Ask Lee Now: Answering Readers’ Questions
We love to hear from readers! Please email your question or comment to Independent Living editor Lee
Bellinger ([email protected]). Please include your name and home state.
You may also reach us via postal mail (P.O. Box 1240; Clover, SC 29710-4240).
Josephine A. writes: Thank you for your ongoing experience and insights. You almost seem psychic sometimes! I am an Italian (100%) and I would like to obtain an Italian passport (2nd passport). I am an American citizen. I hear people who aren’t Italian obtaining Italian passports thru local avenues. Please give me directions to get the secondary Italian passport as easily as possible (without going to Italy).
I’m not psychic, I assure you. I just pay close attention! As to your question, an Italian passport isn’t the easiest to obtain, especially if you lack familial or business connections in Italy. It’s not something anyone can just apply for through the mail and receive after paying a fee, like with some Caribbean expat havens. But if you have parents or grandparents who were/are Italian citizens, you’ll almost certainly be eligible to obtain citizenship yourself. Otherwise, you probably will have to travel to Italy to establish residency…unless you have some real tight connections with Italian government officials.
Unfortunately, I can’t help you with that! I’d suggest completing the online Dual Citizenship Qualifying Questionnaire provided by the National Italian American Foundation (202-387-0600; http:// www.niaf.org) to learn how you might be or become eligible to acquire Italian dual citizenship.
Electricity Prices Poised to Soar
David W. writes: In your supplementary article “Join Us It’s Urgent” promoting the PowerWhisperer, no mention is made of the crisis in power generation at nuclear power plants caused by the Russian termination of supply of ex-bomb nuclear fuel to the USA. The contract to supply nuclear fuel expired 31 December 2013. This closure of a major source of supply is, or soon will, force the USA to compete in an already over-crowded market for uranium. The results will be felt in two areas: (a) rapidly rising costs for energy from huge price rises for fuel, (b) no fuel leads to no generation of electricity.
You are right to note that a supply diminution in uranium could have serious consequences for nuclear power facilities and the millions of Americans whose electricity comes from nuclear sources. We discussed the end of the Russian Megatons to Megawatts program, along with related investment opportunities in the nuclear/uranium space, in the February issue (“The Nuclear Option for Your Investment Portfolio”).
I believe that rising energy costs are a near certainty over the next few years due to a number of factors that are coming together. Growing demand for nuclear power out of Asia will require more uranium than is currently available at today’s prices. Either the lights go out or prices go up. One or the other – or a combination of both.
U.S. officials seem to think that the natural gas fracking boom will ensure plentiful and cheap energy for decades to come. But the era of cheap gas may be ending. Prices spiked in February due to cold weather. Natural gas futures are up 12% year to date. Meanwhile, the Obama Administration has virtually banned the construction of new coal-fired power plants (even as coal is actually the fastest-growing conventional energy source outside the U.S.). And our outdated and inadequate nuclear power infrastructure has been neglected for decades. Wind, solar, and other government-subsidized alternatives are ramping up, but they remain a relatively minor source of energy and are uneconomic and unfeasible on a large scale.
The Media Makes a Joke Out of Preppers
Joan N. writes: Are you aware that in California they have a division of the Police Dept., that goes out to people’s houses if they are suspected of hoarding and they will make them clean it up? I saw it on TV yesterday. It is similar to the TV show on HGTV, however, this is more intrusive. It’s a good idea because some of the houses they showed were absolutely disgusting. I just don’t think that the police should be doing this. We are losing our freedoms little by little.
It’s a shame that “reality” TV shows that feature preppers and compulsive hoarders focus on the lunatic fringe among them. These types of shows are heavily edited and in many cases scripted, so you never know if what is portrayed is actually real.
In stocking up on life essentials, I would certainly advise against becoming an obsessive-compulsive hoarder. Be thorough, but be discreet to avoid attracting unwanted attention from the authorities. Stock up on emergency food reserves, yes, but don’t try to erect grain silos in your backyard (unless yours is farm).
Important IRA Information to Know
Mike V. writes: Lee, I opened a “checkbook” IRA last year, in which the assets are owned by an LLC of which I am the manager. One of the assets is a small Schwab stock account, in which I have done some trading, earning some dividends and accruing some small gains and losses.
I did not report any of these gains, losses or dividends on my 2013 tax return, because it seemed to me that all the activity was occurring “inside the IRA” and that there’s nothing to report, until I take a distribution. Someone has suggested to me, however, that this is not the case, i.e., that the stock account owned by my LLC is not an IRA account and that all gains and losses have to be reported to the IRS each year. What gives? The whole purpose of the IRA is to have gains remain “inside” and accruing free of taxation.
I’d suggest asking a tax professional to review the structures you have set up. Is the type of IRA you created eligible to be held by your LLC? You’ll need to get a definitive answer to that question first.
Most assets placed within an IRA incur no annual tax liabilities. You generally are only taxed (ifany liabilities accrue) when you actually begin to cash out of the IRA. (If it’s a Roth IRA, you may not be taxed at all on gains.) However, there are some exceptions. When in doubt, seek the services of a tax pro – the costs of doing so may be substantially less than the penalties that could be imposed by the IRS for not understanding the intricacies of IRA rules.
The War Against Cash
Charles B. writes: I’ve read occasionally how some businesses, institutions, and even government facilities refuse to accept cash and insist on electronic payments…. On the other hand, a government could declare its money valueless overnight, I suppose. What concerns me is what the electronic requirements could be, and the obvious conclusion that there would be little or no privacy about our affairs if everyone with whom we deal gets involved with our finances.My question: Have you heard anything about this as one of the means the government has considered to get out of the mess it has put us in?
