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Banking 101 - The Art Of Financial Illusion

2008-11-11T22:17:00Z

Bear-Stearns? Gone! Indy Mac Bank? Gone! The mortgage industry? It has been slowly brought to its knees…….Wall Street? They’re still trying to figure out what happened. The stock market? It’s at one of its lowest points in the history of our nation. Insurer A.I.G. gets an $85 BILLION dollar bail-out? (Isn’t that our hard earned money the government is using to save these privately-owned robber-barons who have been bilking the U.S. public out of Billions of dollars for he last 100 or so years?). Wait just a minute.........? Fannie Mae and Freddie Mac get taken over by the government??? How could they be taken over by an organization that it was supposed to be a part of since its’ inception??? Something is very fishy here........Meanwhile, George Bush (and John Mc Cain) still contend: “The fundamentals of our economy are strong”. This is a very serious situation here. But we’ve always had a serious situation on our hands in America. However, the masters of the art of financial illusion have exercised their magic on us for years. Now the pressure is on and the ugly truth is being revealed.

In the last 4 weeks in excess of $500 Billion dollars has literally ‘vaporized’ from many hard-working Americans’ retirement accounts and government pension funds due to corporate mismanagement & greed on the part of these robber barons we call money managers and banks. Congress & our “President” has blown another $700 Billion Dollars with the passing of this “Bail-Out”….. And now they’re telling us they may need more of an “Economic Stimulus”? Well I could use a Billion dollar Economic Stimulus myself! And how, pray tell, does a financial fortress worth Billions like Lehman Brothers just suddenly declare financial insolvency and go Bankrupt less than 1 year after it paid it’s C.E.O. A $39 Million dollar bonus for good performance??? (A Boston.com article dated 2/27/07 Reported that Lehman Brothers C.E.O. Richard Fuld was paid $40.6 Million in compensation last year based on Lehman’s record profits. Only $750,000.00 of that amount was Fulds’ actual salary so you do the math).

‘I can hear many of you out there thinking: ‘Would somebody please tell me what the heck is going on here….?’ by the end of this article you may wish you’d never asked.

Many on “The Street” (as the brokers call it) and in marble-lined inner-sanctums of the financial corporations of our country are going to be upset with me for pulling the sheet off their little game, but I think those who didn’t want to listen before are all ears now. Allow me to first of all give you a disclaimer that I am not the all-knowing, all-seeing guru who claims to be THE authority on this, however, many years ago I predicted what we are seeing right now on Wall Street. How could I see it coming? Well, it’s just like I used to tell clients a few years back when I managed a mortgage company and someone came to me with a claim they could get a better interest rate from so-and-so from ABC Mortgage Company down the street. I would only say the following: “…Don’t believe a word the other guy says……But also don’t believe a word I say. Instead, just look at the numbers because the numbers never, ever lie!” Years ago as a young credit analyst and financial consultant I saw some things in the structure of the banking and finance industries numbers that made me very, very suspicious…The numbers just didn’t add up. And the financial practices that we would be jailed for practicing have for years been championed by Wall Street, the banking industry and our own United States government. Now the chickens have come home to roost! Let’s take a closer look & allow me to help you understand how and more importantly why this whole industry is coming apart at the seams. There are some very dangerous issues looming on the financial horizon and they are based on the following:

Major Problem #1 – This Money Isn’t Real:
The money we think we have in our investment accounts (and bank accounts) isn’t even real. The only real money is what’s called “Central Bank Currency”. This is what we can see with our eyes and also carry in our wallets (i.e. known as fiat money). Commercial Bank money is money that is in a very literal sense “created” by loans and notes. Contemplate this for a moment. How does money (those multi-millions in retirement dollars) just disappear...? Well, it doesn’t. If it was really there it couldn’t. The fact is that it only consisted of blips on a computer screen and existed only in our minds and in a “Virtual” economy. The reality is that the money was gone (loaned) from our accounts as soon as we allowed them to take it from our paychecks and place it into their so-called “retirement funds”. This is because they gambled it out to these risk-taking “investors” & high-risk investments some of which never had any real value to begin with…their trick was to just keep new fools coming in the front door even if a few were wising up and quickly exiting out the back!

