, and it might take another ten or fifteen years, Panama will slowly move up through the ranks to take it's place as the richest country in Latin America. It's going to happen, and it's only a matter of time. Just remember you heard it here first.


GDP Per Capita Is What Matters Most: Panama's Per capita GDP (2007) was $5,970 (Source), up from $3,939 in the year 2000. The overall size and weight of a national economy matters, but a better measure is compare economies in terms of size of their relative populations. Consider the following chart, prepared using data from the end of 2007. Clearly Panama is the #1 Central American economy in terms of GDP per capita. The nation's economy continues to improve, fueled by year after year of continued and steady growth, while others such as Venezuela falter;

Sometimes Small is Good: There are only 3.3 million people living in Panama, so big economic improvements are spread across the board relatively quickly. Unemployment is down to 5.6% and falling. Foreign Direct Investment continues to pour in from around the world. Easing prices for fuel, food, and consumer goods are putting more discretionary funds in the hands of consumers. There is upward pressure on wages as skilled and experienced workers get better and better positions and employers have to fight to keep their valued employees. Being a small country with solid economic fundamentals means Panama will be able to literally dodge most of the really big bullets coming from this global slowdown. There will be impacts, but those effects will be relatively dispersed and mitigated.


Clueless Chicken Littles: As always, there are always people waiting for their chance to scream "fire" at the first possible instance. And as usual those people are, for the most part, dead wrong and pretty much clueless. For instance real estate prices in Panama are established by market forces. Sellers offer products and buyers make offers - and if those two can come to an agreement and meet in the middle then the sale is closed. If they can't come to an agreement then (obviously) the sale does not take place. I've seen some articles lately literally chastising real estate developers, screaming that they should "wake up" to some version of a new reality and lower their prices. Not to worry - simple market forces of supply and demand will establish the value for every piece of property for sale. No need to tell sellers (or buyers) what to do, prices and relative value will be established for them by the big picture.


To Lose Money: For the most part, anyone who finds themselves trying to sell a property might end up making less profit than they had planned or hoped. So far, I've still not heard of one person who has been forced to sell their property for less than what they paid for it, realizing a net loss. So it's still a good marketplace, just not as incredibly lucrative as it has been for the past several years. But less profit is still profit, not loss. My advice - plan to get rich more slowly. Patience.
That's About It For Now: Panama will miss the worst of it. The fundamentals are still in place. Specific sectors will take worse hits than others, and overall the economy will continue to grow. And, once it's all over, Panama will be ready to spring ahead like the virtual rabbit in the toad race, compared to others in the region that will take more substantial hits. So strap on your helmets, hunker down for awhile, and ride it out. Panama is a great place to be right now.

Copyright 2008 by Don Winner for Panama-Guide.com.

Panama to Maintain Growth Amid Crisis, Torrijos Says

Dec. 10 (Bloomberg) -- Panamanian President Martin Torrijos said his country will maintain high levels of growth and a low jobless rate next year even as the credit crisis triggers a worldwide economic slowdown.

The Central American country’s economy will probably expand between 6.5 percent and 8 percent in 2009 and 9 percent this year, Torrijos said in an interview with Bloomberg Television today in Panama City. The U.S. recession won’t impede financing for his government’s $5.2 billion project to expand the Panama Canal, he said.

“There are very good projections for Panama,” Torrijos, 45, said. “If there’s any country that has an advantage that will make the crisis the least traumatic possible, it’s Panama.”

A solid financial system, infrastructure projects, fuel and transportation subsidies and low interest rates for the agricultural industry will help maintain growth, Torrijos said. Panama’s economy has expanded for 23 consecutive quarters, including 11 percent growth last year. The jobless rate fell to 6.4 percent last year from 14 percent in 2001.

Panama signed an agreement yesterday with five overseas banks to receive financing to enlarge the canal. The $2.3 billion loan allows lower interest payments for the next 10 years as work gets under way to expand the 50-mile-long (80 kilometers) canal, which connects the Pacific Ocean with the Caribbean Sea.