No doubt, banks, corporations, and the government prefer electronic transactions over cash. It’s now virtually impossible to do things like purchase an air fare or reserve a hotel room without a credit or debit card. But magnetic card readers are decades-old technology. Increasingly, smartphone payments are being encouraged. Stores can now gather data on you and your buying habits whenever you enter a store with your iPhone or other device turned on.
Having an Internet connection in your purse or pocket wherever you go has its downsides. “Pretty much everything you do on the Internet is spied on,” says Bruce Schneier, Chief Technology Officer of Co3 Systems. “You can be surveilled in a store because you’re carrying a phone. We’ve moved into an era when we are always observed.”
I think most people are troubled by the financial spying that they are subjected to, at least when they are made aware of it. Government economic overseers will have a difficult time completely eliminating cash or barter alternatives from the economy. They will continue to devalue the currency gradually, but they don’t want to send the masses fleeing from it and into alternatives to the dollar. A panic out of the dollar may be inevitable at some point, but it won’t happen because the authorities planned it.
Don’t Stockpile Baking Soda
Anita R. writes: Do keep your great Q & A coming! But as an experienced cook, I have to tell you that stockpiling baking soda for 25 years is terrible advice!
Soda is like yeast -a leavening agent. Its shelf life is about 18 months – a little short of 25 years. Using “expired” soda in cooking/baking is like using no soda at all. You’ll get flat bread or whatever else you’re making. Online, they give ways to test your soda to see if it’s still effective for cooking. You can still use stale soda as a household cleaner.
Baking soda is a great staple for long-keeping because it has literally thousands of household uses. Would I add 25-year-old baking soda to my homemade chocolate chip cookie dough? Not if I could help it! Fortunately, baking soda is cheap, so it’s not a huge financial burden to rotate in fresh boxes every 18 months or so for baking and cooking needs.
More About Second Passports
Bill and Marilyn C. write:We’ve been reading your newsletter for years now and do enjoy it. I have a question though from your March 2014 newsletter regarding a second passport. I was wondering if you could elaborate on this some more.
First of all we were wondering what country to have it in. We looked at South America for retiring a few years back but recently have read that many countries there are aligning with Russia. We visited Central America and noticed China is extensively involved there especially where it comes to controlling grocery stores. Other countries around the world seem to have large Muslim influences. So considering these points where do you go?
There is no offshore utopia out there. There are only countries with relative advantages to be weighed against their disadvantages. Central American countries tend to be convenient and affordable, with sizeable expat retiree communities. But they also have some Third World problems.
If you are geographically open minded, you might consider a place such as New Zealand. It consistently ranks near the top for economic freedom and quality of life and is far removed from much of the world’s demographic and geopolitical threats.
Hillary vs. Reagan vs. RINOS
Ron & Wanda B. write: Let’s watch closely which Republicans welcome Jolly to the Party and which ones do not. What do you think the response will be from the RINOs?
The RINOs (Republicans in name only) and the Beltway establishment types who put party loyalty and political correctness above true principles insist that they are pragmatists who can win elections. But it’s the heart of the party – the grassroots, anti-establishment insurgents and Tea Partiers who are capable of delivering big electoral victories to the GOP. The House of Representatives is in Republican hands today because of the Tea Party.
The last insurgent candidate who defeated the establishment to win the GOP nomination for president was Ronald Reagan in 1980, who subsequently scored two landslide victories over his Democratic opponents. No Republican since has matched his electoral success.
For 2016, Senator Rand Paul seems to be positioning himself as the insurgent. He won the straw poll at this year’s Conservative Political Action Conference. You can bet the establishment will throw its weight behind someone else.
Global Warming vs. the Harsh Winter of 2013-4
George H. writes: There is a subhead in the article entitled “A Dangerous Three Years Ahead”: Global Warming Theory Obliterated as Eurocrats Begin to Abandon Alternative Energy [March 2014]. The rising costs of alternative energy are a political problem. They certainly do not “obliterate” what you refer to as global warming theory. The vast majority of climate scientists are in full agreement regarding global warming. That would make it more than merely a theory.
Thanks for sharing your dissenting opinion. However, I think my analysis still holds up.
It snowed in Cairo this winter! There is actual, objective data on observed global temperatures. And then there is theory – which includes a lot of speculative projection, based on untested models, masquerading as settled science. A theory is no good if it lacks predictive value. Over the past 15 years, global temperatures have not gone up. This is a period that Al Gore and the leading global warming alarmists of the 1990s all confidently predicted would see escalating temperature rises, as illustrated by an infamous “hockey stick” graph that has since been discredited.
Reader Warning on Paypal!
Raymond writes: I would like for you to let your readers know that they should not be doing business with PayPal. My PayPal account was hacked due to their inability to not have all of their security in place. I am having a hard time getting my money back through the help of my bank. My bank tells me that 5 other people had their accounts hacked like me on March 5th, 2014.
I’ve had a few issues with PayPal, but I do find it to be convenient as one of the Internet’s largest payment processers. I have no reason to believe that the leading competitors are any more secure. And as we’ve seen recently, just swiping a credit or debit card at a major national retailer can leave your data vulnerable to being stolen. My suggestion would be to keep your PayPal account balance low or zeroed out by transferring accumulated funds to an external account.