Do Private Banks Care More About Mortgages or bank FEES? How Quickly could Private Banks Recoup Profits, if the Housing Market Crashes? #LateStageSocialism – July 6, 2022
It’s been interesting observing Private Banks, which if you’re looking at things OBJECTIVELY, don’t appear to care much about the returns they get from rising asset prices. Banks appear more obsessed with fees, if you own a business that’s not real estate, you’ll have a better understanding of what I mean. I have friends in real estate and when they explain their portfolios to me, I’m often scratching my head wondering if they’re aware that as a business person I have more access to UNSECURE credit than they have access to SECURED credit.
Once you comprehend what assets and liability are, you buy CASH FLOW producing assets, I buy or get involved in businesses that are CASHFLOW positive. In my opinion, most real estate properties are NOT cash flow positive, but in prior years they were APPRECIATING in value.
In my opinion, I thought it silly to pull out the equity of an existing property to purchase another house unless the said house was catering to affluent clients, who can me $5000 or money per month in rent like they were buying a candy bar. If the most you can get out of the house is $3000 per month and at best you’re pocketing $1000, which is NOT common, you’re playing with fire.
But why oh why would the banks and financial institutions lend you money, when they’re certain eventually interest rates would rise and many of their clients would be overleveraged? My answer are the BANK FEES! Furthermore, you have to remember the Glass Steagall act is GONE! meaning you’re talking about interest charges, monthly fees, loan application fees, liens on the properties, mortgage insurances, and all the other fees banks can potentially collect if you sign one or multiple death pledges.
Now, a rising interest rate environment will be difficult POLITICALLY for private banks, but, fees are fees, and the government in order to collect taxes is reliant on those fees, meaning that even in the event of a market crash, sure the government will talk a big game, but the government is in a losing scenario unless it NATIOANLIZES the banks.
Now, as we all know, and what’s been exposed is that the FEDERAL RESERVE has NO IDEA what it’s doing. Meaning that the Federal Reserve or central banks, in general, haven’t a CLUE on how to properly distribute money to PRODUCTIVE people. What a lot of people don’t understand about modern central banking is that it’s NOT central.
Central banks have time and time again shown they’re BEHIND the markets not in front of them. As I’m writing this, the Bond Market is basically daring the federal reserve to raise interest rates. Sure the Federal Reserve might push through and raise rates anyway, but consumer behavior GLOBALLY has already begun to shift.
Now, if the Federal Reserve knew how to read data it SHOULD know this already, but if it doesn’t know this, well then a hard RECESSION is likely. Now what does this have to do with the Private Banks, well, based on my research, all signs point to the Private banks not really caring, because it’s not like everyone is broke and/or overleveraged, it’s just at what price, are sharks willing to bite.
People hoarding mortgages who are over-leveraged can hold onto their inflated mortgages for as long as they want, during a recession, what it’s about is waiting for the markets to roll over. During a recession, government deficits can explode, now sure the Federal reserve can price down debt, but that’s going to encourage the Federal governments of the world to deficit spend, WITHOUT changing regulatory policies which ofcourse equates to higher COSTS, meaning governments running larger deficits and getting smaller stimulus.
Now, when the government prints money and gives it to whomever, a lot of people are going to buy things that existing asset owners already OWN. The banks in all of this will still be collecting fees. if asset prices rise or fall, the banks are still collecting fees, and it’s not like the private banks haven’t seen this coming, most of them prepared for it, it’s why a lot of banks haven’t been lending.
Now, I could be wrong in all this, but from my vantage point, banks don’t seem to care about mortgages, mortgages appear to be a GOVERNMENT problem and that’s something you should be aware of if you’re currently overleveraged and in NON-positive-cashflow producing assets.
Interesting times ahead!