Tag Archives: FATCA

May 25 2020

Trump Could Launch the Receivables Liquidity Corporation


The RLC backed by the government is in a better position to wait out the economic recovery and collect at the best time and have an organized collection program

Jonathon Moseley image

Re-posted from the Canada Free Press By  —— Bio and Archives—May 24, 2020

Trump Could Launch the Receivables Liquidity Corporation

We are fortunate that President Donald Trump is a businessman who knows how to bounce back from difficulties.  However, the United States really is already in a depression.  We don’t yet have technical indicators stretching over several quarters.  Yet:  “Total nonfarm payroll employment fell by 20.5 million in April, and the unemployment rate rose to 14.7 percent, the U.S. Bureau of Labor Statistics” reported on May 8.

We can fix this.  But it will take swift and decisive action.  We’ve seen it in movies:   The giant airplane is in a power dive heading down into the side of a mountain.  The hero manages to restart the engines and turns the nose up just in time to clear the mountainside and head back upward.

This is a proposal based on my years as a debt-collection attorney in Virginia

President Trump could create a Receivables Liquidity Corporation. (You heard that name and idea here first.)  After the Savings & Loan crisis, the government created a private corporation backed by the U.S. Treasury, called the Resolution Trust Corp.  The RTC took over failing banksand slowly liquidated their assets at opportune times.  During the 2008 mortgage crisis bailouts, allegedly the U.S. Treasury turned a profit eventually.  The government sold the stock it acquired in the bail outs at a time of panic (low prices) and then sold them after the economy had grown healthy (high stock prices).

This is a proposal based on my years as a debt-collection attorney in Virginia.  This could work for Canada, the European Union, now independent England, even the Bahamas or almost any country – not just the United States.  It can even work combining several nations together.  However, it does require a nation with sufficient financial credit to carry debts for a long time until the ideal time to collect on them.  And it requires a mindset to think outside the box with a more business-oriented public private partnership.

The engine has seized up.  When we try to start the engine again, it is going to be bad.  If everyone pulls back and values plummet just because people are frightened, the damage will be far greater than if the new RLC takes payment much later, after things have rebounded.

As soon as the economy re-opens, it will end the freeze on evictions of renters behind on their rent and foreclosures on mortgages.  Within two months of re-opening, many of those 20.5 million unemployed could be homeless.   Those unemployed won’t be able to suddenly repay 2 to 4 months of overdue rent or mortgage payments.

Businesses have been unable to pay rent for offices, store fronts, etc.  Utilities haven’t been paid.  Businesses have accounts receivable but their clients can’t pay those invoices because they are not getting paid.  Those clients can’t pay because their own clients aren’t paying.  And on and on.

President Trump hoped early on that there would be pent-up demand and the economy would snap back.  But he acknowledged back then that the longer the economy stays closed the harder it would get.  Now, there may be a lot of desire to buy.  But will people have the money to spend?

Consider the situation for many small businesses:  As a solo attorney, I am a small business.  Before the pandemic, clients typically had no money to pay me.  Now, no one is paying them.  They have on-going expenses for food and what rent they can cover, with no income in most cases.  The people who should be paying them have no money because they are not getting paid.  So I’m not getting paid for past work or hired for new work.  So my vendors aren’t getting paid.  Etc.  A negative cascade.

The stimulus checks in the United States were small and late.  For many businesses, the $10,000 small business advance loan never arrived.  And the Paycheck Protection Program Loan—for the very small businesses who can get one—is only 2 ½ months of a business’ payroll after cutting any salaries above $100,000.  The size of the economy is enormous.

However, those programs do not have to be repaid.  The only way that the U.S. Government can afford to spend a lot more is if the money is repaid—eventually.

How?  The time horizon for small business is short.  They can’t survive for long without getting paid by clients.  By contrast, the Treasury can carry those invoices for years until the economy has rebounded and the debtor can afford to pay.

So let’s say a landlord is owed 4 months’ rent for a business or a residence.  Once the economy restarts, and the ban on evictions is over, he’s got to collect that unpaid rent from people who don’t have any money after 4 months of house arrest.  Or businesses have shipped products that they haven’t been paid for.  Or utility companies have overdue utilities for 3 to 5 months.  What are they going to do?  If they try to collect, they will leave businesses in the dark without electricity or homes without water.  How is the economy going to rebound like that?