The agreement for the loan calls for $800 million from the Japan Bank for International Cooperation and $500 million from the European Investment Bank. The other participants are the Inter-American Development Bank, the World Bank’s International Finance Corp. and Andean Development Corp.

Canal Authority

The rest of the funds needed for the project will come from contract awards and shipping fees, Panama Canal Authority Chief Executive Officer Alberto Aleman said today on a conference call.

“Yesterday’s signing shows the whole world that it’s a solid, viable project, that there’s confidence in the canal and its management,” Torrijos said before meeting today with U.S. Secretary of State Condoleezza Rice in Panama City. “This ensures the continuity of the canal enlargement.”

The canal authority is preparing for the expansion even as traffic through the canal fell 0.1 percent from a year earlier in the initial nine months of 2008, the first such drop since 2002. Transport fees may be raised at the end of next year if the global economic slump continues to curb use, Aleman said.

About 27 percent of the world’s container ships are too big for the canal, a figure that will rise to 37 percent by 2011, the authority has said. The expansion project is on schedule to be finished by 2014, Aleman said today.

Panama’s poverty rate dropped to 29 percent of the population last year from 37 percent in 2001.

The New Panama Red

Last Friday, Dec. 5, the Russian Navy sailed a warship into the Panama Canal--the first time since World War II. This week Secretary of State Condoleezza Rice flies to Panama to reinforce U.S. interests in the Zone.

Although it sounds like a reversion to Cold War intrigue that would make you want to load up on swords, your better bet might be plowshares.

The free trade spirit permeates Panama. It operates the world's second-largest free trade zone after Hong Kong. Its overall economic growth rate matches that of China. Panama has posted 23 consecutive quarters of economic growth, growing gross domestic product by 11.5% in 2007. This is double the pace of the rest of Latin America and well ahead of the U.S.

Three things explain a continuing positive outlook for Panama.

First, the Panamanian construction sector is in hyper-growth mode. U.S. retirees are attracted there by the lower cost of living, a dollarized economy, English-speaking people and proximity to the states. Several high-profile real estate projects like the Trump Ocean Club are also drawing upscale jet-set buyer attention. Panama City is only a three-hour flight from Miami and has all the signs of a boom town, including building cranes on the skyline and traffic congestion.

Second, the canal widening construction project is boosting the Panamanian economy. This is the largest infrastructure project in Latin America with a price tag of $5.2 billion. This week, five major multinational agencies are expected to agree on a $2.3 billion, 20-year long-term financing. The project is already pumping money into the local service-based economy, which should easily reach the 7%-8% International Monetary Fund growth projections for next year,

Third, the economy of the Colon Free Trade Zone represents almost 8% of the entire Panamanian economy and another potential contributor to growth. Last year, trade between the U.S. and Panama amounted to $4 billion in goods. If the U.S. ratifies the U.S.-Panama Free Trade Agreement, tariffs on 80% of the industrial and consumer goods imported from the U.S. should be eliminated. Lower tariffs will make it easier for U.S. companies like Caterpillar (nyse: CAT) to compete for much-needed earth-moving equipment sales.

Panama Canal 'Open to All,' Including Russian Warships

Panama said its canal is open to all, including a Russian warship sailing through the transoceanic waterway on Friday.

The destroyer Admiral Chabanenko is the first Soviet or Russian military ship to traverse the 50-mile waterway since World War II.

The U.S. government has shown little concern about the destroyer's trip through a canal that was off limits to the Soviet Union during the Cold War.

Click here for photos.

The destroyer's journey to the Western Hemisphere, however, reflects Russia's growing influence and anger with the U.S. for using warships to deliver aid to Georgia after its August war with Russia.

Panamanian Foreign Minister Samuel Lewis portrayed the Russian canal crossing as business as usual.

"Here there is no other message than that the canal is open to all of the world's ships," he said.

