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LAWS AND REGULATIONS
The USA offers protections
and guarantees regarding private property, individual liberties and corporate
liberties that safeguard both the free market and investors. Regulations
and consolidated criminal and civil laws that, on the one hand, support
business activities and, on the other hand, severely punish economic and
financial crimes have always guaranteed protection of investors, who are
regarded as being the key to growth. In recent years, there have been several
financial scandals in the USA and the system has always reacted in the same
way by severely punishing the culprits. All levels of society believe that
everyone has equal opportunity and everyone is equal before the law.
is more: these principles and values are regarded as intangible pillars
supporting the individual freedom that is guaranteed in the Constitution.
Moreover, they are shared by the two major political parties and the
population in general.
There are no entry barriers
to foreign investors and very few bureaucratic restrictions to entrepreneurial
activities, which are encouraged and supported. Once a foreign investor has
acquired knowledge of the language and the laws, there are no further restrictions
to business activities, which are regulated by efficient laws and a simple,
effective tax system.
registers (particularly for lawyers and certified public accountants) guarantee
of new investors. Taxpayers are respected for their role within a system
non-repressive tax audits.
Business successes are
seen by the political class and the general population as being the merit
of entrepreneurs, managers and employees and are publicized as positive examples,
while unlawful deeds are publicly decried.
The two major parties have
different attitudes towards tax policy, which sometimes results in different
tax brackets being applied amongst the fifty states. This is because real
estate taxes are the most significant source of tax income at the state level.
While this leads to remarkable differences in taxation levels from one state
to the next, those differences are actually not critical.
The USA is currently the
only remaining global superpower and this position of strategic superiority
is undoubtedly going to last for a long time as there are no other nations
or confederations capable of challenging its geopolitical role nor of matching
military, economic and political power. This statement is based on facts
alone and has nothing to do with a personal like or dislike of US President
Even in this moment of
financial crisis, which has caused investors to abandon financial markets
and major movements of wealth due to abrupt swings in ratings and listings,
North American financial markets still dominate the scenario, confirming
the old saying that "a cold for the USA becomes an influenza epidemic
for the rest of the world".
Putting aside the causes
and interpretations of these events, as well as the applied and studied financial
treatments, the fact remains that no capital is leaving the USA for other
economic areas. On the contrary, whenever the crisis becomes more acute,
the US dollar exchange rate improves, a fact that is certainly due to a reduction
in major speculations, as well as a return on investments of financial instruments
in US dollars. Financial markets of all major exporting countries, including
both Russia (overwhelmed not only by the financial crisis but also by the
drop in crude oil prices) and Japan, have suffered, on the average, far more
serious losses than North American markets. The same is true for emerging
countries, such as China, Korea, India and Brazil, which are benefitting
from surpluses thanks to exports while suffering slowdowns in growth. We
are all well aware of the major decreases in profits being suffered by oil
exporting countries due to falling crude oil prices.
The only current rival
of the US for world leadership is the European Union. The rival, or rather
the "friendly rival", has already surpassed the USA with regards
to economic size, gross domestic product, overall consumption and population.
the Euro, has already shown its market strenght against the US dollar, becoming
a fearsome competitor in international business. Regarding the international
bond market, the amount of bonds issued in Euros has exceeded that issued
in dollars, a clear sign of both the shifting interest from the US Dollar
to the Euro as a safe-haven currency and of the overall size of the "Euroland" economy.
However, despite these
results, the EU risks remaining a "political dwarf", especially
after the draft of its new constitution was voted against by two important
France and the Netherlands (even though the chairperson delegated to write
the draft was French). Moreover, the differing foreign policies of member
states often have harrying effects. In fact, more than half a century after
the Union was established by the signing of the Treaty of Rome in 1957, it
still does not have a seat on the UN Security Council, the global organization
par-excellence. Not only do the European members of the council show no desire
to abdicate their places in favor of the European Union itself, whenever
they asked to intervene in world hot spots, their positions on issues are
often the antithesis of the EU position.
At the climax of the financial
crisis, not only was Europe conspicuously absent, as if the Old Continent
had not been affected, but when European governments finally decided to take
action, all decisions, however coordinated, were made individually and all
measures were applied only nationally. The image of the EU perceived by the
rest of the world was that each individual member state protected only their
national interests. This behaviour, which openly clashed with the EU's technical
regulations and even more so with its monetary policy, had nonetheless,
satisfied most nations and political factions. In Italy, there had been
about safeguarding the government's control of strategic companies, banks
being first and foremost. However, not a single objection had been raised
whereas, just a few months ago, any similar action or position would have
unleashed political and media turmoil. People understood that, in the crux
of a crisis, all the companies, especially banks, would first act in defense
of their head offices even at the risk of depriving their "foreign branches"
of resources needed to grant credit to the production system. This is a risk
that no EU member state can afford to take right now. The fact remains that
decisions made within a member state, which are not aimed at a Union-wide
level, risk being of no use to economic subjects that now regard Europe as
a single, large nation and act accordingly. Even if, as we all hope, these
measures had full effect and normality was restored, the renationalization
of European companies could hardly be stopped.
