While American banks crumble, wealthy investors are parking their money in the safest banks in the world - in Panama City
In this post-Bernie Madoff age, where is one's money secure? Try Panama. Yes, the John le Carre punch line and former fiefdom of Old Pineapple Face, General Noriega, has become one of the safest bets in the world.
There's more than just the canal there these days and investors from all over Latin America and Europe are parking their money in its ultra-conservative banks.
Panama's banks have long had a slightly shady reputation for taking money which even the Swiss, in their heyday, might have blanched at. Drug dealers and other assorted crooks were rumoured to launder their loot in Panama City. The banks were secretive and secure. Today, they have largely cleaned up and are the envy of much of the world.
While the US giants operated like two-bit casinos, Panamanian banks were models of financial prudence
In recent years, Venezuelans escaping the volatility of Hugo Chavez and Colombians have been pouring into Panama. Before 2001, they might have gone to Florida. But since 9/11 and the impositions of the US Patriot Act, they have found America a hostile place either to visit or invest their money.
Panama, by contrast, has a cosmopolitan capital, Caribbean and Pacific beaches and one of the busiest airports in the Americas, from which you can fly all over the world. The recent exiles dominate Panama City's fashionable restaurants like La Posta and Market which feel like Miami or Los Angeles.
Panama's banks grew out of the trade along the canal. Today Panama has the second largest free trade zone in the world, after Hong Kong, with more than 80 registered banks for a country of 3.3 million people.
These banks are lightly regulated by the government, but tightly controlled by a local oligarchy of extremely rich and conservative families. Rules for opening accounts are stringent. Lending standards are puritan.
Home-buyers must typically put down 30 per cent in cash and construction firms must do the same. Thirty- or 40-year mortgages are unheard of, with 20 or even 10 years the norm. There has been almost none of the 'zero down' nonsense which has brought the British and American credit markets to their knees. Consequently Panama's banks have been shielded from the construction bust affecting their own country.
It seems extraordinary, but while the great American firms Citibank, Lehman Brothers, Bear Stearns and Merrill Lynch operated like two-bit casinos in the past decade, the Panamanians were models of financial prudence.
Back when these banks' clients were less savoury, their owners learned the importance of not jeopardising their investors' capital. The risks had been taken in amassing the money. The banks' role was not to lose it. The costs of doing so could be more painful than a lawsuit.
While firms around the world struggle to borrow money, the Panamanian government recently secured a multi-billion dollar round of financing, at generous terms, to expand the canal. Traffic along the canal may fall along with global trade, but it
remains effectively uncontested as the most cost-effective route between the Pacific and Atlantic Oceans.
Two decisions in the 1970s laid the path for Panama's current economic success. First it adopted Swiss banking laws, then the corporate laws of Delaware, the American state regarded as the friendliest to business.
Today, multinational corporations, from Hewlett Packard and Proctor and Gamble to Caterpillar have established major operations in Panama, finding it to be stable, sophisticated and accessible.
There is a new Frank Gehry-designed Museum of Biodiversity opening in Panama City, which its builders hope will become to the Panama Canal what the Opera House is to Sydney Harbour.
It is all a long way from December 1999, when the United States ceded control of the canal to Panama. "When it was first proposed that the world hand a major global asset to a little chicken-shit, Third World country, the presumption was they would fuck it up," says Bobby Eisenmann, the founder of Panama's leading newspaper La Prensa. "So when we didn't the reaction has been geometrically positive." 
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