Uruguay residence permit

I just got back from the FreedomFest in Las Vegas. It was in the news because Donald Trump spoke to us, as did Mike Lee, Marco Rubio, and Glenn Beck. I believe Trump’s talk was on the TV news. John Stossel also taped a show there which will air Friday, 7/18/15 on Fox Business and Fox News. I gave one talk on real estate investment and another on nuclear war there.

One of the main things I got out of the conference was talking to and listening to the presentation of Juan Fischer, an Uruguayan lawyer. Good guy. He grew up in the US in part because his father was a Uruguayan UN diplomat. He also got an MBA from Northwestern U. If he had any less of an accent you would wonder if he were really Uruguayan.

I am interested in this subject because my research of past hyperinflations around the world revealed that the best solution for day-to-day survival is to simply leave the hyperinflated country and go to one that is not hyperinflated. Details on that are in my book How to Protect Your Life Savings from Hyperinflation & Depression, 2nd edition.

Integrity and safety

Uruguay has been on my radar for some years because of its high Transparency International integrity rating. That’s not the only category where Uruguay ranks high. Someone, maybe FTI Consulting, named Uruguay Latin America’s safest country tied with Chile for that honor. One might observe that that’s not saying much, but apparently Chile and Uruguay are significantly safer than other Latin American countries.

‘Stable democracy’

Fischer says Uruguay is a “solid, stable democracy.” The Economist Intelligence Units’s Democracy Index ranks Uruguay as a “full democracy” and gives it the same democracy rating as the US. Only Canada ranks higher than both Uruguay and the U.S. in the Western hemisphere. Costa Rica also ranks in the same category but they do not rank high in integrity.

You can see the numerical scores for each country and the breakdown of categories of democratic freedom at http://www.economist.com/media/pdf/DEMOCRACY_INDEX_2007_v3.pdf.

Large middle class

Fischer also says that Uruguay has a large middle class as opposed to the rich and poor only often seen in Latin American countries. I asked what percentage own their own homes—perhaps the main indicator of a middle class. He said 60%. The Housing Finance Information Network says 59% in urban areas—close enough. That same source says the U.S. is 65%.

European, not so much African or American Indian

Fischer says the typical American will blend in in Uruguay because they are of European descent rather than the mulatto and mestizo ancestry that is more prevalent in most of Latin America. Wikipedia says 88% are of European descent and that Montevideo is very reminiscent of Western Europe. Here is a collection of photos of Montevideo. And they say the literacy rate is 97.3% and that the country has a large urban middle class.

The population is 3.8 million, similar to Oklahoma, which is also about the same size as Uruguay.

In 2013, Economist magazine started choosing a country of the year. The first winner was Uruguay. Here’s a quote from that article:

…the man at the top, President José Mujica, is admirably self-effacing. With unusual frankness for a politician, he referred to the new law as an experiment. He lives in a humble cottage, drives himself to work in a Volkswagen Beetle and flies economy class. Modest yet bold, liberal and fun-loving, Uruguay is our country of the year. ¡Felicitaciones!

Climate

The climate is described as temperate, humid, and windy. Temperatures in Montevideo in summer (January) average a daily high of 82ºF and a daily low of 63ºF; in winter (July), 57ºF and 43ºF, but it feels colder in winter because of humidity. Annual rainfall is about 37 inches. In my native NJ it was about 40 inches; in my current Northern California, 20 inches. Uruguay is at about the same southern latitude as Santiago, Chile; Auckland, New Zealand; and Sydney, Australia and about the same comparable distance from the equator as Los Angeles and Charleston. It is on the Atlantic Ocean which moderates the climate.

Three places have been recommended to me as places to live: Colonia del Sacramento, the ferry terminal closest to Buenos Aires, Argentina; Montevideo, and Punta del Este, a beach resort. Photos of Punta del Este look like Miami with many mid-rise and high-rise buildings. It is apparently rather deserted in winter, which is what I experienced in my elementary school years living in Wildwood-by-the-Sea, NJ year round. I did not mind as a kid. As an adult, I probably would not live in such a place. Montevideo, which is right on the ocean at the 50-mile-wide mouth of the Rio de La Plata, also looks like a combination of Miami and a Western European city. (European cities are averse to high-rise buildings; Miami is not.)

Photographs of Colonia del Sacramento, a UNESCO World Heritage Site, make it look like an ancient, Mediterranean village. I expect Hollywood has used it as a location for making movies about ancient Rome or old Portuguese, Spanish, Italian, or Greek villages. One web site said,

The historic centre of this small Uruguayan town is so well preserved that you’ll think you’ve stumbled on a film set for a historical drama.

Punta del Este is a popular place for second homes of Argentinians, Brazilians, and Europeans. The average daily high temperature there is 77ºF in their summer (our winter) and 58ºF in winter.

Fischer also said Uruguay has good tax laws; cheap, high-quality health care; modern infrastructure; and solid banks. You can read about the health care at http://internationalliving.com/countries/uruguay/health-care/. The tax laws sound a bit better than the US laws—much better for estates. They have no subway system. Here is what the International Living web site says about general infrastructure:

Here, you’ll find the best overall road system, the most reliable electrical grid, and one of the fastest overall internet speeds in Latin America. You’ll also find quality medical care, safe drinking water, and good public transportation.