In the current global scenario,
the USA is the only true "union" with unified political leadership.
The EU has proven to be more of an alliance of sovereign states and governments
with each member focusing primarily on defending its individual interests.
One last, but not least,
important remark is that the "tactical and strategic superpower" role being
played by the US Armed Forces, along with being politically unacceptable,
is completely incompatible with the current financial status of European
countries or other local powers. This situation will very likely continue
years to come.
The USA is the only western
country with a positive population growth rate. Population growth figures
are constantly updated at this White House website www.popclock
has the highest GDP and one of the highest per capital incomes in the
quarterly increases and an uninterrupted expansion cycle despite
talk of recession over the last two years. In fact, while the explosion
of the current financial crisis has slowed down the growth for the
US economy, it has not taken it into decline.
The most recent IMF report
estimates that the US economic growth rate for 2009 will be +0.1%, while
estimated growth for Germany, which was +1% in the April 2008 reports, is
zero. Since Germany is the true engine of European economic growth, the +0.2%
figure for France and -0.2% for Italy, Germany's primary business partners,
come as no surprise.
We must keep in mind that
the US economy has been leading world growth for the last decade and, thanks
to the strength of its imports, has been pulling such countries as China
and India out of the depths of underdevelopment. North American imports of
goods from developing countries have become the new fuel of global growth.
The consequent expansion of Asian economies has then become another driving
force allowing the US economy to grow even more. It is not easy to say what
will happen in the future. Presently, the strong bond that links all world
economies has not only turned the troubles of the world's greatest importing
country into a tragedy for major exporters but also made clear that global
growth depends on the good health of the world's leading economy. Therefore,
joint efforts undertaken by the major world economic stakeholders should
start having a positive effect soon.
productivity shows an uninterrupted growth.
Over the last three
years, there has been a significant flow of foreign investments,
which has halted the trend of the previous years. These trends have
also been reinforced by the gradual weakening of the US dollar.
the most recent (September 2008) quarterly figures for the US GDP (Gross
Domestic Product). After the stunning growth of +4.8% in the second quarter
of 2007, the downturn of -0.2% in the fourth quarter of last year generated
some pessimism, which the +0.9% rise in the first quarter of 2008 has
not entirely erased. The fact that the GDP then soared to a solid +2.8%
in the second quarter of 2008 seems to have disproven the hypothesis
that the decrease at year-end 2007 and the small growth of the first
quarter of 2008 were clear signs of recession. The IMF also estimates
that next year there will be growth, albeit limited.
The strong GDP growth in
the most recent quarter has also been helped by the hefty +18.5 increase
in foreign real non-residential fixed investments compared to a rate of 8.6%
in the previous quarter.
It may be useful to complement
these data with a statistical report by the BEA (Bureau of Economic Analysis)
which analyses direct foreign investments in the USA sorting them by country
of origin. These quarterly data have been updated only to the third quarter
of 2006. It is particularly interesting to note the progress of Italian investments
in the USA, which, in the first 9 months of 2006 alone, amounted to 3.39
billion dollars, compared to 4.13 billion dollars in the five previous years
from 2000 to 2005. This substantial increase is particularly due to the third
quarter of 2006, which saw 2.93 billion dollars of investments.
The inflation ratio reported
in September 2008 was 4.9% bringing the average of the current year to +4.5%
compared to 4.1% in 2007 and 2.5% in 2005. A substantial contribution to
the higher inflation rate reported in the fist 9 months of 2008 has come
from a +16.6% increase in energy costs and +7.2 rise in food costs. Production
has decreased slightly to 1.6%.
The US unemployment rate
reported in September 2008 was 6.1% lowering the third quarter average to
6% compared to the 5.3% average in this year's second quarter. Job loss has
been most felt in the construction, production and trade sectors, while raw
materials extraction and healthcare have reported an employment increase.
The above rise in unemployment is particularly significant if we consider
that, compared to last year, the overall number of unemployed people has
increased by 2.2 million with an increase in the unemployment rate of 1.4%.
this increase, the current US unemployment rate is equivalent to the average
unemployment rate in Germany.
The USA is an ideal location
for those wishing to make real estate investments in a "low risk" country.
It is the best choice for mid-term foreign investments, especially in the
real estate sector, due to its: current economic situation, geopolitical
leadership, which remains stable even in moments of sever crisis, favorable
tax and regulatory system, high population growth rate, positive migration
flow, average prices for built up land and areas, market opportunities, and
favorable exchange rates.