The warship is part of a fleet that is the first Russian navy deployment to the Western Hemisphere since the Cold War. Before arriving at the canal, it took part in joint exercises with Venezuela's navy.

Also on Friday, Russia said it was sending its sole aircraft carrier and several accompanying ships for combat training in the Atlantic and the Mediterranean.

The destroyer entered the canal Friday night and was expected to take eight hours to reach the Pacific. Following its passage, the Admiral Chabanenko will dock at what was once the base for all U.S. naval activities in South America.

The U.S. government handed over the Rodman Naval Station and the canal to Panama nearly a decade ago, and the waterway has since become a symbol of Panama's true independence.

When it opened in 1914, the canal was a symbol of America's growing global reach and became a major U.S. military outpost for generations. The 10-mile-wide (16-kilometer-wide), 50-mile-long strip along the canal was considered U.S. territory -- a fact that allowed Canal Zone native John McCain to run for the U.S. presidency.

Lewis said the canal maintains a neutral policy in world politics. He pointed out that the ship's passage came just a few days before U.S. Secretary of State Condoleezza Rice is scheduled to visit Panama.

Architects Head to Latin America to Weather the Economic Storm

Even as financial troubles mount around the world, some architects are betting on Central and South America

In recent years, as many major U.S. architecture firms expanded internationally, they often bypassed Latin America in favor of Europe, China, and the Middle East. Gradually, though, that may be starting to change, as architects open offices and enlist for projects in Central and South American countries, where population and economic growth have been strong in recent years.

Even as financial troubles mount around the world, and increasingly put some Latin nations at risk, there's a sense that much of the region, which has been buffeted by severe recessions before, can weather the current crisis. At least that's what some architects believe.

"I'm continually surprised how much of a need there is for development," says Stephen Forneris, AIA, who heads the 10-employee office that Perkins Eastman opened in Guayaquil, Ecuador, in October. The city, which is Ecuador's largest and a busy port for shipments of chocolate, bananas, shrimp, and cement, has mushroomed from 300,000 people in 1970 to 3.5 million today, Forneris says.

Now cropping up there are stores selling luxury foreign goods, the kinds of watches and handbags purchased by big spenders on Miami shopping trips. More significantly, a growing middle-class in Ecuador, as well as in Peru and Colombia, is spurring the construction of discount stores, adds Forneris, who recently completed a 12-story mixed-use project in downtown Guayaquil. Among its tenants will be a new outpost of Juan Eljuri, an Ecuadorian-type Wal-Mart that sells clothes, housewares, and electronics. The building will house both the 45,000-square-foot store and the company's corporate offices, in addition to other tenants.

While the global credit freeze could theoretically curtail shopping habits, the overall effects "won't be as severe here," Forneris predicts. "Money has been hard to come by for years, so I don't know how much more credit can shrink for them."

The foreign influence on Costa Rica, meanwhile, is predominantly from U.S.-based personal-care products and technology companies looking to outsource jobs, says Joe Brancato, a managing principal with San Francisco-based Gensler, which opened an office in Escazu, Costa Rica, in 2006.

To accommodate clients, it helps to have local connections: all 22 employees in Brancato's office are native Costa Ricans, because they're familiar with the country's intricate building codes, he says. Plus, residents are often better equipped than transplants for the delicate task of convincing local contractors to start projects after construction plans are finalized, not before, as is often the case in Costa Rica. "You need to understand and embrace that this is a different culture, that they do things differently," Brancato says.

Another driver of Latin America's building boom is tourism. Despite a global drop in travel due to the economic downturn, Bryan Algeo, AIA, principal of WATG, an Irvine, California-based firm, says the Latin American tourism industry shouldn't be as badly affected as other parts of the world because the region's still relatively affordable compared with other destinations.

Plus, with demand for hotel rooms there far outstripping supply—there are just 500 luxury hotel rooms in all of Costa Rica, he says—developer interest should remain high. That's just one of the reasons his firm, which has designed hotels in 150 countries since its founding in 1946, is seeking more commissions in Latin America. "We go where the action is, and we see activity moving south," Algeo says.

