Thursday, May 13, 2010



Foreign banks and other lending institutions that lend money to the Government of Belize are running a racket to keep the BELIZEAN GROWTH, or GDP foreign exchange earnings, enslaved to interest payments.

This is an old racket going back for fifty years that I know of. It is talked about in many books. Unfortunately, Belize is a small primitive country and do not know the games that foreign banks and lending institutions in the USA and Europe are playing with them

The secret of foreign banks and lending institutions, is that they want INTEREST to be paid on their loans to our Belize Government. They will lend more loans, to ensure that you can keep the interest payments coming. The PRINCIPAL is not wanted. Just the foreign exchange in interest payments.

The interest payments are intended to skim the foreign exchange that Belize earns through their government loans interest payment requirements. In other words, like many third world small countries, Belize is a slave state; a commodity crop ;producer of foreign exchange, reaped in interest payments..

This is practiced by Europeans and the USA on countries around the world. Latin American countries have huge debts this way. They can NEVER pay off. Only Dictator of CUBA, Fidel Castro beat them off at this game.

If the PRINCIPAL part OF LOANS is NEVER paid off, the loans can be continued in perpetuity. The Balance Sheet SCAM is about burying the non-paying loans as performing assets on a foreign bank, or lending institution. It is not a liability of the foreign lending institution. So long as a country like Belize pays the interest, even if the bank or institution has to lend you the money to pay the interest, there is NO LOSS needed to show on the annual reports of these foreign lending institutions. These BAD LOANS can be shown as ASSETS on the balance sheets. What happens to FOREIGN BANKS and LENDING INSTITUTIONS, if you were to default, is that their game would come crashing down on them and cause them big trouble. Most such foreign lending institutions and foreign banks do not have the CAPITAL RESERVES to cover such BAD LOAN write offs. Belize itself is small potatoes, but if Belize were to default, perhaps there would be a DOMINOE EFFECT throughout the Caribbean and Latin America and then the BAD LOANS would become trillions and break any foreign institution, and at the least require them to reduce available capital as they put aside RESERVES to cover bad loans.

Let me use an analogy. If you have a $1000 to invest in stocks, from your savings, you would be allowed to buy $1000 of stock in a company as an investment ( GAMBLE ) plus another 50% on MARGIN. MARGIN is a hidden loan. If the price of the stock goes up, you make money on your original $1000 savings, plus the MARGIN 50% which you borrowed at a small interest rate. Good deal right? If though, the stock goes down in price, you get a margin call. This means you have to cancel the investment with borrowed Margin money and also subtract the value of losses from the $1000 cash you originally invested. You could end up with only $200 back from your savings of $1000 that you invested.
The foreign banks and lending institutions work like that also. The PRINCIPAL part of any bad loan you owe them, in a country such as Belize, can be shown as an asset and improves the balance sheet of the lending institution. Giving them on the books a net worth far in access of the hidden loss of a bad loan. If they can just keep meeting the margin calls, by loaning you more money to pay the interest on the bad debt. Should you default as a country, the edifice comes crashing down. Because the foreign lending institution, or bank will have to write off the interest, plus the debt, but worse from their viewpoint is that their balance sheet will lose value, their shares will go down, the stockholders will complain and there will be a run on the bank. Should more countries follow suit then loans in Latin America and the Caribbean could conceivably cost the value of lending institutions and banks to drop en masse by the TRILLIONS. Liquidity is the problem. That was just experienced in the recent housing bubble special US mortgage packages. If one bank goes, many will go bust. That will mean a big hit on the economy in the USA, Great Britain, or other EU countries. The more successful lending institutions, will have RESERVES to cover such bad loans, like Belize loans has outstanding, with them. Most don't! They have a liquidity problem because they are using the additional interest to pay interest loans to governments, to hide and bury non-performing assets. This allows them to inflate their value on the balance sheet and speculate with more money, which in of itself is MARGIN money costing interest.
I didn't explain this very well, but you get the idea that there would be a general collapse of any country banking system, that had outstanding loans in Latin America and the Caribbean, if countries started to DEFAULT. No government either in the EU, or the USA will allow this to happen if they can help it. Threats, invasion by military forces, coup d'etat's, blockades and other strategms would be made by governments to protect their inadequately capitalized banking, or lending systems. As a general bank failure, or series of them, would threaten their economic stability. In the USA the FDIC guarantees an account holder up to $100,000 but they do not guarantee more than that, and even small countries like Belize have FOREIGN NATIONAL DEBTS in the billions of dollars to banks and lending institutions in the USA. Some of these banks and lending institutions during the recent similar crisis just past, were considered too big, to allow to collapse, as the effect on the economy of the USA would have been horrendous.

In the specific case of Belize what is needed is some BANKRUPTCY LEGISLATION covering FOREIGN LOANS that the Belize government has borrowed. In the USA and Europe they have many types of BANKRUPTICY avenues to explore. I’ve heard of Chapter 7 and Chapter 11, type situations, but am not familiar with them. As a last resort the US government covers such cash shortages in that country, of institutions they support, like the IMF and the WORLD BANK. BELIZE NEEDS legislation to allow government bankruptcy under different conditions, regarding any government foreign loan borrowing it cannot pay, because the lenders have continued to lend to the government, even when they know they cannot pay, or the loans exceed the whole annual GNP.

It is the PRINCIPAL of the LOAN that foreign banks and institutions do not want to see endangered. They will go to great lengths to keep Belize and other countries paying the interest. Even if it means continuing the indebtedness through further loans to pay the interest. The bad loans in countries like BELIZE need writing off and the lending foreign institutions need to be forced by this to raise up their RESERVES to cover write offs.
Bankruptcy laws are intended to put the onus also on the lending institutions. We have no legislation in Belize that so safeguards our own government from these rapacious sharks and their BALANCE SHEET swindles. We are still VICTIMS!

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