For many of us, the decision as to whether or not to 'expat' ourselves may very well depend on the next few months.
The world financial system a ppears on the verge of collapse, egged on by a housing bubble and an excess of borrowing. Already in the United States, major investment banks Bear Stearns and Lehman Brothers have collapsed, and the large insurer AIG and Fannie Mae and Freddie Mac have effectively been nationalized by the federal government. It appears many more bank failures are yet to come, and the turmoil threatens to cut off credit and send the U.S. into a major recession.
As they say, if America sneezes, the rest of the world catches the flu. If the United States economy falters further, it will have global repercussions. Many countries depend on exports to the U.S.- a major economic slowdown could be triggered in those nations. Countries like Venezuela and Russia, which have counted on high oil prices, could be hard hit as demand for energy products drop precipitously.
And small islands, which depend on tourists with disposable income, could be hurt very badly.
Why am I mentioning all this? I think a cataclysmic economic event like the one we face could cut both ways. On the one hand, escaping to a small country might be a great idea. Instead of losing one's job and watching one's assets being drained, dollar by dollar, maybe this is an ideal time to cash out now and wait the crisis out. Live on coconuts and fish until the world crisis plays itself out.
On the other hand, if you, like me, own a house, it may be difficult to escape from America or Europe. It is very difficult to sell a house quickly at a profitable price. Furthermore, if your money is tied up in equities, you may want to wait until prices rise again before liquidating your assets.
Further compounding problems is guaging the effect the world economic crisis could have on the country of escape you have chosen. No one wants to live in a part of the world where people are suddenly starving. It is sad to watch and is conducive to an unsafe environment for foreigners.
For right now, I counsel keeping eyes open, and being ready to pick and move on a moment's notice. The coming weeks will give us all more insight on what our next steps ought to be.