In Panama, he adds, developers can't usually secure loans until they have pre-leased 75 percent of a project, insuring that the kinds of speculative buildings that can worsen downturns aren't constructed. His firm currently is working on Panama City Center, a $60 million project whose twin 22-story glass towers rise from a four-story podium that includes a casino and spa. Excavations are underway for the project, which is on track to open in 2010, according to Algeo.

Latin America's stabilizing political landscape is also fueling its appeal, says Alberto Aranda of Giancarlo Mazzanti Architects, a 12-year-old Bogota, Colombia, firm specializing in schools, libraries and stadiums and other state-sponsored commissions. He adds, however, that a gold-rush mentality may never totally catch on, as South American clients still typically pay far less than their American counterparts.

"There's a still a gap, and that gap makes us less competitive than the rest of the world," Aranda says. "It's not always attractive, economically speaking, for an American to come work here."

Source: BusinessWeek, C.J. Hughes

West Coast ports face struggle to maintain relevance

The global financial slowdown has already slashed traffic, and a major Panama Canal expansion will bring new competition.

By Ronald D. White


November 28, 2008

The slowdown in international trade has left the docks at the nation's biggest seaport complex quieter than they've been in years.

Some workers, particularly non-union "casuals," at the Los Angeles and Long Beach ports wait for shifts that never come. Automobiles and other merchandise pile up as consumers dig in for a long economic winter.

But the problems at the twin ports, along with smaller West Coast harbors, extend beyond the nation's economic woes, maritime experts say, and changes on the horizon could leave the seaports struggling to keep customers.

That's the assessment of a recent report by London-based Drewry Supply Chain Consultants, a maritime industry research firm that has about 3,000 clients in more than 100 countries. West Coast ports will see increased competition from the Panama Canal, which is undergoing a bigger-than-expected expansion due to be completed in 2014, Drewry said. In addition, rising Chinese labor costs will push some manufacturing back to Mexico and South America.

Even if global trade returns to its formerly robust pace, Drewry said, "any new trade will probably pass the West Coast by. Volumes are unlikely to decline, but the days of strong growth on the Pacific Coast are behind us."

The implications are potentially enormous.

The ports of Los Angeles and Long Beach are directly or indirectly responsible for 886,000 jobs in California, according to a 2007 study by the Alameda Corridor Transportation Authority. The $256 billion in U.S. trade that moved through the ports that year, including $62.5 billion in California cargo, was also responsible for $6.7 billion in state and local tax revenues, the study said.

But times change, Drewry and other maritime experts say, and future economic conditions will shine a more favorable light on the all-water routes to East Coast and Gulf Coast ports by way of the Panama and Suez canals.

Some of that trend can be seen already.

A.P. Moller Maersk, the world's biggest shipping line, this year reduced its business from Asia to the U.S. West Coast in favor of stronger Asia-to-Europe trade. This month, the Denmark-based giant announced more changes.

Maersk said it would join with the world's third-largest shipping line, France's CMA CGM, and cut back its Asia-to-U.S. business by an additional 8% with new routes through the Panama and Suez canals.

The new business partnerships come at a time when the maritime industry is reeling from the global economic slowdown and credit crisis, delaying delivery of new vessels and killing deals considered too much of a revenue risk. Those pressures, Drewry says, will result in changes that will be difficult to unravel even as global trade eventually recovers.

Officials at West Coast ports say that they are doing what they can to remain competitive. But Drewry and other authorities say the ports suffer from a number of problems, including a lack of land for expansion and rail capacity that is significantly lower than in the past, despite billions of dollars in investments.

The two largest ports -- Los Angeles and Long Beach -- also face steep and costly environmental hurdles to expansion projects that had slowed to a crawl until this year. Some of those plans face serious legal challenges from trucking and trade groups.

In the meantime, the Panama Canal expansion project has come a long way from something that generated amused smirks from the maritime community when it was first announced in 2006.