Instead, the landlord or utility company sells the invoice to the Receivables Liquidity Corporation and gets paid in full.  Hopefully, the invoice eventually gets paid to the RLC with interest when the economy has recovered.  The debtor must agree to:

  1. waive rights to discharge that particular debt in any bankruptcy,
  2. provide the owner’s personal guarantee for a business,
  3. waive the statute of limitations,
  4. consent to deduction from tax refunds,
  5. certify that they do not dispute the debt or to what extent, and
  6. add interest if the invoice did not provide for it.

In return the debtor gets a grace period of one year or more before having to start repaying the invoice(s) (with a possible hardship extension if circumstances warrant on application).   The debtor would get an installment plan to pay back over time.  If the debtor does not agree they are subject to immediate collection action.  So they have motivation to agree to the terms.  If they cooperate, they get a breather of at least a year before they have to pay.

The RLC backed by the government is in a better position to wait out the economic recovery and collect at the best time and have an organized collection program.  While some invoices will not get paid, hopefully enough will be paid with interest and collection fees – eventually—to come close to breaking even.

One small problem:  Who would run this program?  Wink.  Call me….

Apr 9 2020

Value of a Currency


Armstrong Economics Blog/Economics

Re-Posted Apr 9, 2020 by Martin Armstrong

QUESTION: Hi Mr. Armstrong,
You have said that money is not gold, or silver, or oil, or fiat currency, but rather represents the collective elbow grease and ingenuity of a people. From the work of Socrates, which country or countries best typify this concept and therefore will become the better countries to live in, so that we may guide our families and children in that direction?
As always best to you and your vision, and thank you.
MB

ANSWER: What made America great was not our resources. The Silver Democrats tried to force a higher silver to gold ratio and were bribed by the silver miners. When the world was on the gold standard, that dictated the value of a currency in international FOREX markets because the value of the currency was just the metal content. Napoleon attempted to create that standard and the idea, known as the Latin Monetary Standard, was used after his defeat where the coins were all of the same weight and purity.

However, great disruptions to this standardized system of metals repeatedly led to major economic upheavals. The economy of Florence suffered from the tremendous economic crisis and people were burning down the houses of bankers because they blamed them without understanding the real cause. Due to the war between France and England, the French debased the coinage. This drove the price of silver up dramatically where there had been a two-tier monetary system — gold for international transactions and silver for domestic. Since wages were paid in silver, as the price rose, employers could no longer afford to operate and the economy crashed with a vast rise in unemployment.

Only after World War I and II did modern society begin to see that the value of a currency was not simply the metal content. There was a premium even over gold’s value attributed to the Romans, as was the case with silver and the Greeks. This is proven by so many surrounding nations imitating their coinage with the same metal content and weight showing that there was a premium over the raw metal.

China, Japan, and Germany all rose from the ashes because their people were productive. Once the unions began and extorted higher sums of wages beyond competitiveness, the USA began to see its labor move offshore for it was overpriced relative to the world because of also taxes on labor — not merely the hourly wage.

Adam Smith in his “Wealth of Nations” saw that it was not simply metal. If a farmer or candlestick maker sold something from London to Paris, they both returned with gold. It was the value of their labor that mattered.

Unfortunately, the socialists are leading the charge and have conspired together to bring down the economy to force political change. They are also weakening the West and inviting war. Just as Rome saw its economy decline sharply within 8.6 years during the 3rd century, the barbarian invasions began. These socialists have no idea what they have unleashed. The world economy will NEVER be the same all because of a pretend virus that has a death rate of 10% of the annual flu.

Unfortunately, the baton will pass to Asia. The West will be engulfed in civil strife. The Socialists have killed the economy precisely as did the communists during their revolutions in Russia and China. We have a turning point in 2021 even for Russia.

Industrialization in the Soviet Union was a process of accelerating the industrial potential of the Soviet Union to reduce the economy’s lag behind the developed capitalist states, which was carried out from May 1929 to June 1941.

The official task of industrialization was the transformation of the Soviet Union from a predominantly agrarian state into a leading industrial one. The beginning of Socialist industrialization as an integral part of the “triple task of a radical reorganization of society” (industrialization, economic centralization, collectivization of agriculture and a cultural revolution) was laid down by the first five-year plan for the development of the national economy lasting from 1928 until 1932.

In Soviet times, industrialization was considered a great feat. The rapid growth of production capacity and the volume of production of heavy industry (4 times) was of great importance for ensuring economic independence from capitalist countries and strengthening the country’s defense capability