Use Your IRA to Buy a Business in Guatemala
By · CommentsA few weeks ago I mentioned to a friend who was visiting that I was looking at buying a business here in Guate. After sharing a few details about it he got really excited, and then explained that he just didn’t have much cash and that he wished he could do something with his old 401k that was languishing in some mutual fund.
When I explained that he could use that money to invest in Guate by transferring it to a self-directed IRA and then buying shares in a Guatemalan corporation (they’re called Sociedad Anonima or ‘SA’), he got as giddy as a shoehine boy in the park after getting a 20Q tip! I even shared with him how we might be able to generate some tax benefits out of the thing. (You’ll definitely have to buy me a drink for that tip).
Regrettably, that business opportunity vanished after I asked a few tough questions about the financials (that would supposedly support the asking price). Turns out the business has really only been up and running for 9 months (know anyone that sells a good business only 9 months after starting it?), and net income is a lot less when you consider the owner is working night and day and not counting those hours as wages. If I had to hire someone to replace the owner, I’d be looking at 3000Q a month, minimum, which would cut the net income by 20%. Oh, and she wasn’t paying market rent to her ‘friend’ but I would have to, at some unknown (higher) price. I’m not thrilled about forking over $50k for that and she wasn’t thrilled about an escrow account based on net income performance. Duh!
But I thought I would take the opportunity to tell you that it is possible to take that dusty old 401k or IRA and tweak it to invest in Guatemala. You can’t exactly buy a house to live in, but you could buy it for investment purposes. Or you could buy a bar, which would undoubtedly be a good investment for some of you, considering how much my frequent visitors tend to consume. You could buy a finca and export coffee, or…well, the opportunities are limitless.
Regardless, better to do it now than AFTER Obama implements a 30% tax on ‘qualified retirement assets‘.
How Much Does a Visit to the Free Hospital Cost?
By · Comments“I need money for my sick kid”. This statement is made to us on a regular basis. Always by women. When men lie about needing money, they ask for their sick wife. When women lie about needing money, it is for their sick child. Not that needing the money is the lie, but the story they tell that they think will convince you, the merciful yet stupid gringo, to give them the money.
How Is It That I’m the One Getting Death Threats?
By · CommentsThe English have a way with their language that, well, we don’t. Occasionally I cite a certain half-time, local expat non-American blogger with a penchant for movie reviews, the highest terrace in Antigua proper and a house on the Thames River and readers email me and ask, “What does he really mean?” or “FYI, I think he was poking fun of you”. Really?
There’s no mistaking this time:
Leaving aside the singular piece of self-regarding gringo bilge that is “Antigua exuded a culturally authentic sense of place”, are we right to pine for some sort of vanished arcadia, long since unmindfully overrun by an assortment of crass Johnny-come-latelies and lowbrow retirees clutching blueprints for their Miami-colonial mansions?
And I thought I was the only hombre con los cojones to take on the establishment sentiment-setter with indisputably unambiguous language.
A Little Chat with El Taller
By · CommentsAs I mentioned in the last update on Fraulein, the drama escalated to a point where calling in Santiago was my only hope of pre-abogado resolution. True, Santiago does carry a gun, but the real purpose in taking him is because he grew up in HueHue in the ’50s and ’60s and retired here about 10 years ago and, to the point, understands how things really work here. Besides, suing this guy and putting him in jail for defrauding me doesn’t get me my car back, and it won’t even make me feel any better. After all, el abogado doesn’t work for free and I just want my !@#$%&* car back.
Of course, I wanted to call the taller to make sure he would be there, but Santiago says, “That’s not how it works. First, he won’t answer the phone. Second, you don’t want him to know you’re coming, and third, if there is something really nasty going on you’re more likely to discover it with a surprise visit.”
We arrive in San Felipe and Santiago strikes up a conversation with the mechanic. He’s pretty aggressive at first, really grilling the guy on how many months the car has been there, missing parts, asking for more money after we supplied the parts he said he needed, etc. The old mechanic held his own, with lots of gesticulating about pressure, valves, the car not having enough ‘oomph’, etc. I was only catching about 50% of what Santiago said and about 30% of what the taller said. What was clear to me was that Santiago was engaged in a dance of sorts, and I’m not just referring to the way he moves when talking as if he were involved in some sort of native feria, but a well-understand and time-tested dialogue of posturing and negotiation. Stuff that for better or worse has been eliminated from all but the most grand transactions in the US.
I could see him gradually easing up on the guy, and the guy gradually letting his guard down as the conversation continued. They were rehashing all the old things, and then throwing in new pieces of information here and there. It wasn’t unlike the negotiation at the mercado, except far more complex and lengthy. About 10 minutes into it-with only the occasional short explanation by Santiago-it started raining harder than it has since Agatha. The tin roof on the shop made it impossible to hear anything, but I could tell from the increasing frequency of smiles and laughs that Santiago was getting on well with the guy. Before long I could hear them commiserating about the Catholic Mafia in Antigua and other pejoratives that I can’t print here, more than one of which was launched in my direction.
Another 10 minutes of this and the heavy rain and I had figured out that the ‘missing’ part that had been ‘found’ was not so much found as ‘replaced’, through a ‘friend’ of the mechanic’s in the city. That had cost me Q1200, something Gunther had forgotten to mention. The odd thing was that this same ‘friend’ of the mechanic had also been able to locate the eight valves that needed to be replaced, the same eight valves that Gunther explained he couldn’t find in the US or Germany.