As a sign of the new esteem with which the project is now regarded, Panama Canal Authority Administrator and Chief Executive Alberto Aleman Zubieta was honored Monday with an excellence award at the Asia-Pacific Economic Cooperation Summit in Lima, Peru, for "successfully moving the canal from a profit-neutral utility to a business-oriented enterprise."

Now, Drewry says, West Coast market share is about to take a serious hit, "possibly forever," from a "rejuvenated, aggressive and soon-to-be widened Panama Canal" that will have locks capable of handling cargo ships carrying as many as 13,000 containers -- much larger than the 8,000-container ships it was originally expected to accommodate.

Drewry isn't the only one who thinks so.

"With the ability to handle most of the world's largest ships, the Panama Canal will begin to enjoy better economies of scale than its primary competitor, which is the transpacific intermodal route from Asia to the West Coast and to the rest of the U.S. by rail," said Asaf Ashar, head of the Washington office of the University of New Orleans' National Ports and Waterways Institute.

"It's cheaper to move cargo by ship than it is to transfer it to rail and go overland," Ashar said. "The logical conclusion is that market share will be lost."

Meanwhile, East Coast ports are frantically working to be prepared once the Panama Canal expansion is complete.

The American Assn. of Port Authorities, which represents most of the Western Hemisphere's major harbors, is devoting the current issue of its Seaport Magazine and an upcoming seminar in January to the shifting international trade routes and the Panama Canal expansion.

"It's become a very big deal," said Aaron Ellis, a spokesman for the trade group.

Port of Los Angeles Executive Director Geraldine Knatz said the port's willingness to address environmental concerns ended a logjam of expansion projects this year.

Saying that the port "should be investing $1 million a day in its capital spending plan" to increase efficiency and reduce pollution, Knatz said the facility was on pace to award $383 million in construction contracts this year.

Knatz said port officials were fully aware of the threat posed by projects such as the Panama Canal expansion, but she said the local ports had no choice in the way they must proceed.

"We're aware that some cargo has been diverted because of what we are trying to accomplish here," Knatz said, "but there is no way we would have been able to move forward at all with these construction projects if not for the steps we are taking to reduce pollution."

Latin America Combats Credit Crunch

The global financial crisis is taking a toll on Latin American economies and their financial systems that will lead to a sharp reduction in lending for the remainder of this year and in 2009. In a bid to reduce the negative impact on economies and banks as much as possible, governments, central banks and multilateral entities have been very active in providing liquidity and financing for banks and companies.

Central Banks to the Rescue?
Central banks in many Latin American countries have acted swiftly to inject of liquidity into financial systems to ensure credit does not dry up as a result of the global crisis.

Central bankers, finance ministers and the Latin American Banking Federation have repeatedly assured companies and the public that the region is better prepared than ever to face this sort of crisis, thanks to sound macroeconomic fundamentals and large foreign reserves.

Central banks in the largest countries have agreed to work more closely with one another through technical cooperation and information sharing, but interest rate decisions are still made at the national level, not coordinated among countries.

The Role of State Banks
Governments in several nations have also aggressively used public-sector banks to provide credit and other types of financing to particularly vulnerable to the crisis or those that are important for economic growth.

Brazilian federal banks Banco do Brasil and Caixa Economica Federal and Sao Paulo state bank Nossa Caixa have together made several billion dollars worth of financing available for various industries, among them the country's important export and automotive sectors.

Chile's government acted to increase the available capital of the country's only state bank, BancoEstado, by 50%, to the tune of some $500 million. This is to ensure financing for small and medium-sized companies and mortgage lending at favorable rates for the middle class.

State-owned Mexican development banks Nafin, Bancomext and Sociedad Hipotecaria Federal put up close to $7 billion to support the local capital markets, real estate financing and debt issued by non-bank financial institutions and residential mortgage-backed securities.

Multilateral Moves
Several multilateral entities have also pledged billions of dollars in liquidity for Latin America's financial system, as well as increasing regional credit lines and lending volumes.