And here is that web site’s take on the banks:

But what about Uruguay’s solvency? The country of Uruguay has investment-grade sovereign bonds. The locally-owned banks are well capitalized and safe. In 2009, when most of the world’s economy was suffering from the global recession, Uruguay posted an economic gain. There were no failed banks, and the rate of nonperforming loans throughout the country was just 1%.

Foreigners can buy real estate in fee simple in Uruguay. That is not the case in many Latin American countries.

Haven for Latin Americans

“Simon Black” who is an advocate of internationalizing your life, says Uruguay is mostly described as “charming” by Americans. He says its role, to a large extent, is to be the nearby safe place to own real estate and bank accounts for Argentinians and, to a lesser extent, Brazilians. Buenos Aires is across the river from Montevideo. I have written a lot about how border areas of France and Italy took much advantage of Germany during that country’s hyperinflation in the early1920s. Germans could not do like Argentinians and put their money in France and Italy because they were at war with them in 1914 to 1918.

Fischer said wealthy Brazilians prefer Punta del Este to their own resorts because of the high crime in Brazil and the lack of crime in Uruguay.

This is very interesting since my main interest in it is as a possible refuge from U.S. hyperinflation. It is not close to the US. Non-stop flights from Miami cost $1,520 round trip and take 9 hours and 13 minutes, $913 if you are willing to make a stop. But I already have money in Canada and Canada is a much harder place to get a permanent residence permit according to the Canadian and Uruguayan lawyers to whom I spoke.

Distance from U.S. a virtue at times

Also, in a time of hyperinflation in the U.S., distance from the U.S. may be a virtue. Contrary to widespread belief, hyperinflation is not contagious. But recessions and depressions are. A financial crisis in the U.S. will adversely effect the Canadian economy, but not its currency—at least not as much. That’s because the Canadian economy is heavily dependent on trade and tourism with the U.S. Not so Uruguay. See the above International Living comment about how Uruguay fared during the Great Recession of 2009.

You’ve heard the expression “get away from it all.” During hyperinflation in the U.S., all sane people will want to get away, if only to buy food, fuel, and medicine. If you go to Uruguay, you have truly gotten away—4,400 miles away! To go any farther away in the Western Hemisphere, you must go to towns in Argentina or Chile that you never heard of. And you have truly gotten away not only from from America’s hyperinflation, but also any finanical recession or depression.

I expect U.S. hyperinflation, if we get it, will last about 6 to 24 months then disappear. This is based on world financial history. So I probably do not need citizenship. A permanent residence permit—which has to be renewed every three years, would probably do me just fine, and many of my readers.

Cost of living cheaper than the U.S.

Numbeo.com says this about costs of living in the US compared to Uruguay:

And this Numbeo comparison with my local San Francisco compared to Montevideo:

You would need around $2,825.01 in Montevideo to maintain the same standard of life that you can have with $7,700.00 in San Francisco, CA (assuming you rent in both cities).

I’m guessing that is the monthly figure.

Uruguay ranks 43rd in the world in economic freedom, unlisted on the Where-to-be-born index, 41st in the Good Country Index, 43rd in the Economic Freedom of the World produced by the Fraser Institute, 46th in the Quality of Life Index.

You can get one or two, but not all three

With residence permits and citizenship, one FreedomFest speaker put it well. There are three dimensions. You can find countries where two of the three are good, but none were all three are good. They are:

1. speed

2. cost

3. ease

Uruguay is pretty good on speed at Fischer’s estimate of 6 to 8 months for the permit. It also isn’t bad on cost being about $500 to the government and about $1,400 to the lawyer for the first family member. You may also have to rent a place for the period of the residence application. The ease is providing the same documents every country wants plus and living there for half the time while your application is pending.

Reportedly, the way you do this if you want to minimize your time there during the application process is to go there to apply, then leave for three months. Then return and live there for three months. If you get the permit at 6 months, you can leave again. If you don’t, you continue to stay there until you get the permit or one more month, whichever comes first. At the four-month point, you have fulfilled the living-there-half-time requirement, assuming you get the permit at eight months.

How much time you need to spend there to keep the permit after you get it varies according to whom you ask—from only tagging up every three years to living there six to ten months a year.

If you check on the Net for the speed, cost, and ease of getting residence permits or citizenship around the world you will find enormous variations. For example, in Canada, I needed to get a job offer there and prove a Canadian could not do the job. And the cost was higher.

Some countries will give you the permit immediately, but demand that you pay or invest hundreds of thousands or millions into the country. In some, you have to prove your ancestors are from there. It really varies all over the map in terms of the three variables. Integrity is a sine qua non for me so I would only consider Uruguay and Chile in Latin America.

Panama was also represented at the FreedomFest. Their residence permit sounded relatively easy to get. You have to form a Panama Corporation and put $5,000 in the bank, but Panama ranks 94th out of 175 countries in lack of corruption. Uruguay is 21st; the US, 17th.

I wrote an article saying it seemed to me that the standard 90-day tourist visa Americans get when they arrive in most countries ought to suffice for taking refuge outside the U.S. in the event of U.S. hyperinflation. Doug Casey, the International Man author, says you need a residency permit and preferably a second citizenship in a country other than the U.S. I surmise he means the 90-day tourist visa is not stable or sure enough compared to a residence permit.

Violent crime is a problem in Uruguay.