It was these valves that presumably keep the pressure inside the transmission that allows the parts to work at maximum efficiency, and the cost was Q3,500. So then Santiago asked an interesting question. “Don Marco wants the original parts back when you’re done; that’s no problem, right?” The mechanic paused for a moment, there was a fijese, and then, “Sure, no problem”. I realized that a great deal had just taken place; the mechanic had gotten the message that if the original part were to go missing like the earlier one, it might raise questions about the ‘new’ part, which just happens to be in an ‘inaccessible’ part of the ‘box’.
Next Santiago suggested that if the part was with a good friend of the mechanic’s, it would be no problem to install it first and try it out before paying for it. That led to another 5 minutes of conversation or so, and then I caught up to the mechanic saying, “Well, if you think you can get the money together, I can get the part from my friend, perhaps for even less than Q3500″.
That launched an entire additional round of conversation, with Santiago explaining that we had given Gunther the money months ago to buy all these parts, and the problem wasn’t with our money, but with the mechanic losing parts, etc. They rehashed everything again, apparently like chewing a piece of tough meat sufficiently, at which point the mechanic agreed that he would install the part ‘manana’, which seemed very timely indeed considering he didn’t have the part yet, and that he would take a few days to test it, and if we were happy, then we would pay. (Perhaps even a reduced price).
We all shook hands, with smiles all around, and left San Felipe. I immediately called Gunther to give him an update and to let him know that once the car had been fixed and we had all the old parts in hand, he could go ahead and pay the mechanic whatever we owed him. He agreed, but kept expressing that he was uncomfortable with how things were going.
Well, he had good reason to, because five days later the mechanic showed up at Gunther’s telling him he was tried of the gringos taking advantage of him, how he was losing money on the deal, and that he would never install a part without getting the money first, etc., etc. He then told Gunther that he was going to throw all the parts in the trunk and push the car out into the street and abandon it. My first instinct was to call Santiago and a few other locals and show up armed and ready to tow the car. We had obviously caught the guy in one big scam to sell me old parts as new (or not even change the parts and sell them as new), and he was going to keep milking this as long as he could, which had come to an end with our friendly visit and insistence that we get the old parts. At the very best, he was completely incompetent and was unwilling to admit it until we forced the situation.
But assuming we towed the car out, we’d have no idea about the location of the parts or the condition, and jerking the car off his lot still wouldn’t get me anywhere. I did have clarity about one thing; we couldn’t trust this guy and there was no reason to expect anything good to come from additional good will or patience.
(to be continued)
Homicide Rate in Guate vs USA
By · CommentsCarlos Mendoza over at Black Box has posted about the homicide rate in Guatemala compared to some larger US cities. It appears that my observations last year about the relative risk still hold true.
Strange Things Seen in Guate #41
By · CommentsNormally it’s difficult to find WIFI in Guatemala, unless you know exactly where to go and precisely which seat to sit in to get a good signal (not to mention knowing which employee to for the key from). When I’m standing in Antigua’s Central Park (supposedly a WIFI zone, BTW), nothing shows up.
Anyway, on this particular day I found myself wondering if I might be able to find a WIFI connection. Look at what I found:
Free nachos con lomito at El Muro for the first person to identify where I was...
Of course, nobody had ever heard of ‘WIFI’ and when I asked employees if I could get the ‘clave para la internet’ they stared at me as if I had just asked for a masaje con amor. Oh well, my iPhone screen has never been so full.
Good Corporate Neighbor? Not So Much
By · CommentsReaders know I’m no fan of revolutionary humanist movements, but I do believe corporations have a responsibility to their fellow men and to nature. There’s an article on MiMundo (in English) about the Canadian GoldCorp operation here in Guate, which those in the know tell me is pulling out more than $350 million a year in gold. I won’t say they’re obligated to give some of that to the locals-I assume they are heavily taxed by the government who has the responsibility of promoting the common good-but it would be prudent and noble to try to return some of that water to the environment in a sanitary fashion. If they don’t, it’s the responsibility of the government to correct it. Your thoughts?
How Did This Get Past the Censors?
By · CommentsFrom the July/August edition of Los Comrades’ La Cuadra:
The Company [United Fruit] always took care of us – we had schools, playgrounds, a hospital, my mother tells me. They never had to pay bills, which is why to this day my mother blames her late bill payments on The Company. It was a kind Company; more than the Guatemalan government, they provided, even a nice hospital – the one I was born in, Bananera, was the first Company hospital with air-conditioning. “¡Con aire, puedes crearlo!” With air conditioning, can you believe it? You were the first child to be born on El Día Del Ejército, the Day of the Army in that air-conditioned hospital, my mother reminded me. Tío was a sindicalista, a union leader, one of the first to ask for fair labor rights and pay at the Company. Many followed him, just to listen to his stories and the confidence with which he spoke.Just as we left Media Luna and the other fincas where we had grown up, so the United Fruit Company began to pull out, changed the name of the company from United Brands Company into Chiquita Brands International Incorporated, underwent numerous lawsuits and eventually marched towards its eventual collapse. In Media Luna, the schools closed down, the basketball courts began to crack, people were replaced by cables and machines, the cement dorms and houses were abandoned, and slowly the workers found themselves without jobs. Not long after, many packed their bags for Guatemala City, a destination for more than 2 million people at the time, among them my grandmother, uncles and my mother.
When the publisher finds out this little bit of truth re the United Fruit Company’s history in Guatemala, someone is going to get a one-way ticket to Siberia with a short stop over in the deserts of Progreso.
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