The Andean Development Corporation (CAF), Inter-American Development Bank (IDB) and Latin American Reserve Fund together promised $9.3 billion in liquidity to aid the region's financial systems.

The CAF raised its credit lines for financial institutions in its 17 member countries from $1.5 billion to $2 billion.The IDB is speeding up loan issues and expects to lend a record $12 billion in 2009, and also pledged a $20 million financing facility for the region's 600 microfinance institutions and their 8 million clients.

Outlook
High inflation, rapidly falling commodity prices and deteriorating consumer confidence are all contributing to the more adverse outlook for the region's banks. Mexico's banking sector is especially troubled, with the possibility of bad loans increasing to more than 10% of total loans in 2009.

But Latin American banks are well-capitalized in general and have reasonable access to liquidity. In contrast to the gloomy economic outlook for developed economies, the region’s banking sector will continue to attract investments from some international banks and private equity investors in the near term.

IMF and World Bank paint a bright future for Panama

Contributed by Sam Taliaferro - Panama Guide

It does not come as a surprise that the Multi-national banks are touting Panama's strong financial position as they are also committing billions of dollars to the canal expansion project. At a recent meeting in Washington, Augusto de la Torre, chief World Bank economist for Latin America and the Caribbean, predicted that Panama would stand out as the fastest growing country in Latin America in spite of the impact of the financial crisis. The only cautious statement was "Estimates by the two financial institutions varied somewhat by the magnitude of the impact the global financial slowdown would have on Central America, as well as the effect recessions within the economies of key trading partners may have on the local economy."

We often hear about these banking entities being involved in high level projects in various countries but we don't know much more than what is put out by their press releases or the news media. So what really are these world banks and what is their purpose? I found an article from this week put out by the Global Policy forum, who's stated mission is to monitor policy making at the United Nations, promote accountability of global decisions, educate and mobilize for global citizen participation, and advocate on vital issues of international peace and justice.

It is interesting to note that both these financial institutions came about In 1944, as the end of World War II was coming into view and in the aftermath of financial disorder following the Great Depression, the two Bretton Woods institutions, the World Bank and the International Monetary Fund (IMF), were created. Interestingly, in the next week Brenton Woods III will take place because a similar economic situation is facing the U.S.. The report shines an unflatering light on the organiszations their continued failure to follow their mandates.

Here are some interesting excerpts from the article:

Both institutions have also played havoc with the development process of many developing countries, pushing them deep into debt and economic decline for a number of years."

However, over the years, both institutions deviated significantly from their respective mandates to become politicized, over-ambitious and grasping all decision-making in countries that fell in dire need of their resources.

At the same time, the management of these institutions is dominated by the US, a handful of European countries and Japan. While the institutions preach good governance and management, they have been unable to adapt themselves.

Panama: Boom or Bust?

By Michael Manville for nuwireinvestor.com - While most of the world faces downward-sliding real estate markets and a global credit crunch, it is easy to assume that Panama's real estate market will follow. On the other hand, perhaps a speculative real estate boom has coincided with a variety of real geopolitical events that enhance the intrinsic value of Panama's real estate market in the wake of new trends related to globalization. Boom potential: Panama has been posed to grow exponentially in terms of tourism and real estate, particularly with baby boomers and other retirees and expatriates looking for affordable alternatives to well-established markets such as the Caribbean, Mexico and Costa Rica. Over the last several years, Panama has emerged as one of the hottest international destinations for tourism, real estate and business investment. Panama City hotels have doubled their rates and still there is almost no vacancy. Million- and billion-dollar projects are scheduled throughout the country, and real estate agencies have sprouted up on every corner. (more)

source: Panama Guide

One More Reason to Consider Retiring in Panama

"The rich are looking to get their money out of the U.S."

As a sign of the times this article from International Herald Tribune blog is about the high end of the real estate market slowing dramatically. Many falsely believed that those with money would still spend it as if nothing had happened to the economy. The truth is that the rich are like everyone else when it comes to money. When they see more going out than coming in they get concerned and pull back on spending.