Major Problem #2 – FRACTIONAL BANKING:
Fractional banking is an accepted banking industry practice by which banks are required only to keep a fraction (20%) of their deposits in reserve. A demand note (i.e. checking acct /savings deposit) or bank note issued by a bank (bank issued paper money) is essentially a loan to the bank that is repayable on demand (i.e. Withdrawal). The problem is that note holders and depositors still have a claim to their funds on demand even though they are largely already “invested” by the bank in interest bearing loans, high-risk stocks, unstable securities, mortgage backed securities as well as other sophisticated yet confusing (to the average individual) investments. Now let’s say everything seems to be going along smoothly in all four of the above mentioned areas. Then suddenly in one area, say, MORTGAGE- BACKED SECURITIES begins to have a high rate of default at the same time many depositors are presenting their demand notes (checks or withdrawals). When loans go into default that means the bank reclaims zero and are at an 80% loss across the board. It only takes a very small percentage of defaults to rapidly deplete the banking institutions’ reserves. Then suddenly, entire portfolios of millions of dollars are gone?
How so? Because when a Lehman Brothers files Bankruptcy
While holding Billions of XYZ Banks’ money in their “money
Market fund” accounts it is basically gone forever. Suddenly the bank is operating on only 20% reserves and depositors now want to liquidate/cash-in their chips so to speak….This is what is know as a “Run-On-The-Bank”.

Unfortunately there will be many others to go down in this financial carnage until the ‘someone’ (the Federal Reserve, treasury or the U.S. Government) reforms and re-structures their entire way of doing business. In reality, the insane greed that got us into this billion-dollar-mess will not be reformed overnight. These guys obviously cannot and will not police themselves. We as American citizens and tax-payers must push the envelope and we must be less trusting and more discriminating with the who, what, where and how of our finances and investments…..We absolutely must learn to manage our own money, manage our own retirement funds
(self-directed IRAs’, etc.) Right now even lawmakers are coming clean (well, at least as clean as a crooked politician can anyway) and admitting that this bail-out bill is loaded with excess “pork” (special interest goodies which of course we pay for). I suspect though that their honesty is only due to the fact that it is an election year and they know they’ll not be re-elected if they don’t do something (or at least pretend to). Please stop playing the fool. Our very own government has proven itself once again to be incompetent
at basic economics. There is something very wrong when they think printing and circulating more dollars in our financial system will fix the problem...........Bush and the boys have proven again and again that they’ll bail-out the corporate raiders on Wall Street but won’t lift a finger to help the average citizen in distress! (Side Note: If anyone had bothered checking Bush’s record they would have seen he wasn’t capable of running a nation due to the fact that he ran every business he owned into insolvency. But Daddy Bush’s money and influence always cleaned up the mess). Let’s wake up and turn the Reality TV shows & video games off for a minute folks! There is so much more to this financial puzzle so stay-tuned. The game is far from being over and there is much more you need to know because it is you and i who is going to pay the bill…

Ruff Rev. Jerry L. King, Jr.
America’s Credit & Finance Drill Sgt.

Rich Athletes, Poor Minds

2008-09-04T04:15:00Z

Evander Holyfield is broke…? Wasn’t he the Heavyweight Champ who made in excess of $200 Million Dollars in his boxing career….??? Evander “The Real Deal” Holyfield is the fighter who electrified fans with his duels with Mike Tyson. He is currently $9000.00 in arrears on his child support and his 10 Million Dollar Mansion is about to go to auction because he can’t keep up with the payments.

