The Banking System: “it’s broken”

I am using my blog to communicate situations and data that I come across in my work and everyday life. My hope is that it will help answer questions that people have about finance and the current state of affairs. 

It is sort of a FAQ (frequently asked question) concept. Because I sit at the crossroads of many different investment and finance related activities I find that I have a clear view of what is going on in many areas of life and finance.

In the past several months many of my friends and clients have been calling me with problems in obtaining financing. They are trying to finance everything from houses to businesses and other personal pursuits. They simply are not able to borrow money from the conventional banking system. Now, I am talking about very well qualified people; people with high net worth, great credit and great income, people who have real assets with real value. These are not people looking for no money down deals, or sub-par credit customers. They are not even looking for super cheap, low interest money. They would simply like to borrow some money to do something constructive. 

So, first and foremost, I wanted you to know that if you are experiencing trouble borrowing, it is not you. It is the system. It may make you feel like you are not qualified or that your ideas are wrong. But, it is actually that the current monetary system is not working. The creation of small business is not working. The apparently “low cost” of money that we hear about is not really happening on a broad scale. I know this to be true based on the small number of transactions I have heard institutions making and the number of good investments and loans that my company has made to good people and good companies. It is not that there are no good people, good businesses or good loans out there. It is that the system is constricting the money flows to a trickle. 

Here is the simple look at it:

1. Banks and lending institutions did unethical things, bad loans, falsifying documents, etc, etc.

2. The Government and the Federal Reserve was complicit in this, providing the money and the low regulatory environment. 

3. The system as we knew it crashed, as it was simply not sustainable. At some point we all knew the music had to stop and there would not be enough places to sit (this is a separate blog all in itself). 

4. When the money supply stopped, the housing market crashed. The stock market crashed. Financial Institutions crashed. Countries crashed. And, we are still seeing the effects of this. It is one of the most broad-scale global situations in our history.

5. The system (banking and monetary) froze. 

6. Companies then started crashing, like GM, and others. 

7. Unemployment spiked and is still at an all time high. 

8. People out of jobs then further depresses the economy, as spending decreases.

9. Many other negative things occur, just look around and you will find a few of your own.

10. Now appears the Federal Reserve, apparently to the rescue. The only tool they have is to “pump more liquidity into the system”. So they lower interest rates to zero.

11. Large financial institutions take that low interest money to repair the holes in their balance sheets, reduce their leverage and try to bring their companies back to health. This is where we are right now in the cycle. 

12. It is promoted by government that this excess liquidity being generated by the Fed will help restore our economy. But, as you and I know it is not happening. 

13. The outcome is “no money” or very hard to get money. 

If you think about what you would do if you had the Government promoting that there was lots of liquidity and it was your job to lend it out, yet you could not because you were dealing with your own problems, what you would do? I think a few obvious answers are “delay”, “give you lots of paperwork to fill out”, make you “submit more and more documents”, etc. All of this in the hope that you would simply give up. This is what I see happening over and over again. No lending and people giving up!

At the end of the day, you may be able to get money from conventional lending institutions, but it will require persistence. It will require more documentation that you have ever imagined. Some of this is because there are new regulations that the government put in place to prevent another crisis, but it seems to make lending impossible. I believe that the banks are mired down in their own problems and now have huge regulatory hurdles to overcome. If you add in a dose of incompetence and stupidity then you will really understand why you are pulling your hair out.
But don’t give up, if you need capital to expand in some way and you have good assets and resources it can be done!!

This blog would be incomplete without a personal comment on all of the above notes. It is my goal to simplify and explain seemingly complex issues. Hopefully, I have done that above. But, the above posses to me an obvious question, WHY? WHO? And, for What Purpose?

I come from the school of thought that says, if something happens – somebody caused it.
I am by no means a conspiracy theorist, but a planned action and outcome is not a conspiracy. It is a simply a plan, for a purpose, with an end goal. 

I think there are many opinions out there and mine is just another one, here goes:

Globalization – large multinational companies and banks that control the majority of the world’s goods and services.
In order to accomplish real global commerce, first the currency disparity has to be handled, thereby leveling the playing field. No countries money can be worth too much more than the others. 

Next, any advantages have to be routed out and gotten rid of. Look at China and the low cost production they are able to achieve. Also, look at how much of the US Dollar they hold and control. They are in a very advantageous position in the global arena. In fact, they are in the strongest position on the planet right now, in my humble opinion. They have a very, very controlled population, communist. They have a lot of money. They have a strong military. Low cost production.

If, I am right that this is the game being played, then it explains a lot about what is going on.
If you are an average Humanoid, then what is the biggest game you can think of? Take over the world…right? If you were not an average person, you might want to save the world, end war, create peace, and help people survive better!! There are actually a lot of these types of people on this planet, but they are being suppressed and mostly unknowingly controlled by those with different intentions. It is the classic game of good and evil.

That’s all for today… but in closing let me say this. Good can win!! You can win!! 

What we need to do is educate and expand ourselves as a number one priority. Do things that promote sanity and rationality. Recognize that we are being messed with by those who want more power, more money and more control. Refuse to let them win. Support and create pro-survival groups and activities. Because, while you may be able to win if you focus on just you, we have to all win as a group or it won’t matter in the end. The whole human race must evolve. It must evolve into a group of creative and caring people whose end goal is survival and success of the whole race!!

Whew… that got a bit out there for a blog on banking, but it just came out that way!!