As the U.S. is forced to become an even more socialist country many will be doing what is quoted at the end of the article. Sharon Simms, a luxury specialist in St. Petersburg, Florida, has also noticed a bump in international business, but with a twist. “For the first time I’m seeing U.S. citizens looking to get a percentage of their assets outside the United States,”.

This may well be the benefit that Panama will see from the economic shock and oncoming plan to redistribute wealth in the U.S. and Europe. No matter what the politicians promise about taxes, the fact is that somebody is going to have to pay for the mistakes that were made and those that have it will be the ones that have to pay. Unfortunately it won't be the bankers and rich politicians that got us into this mess that will pay. It will be those who through prudence, providence and hard work accumulated wealth and did not live beyond their means. But as this article points out, the rich will be looking at getting their assets and their asses out of harms way and Panama is poised with plenty of property and banks to take care of them. Read the story here.

Panama Sees $1.1 Billion in Foreign Direct Investment in First Six Months of 2008

By Marianela Palacios Ramsbott for La Prensa - Foreign Direct Investment (FDI) entering Panama in the first semester of 2008 reached $1.1 billion dollars, representing an increase of 32.8% when compared to the same period of 2007, according to a report published by the General Comptroller of the Republic. The increases are primarily due to investments by banks and utilities of general license operating in the country. Other areas that have attracted great volumes of foreign investment during the past year are construction, the expansions of port facilities, the entrance of new cell telephone companies into the Panamanian market, as well as projects to increase the generation of electricity. And, according to the economic consulting firm Indesa, everything seems to indicate the flow of FDI will continue to grow strongly in the mid term, unless a strong recession in the United States and the global economic deceleration contracts international investments. “In order to expand the installed electrical generation capacity of 993 megawatts, as is predicted, will require an additional investment of $1.2 billion dollars in hydroelectric facilities over the next five years," said Indesa. And “for the period 2010-2011, $2.8 billion dollars or 53% of the total cost of the expansion of the Panama Canal will already have been invested." Between 2005 and 2007, foreign direct investment represented an average of 17.5% of the gross domestic product. But, according to estimations from Indesa, that indicator will jump to 52.3% in 2011. On the other hand, the United Nations Conference on Trade and Development (UNCTAD) anticipated recently that, in spite of the crisis in the United States, foreign direct investment in Latin America will continue growing this year and that Panama will not be the exception of that rule.

Editor's Comment: These are the kinds of numbers that cause economists to lose control of their bodily functions. Did you see the line about the expectation of seeing a level of foreign direct investment equal to 52% of the GDP in 2011? I mean, holy friggin' cow. Money is just pouring into this place in buckets. History will see this period as the golden times of an unprecedented expansion in Panama's relatively tiny national economy. Panama has had the fasting growing economy in Latin America for two years running. Sure, the crash in the US is going to have an impact, especially with regards to access to credit for large and ambitious construction projects, but overall I still think foreign investors will see Panama as a relative safe haven with attractive potentials for significant near to mid-term growth.

source: Panama-Guide.com

Construction Up 52% Compared To Last Year

By GILBERTO PÉREZ for La Estrella - From January to August 2008 investment in construction rose 52%, from $726.2 million to $1.143 billion dollars compared to the same time period of the previous year, according to the primary monthly economic indicators of the General Comptroller of the Republic. Numbers reported by the Direction of Statistics and Census reveal that in the district of Arraiján growth was 133.2%, increasing from $21.3 million to $49.7 million dollars. In Colón growth was 84.2%, increasing from $19.2 million to $35.4 million dollars. And in Panama the increase was 54.3%. In addition in the areas of David, Bugaba, Chitré, Aguadulce and

Panama's annual GDP for the entire nation is just over $9 billion dollars, annual. This report says that in the first eight months of 2008 already more than $1.1 billion dollars has been spent on construction. That's an amazing number considering the tiny size of Panama's economy.

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