|
New Mexico | supposed "trickle down" system, options become rather limited.
Today that is very obvious.
I wonder why no one has thought of basically doing a 180 degree flip.
Just a couple changes in banking regs could bring to light truely running traditional bank JV equity capital to main street so to speak.
Fixes alot of things actually:
Simple example is say Joe in Harlem decides to build widgets...takes say $1,000 startup dough.
Bank comes in with a 5 year JV EQUITY split deal.
Put's up the 1,000, also charges closing and a capital charge ( say 5% on the 1k, 5 years ) tacked on the deal of say $400.
Thus total originated deal of $1,400.
Since the capital charge was tacked on, thus carryed ..there are no other charges...until 5 years down the road.
Say the Widget Operation does OK.
5 years down the road the deal is worth say $3,000.
Joe pays the Original $1,400, PLUS say 25% of the Net UP.
25% of the Net up on $1,600 is another $400 to the bank.
The Total $1,800 return on the bank's original 1k capital is a pretty decent return in 5 years.
Joe of course is now pretty well capitalized too, thus could roll to strait loans OR expand with yet another 5 year JV split deal from the bank etc.
What kills alot of deals is annual interest.
What kills MOST deals though is NOT recognizing TRUE Equity.
The TRUE asset of every business and EVERY economy is actually the PEOPLE.
If the people lose interest for any or several reasons and stop coming thru the door either to go to work or as customers of said business...well then it's over.
Granted the supposed "hole" in the afore example is that if every bank on main street usa were to Truely start getting dough out there to the local little people, that does severely cut into govt money supply due to the fact banks would likely back off on Fed Auction T Bill purchases etc.
Upside though is the afore takes debt off the books of a bankrupt system adds Equity to a REAL deal flow up scenario.
Keep in mind that in the 1930's the govt HAD money, but the people did not.
Today the govt has NO money, but plenty of entities and people do have some.
The object of the afore example is to create an opportunity for everyone to win some by putting said capital to work without debt in a PAID for system.
| |
|
Sunday morning thoughts