(www.associatedcontent.com/.../evander_holyfield_just_ another_bum.html)

How is it that a poor, destitute grandmother who never made more than $15,000 per year ironing clothes ends up donating a Million Dollars to a local college and this guy end up broke??? The answer? Well, its’ simple, yet complex. Difficult yet common sense. And oh by the way....for those of you who want to make this a race issue: it's colorless. The infamous Donald Trump just came through Chapter 11 Bankruptcy proceedings on his Atlantic City Casinos. Mysteriously they give him awards, book deals and TV Shows (“The Apprentice”). Go figure. Let’s elevate our minds and not waste time and energy on the color thing. In this economy almost everyone is catching hell in one way or another, even the rich. However, the difference is that the truly rich Know full well the difference between the lies we are told and the real truth. Our entire society is delicately balanced on the many optical illusions orchestrated by the banking, mortgage & finance industry. People like Holyfield believe these lies to be truth and hire those very perpetrators of financial smoke & mirrors to handle their money. Then the winds blow, the storms come and the phony Hollywood backdrop we call our "Economy" tumbles to the pavement. These “Big- Ballas” do in fact have accountants, CPA's and “Lawyers watchin’ Lawyers” as Biggie put it, but, they still go broke. Many of those "Professionals" have only one thing in mind: Getting the money from the athlete's bank account into their own as fast as possible PERIOD.

Most accidentally-wealthy people think they can abdicate financial responsibility over to someone else and THAT is where the trouble starts. While you should have funds with some trusted firms for management, YOU MUST LEARN HOW TO MANAGE A GOOD PORTION OF YOUR OWN MONEY...and, you should watch it like a hawk.

Wealthy people who came form nothing and earned their Millions attend matinee movies and routinely scoop-up bargains at auctions, flea markets, online and yes...even the dollar store. The funds they save by exercising these prudent habits they invest in real estate, businesses, off-shore investments or other assets. The other thing the EARNED WEALTHY (Those who actually earned their wealth the old fashioned way) do is BUY ASSETS. The Holyfields’ of the world buy a bunch of stuff (Liabilities) that loses value the second you leave the showroom, Flat-Screen Store or Jeweler. The poor (in mindset & wallet eventually) always brag about how much they spent for an item. The truly Rich brag about how little. Then boast about using it for a year and selling it for a huge profit!!!

What is really scary is to see that we have a large group of teens who have been raised by a some (not all) financially irresponsible parents to believe that the world will just give them anything they want and that there will always be someone there to save them when they're in trouble. It is for this reason that we teach financial responsibility & credit management via "THE TEEN CREDIT BOOT CAMP" (Credit and Finance Training for Teens & Young Adults of the Hip-Hop Generation). Evander, maybe you, Michael Vick and Latrell Spreewell need to show-up for the next session huh??? And by the way…Fifty-Cent could probably give you guys some financial tips because he hasn’t forgotten from whence he came. It has been said that successful people are always leaving clues. Teens, pay attention cause Fifty is always dropping clues to his success…He seems all FUN but Fifty is all BUSINESS. He stays on the grind and he counts every cent. Remember in “Get Rich or Die Tryin” he stated :“…I Would Take Change……… I’d take pennies if that’s all a (Crack) fiend had”. Hmmm… Fifty Cent went from small-time hustler who counted pennies (hint) to Multi-Millionaire and recently sold his stake in Vitamin Water for $400 Million (www.bloggingstocks.com/2007/05/29/50-cent-banks-400-million-on-sale-of-vitamin -water).

Fifty for Vice-President!!! Can you even imagine? OBAMA & FIFTY IN THE WHITE HOUSE…all our troubles would be over.and you can best believe, we’d have a balanced budget.

Ruff Rev. Jerry L. King, Jr
C.E.O. Super Star Financial, LLC
Facilitator: Teen Credit Boot Camp
www.TeenCreditBootCamp.com
RuffRev@yahoo.com

Welcome

2008-08-11T01:21:59Z

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