Shhh! Your Bank Has a “BIG” Dirty Little Secret – it Could Crush Your Retirement

Who can forget those dark days of the housing market crash of 2008? The vacant homes and neglected lawns.  The abandoned swing sets and forgotten barbecues. The bright signs and bold arrows that needed little explanation: “Foreclosure.” “Auction.” “Bank Owned.”

We’re told that the housing bubble and collapse was about predatory lending and high-risk borrowers who were duped into loans that they couldn’t afford. The massive regulatory response to the subprime crisis meant that banks were no longer allowed to behave BADLY… so they chose to behave DIFFERENTLY.

Shhh. Your Bank Has a “Big” Dirty Little Secret. Read this Very Carefully…

The largest source of mortgage lending in the United States is now being done by non-banks – financial entities that offer unsecured personal lending, business loans, leveraged lending, and mortgage services… but do not hold a banking license. As a result, they’re not subject to standard banking oversight and can engage in risky lending.

But where do they get the money to make these loans? You guessed it: Wells Fargo, Citibank, Bank of America and everyone else who got their hands dirty ten years ago.

Behold the Subprime Work-Around! According to the Wall Street Journal, loans to non-bank financial firms increased six-fold from 2010-2017, hitting a record $345 billion. Wells Fargo coughed up $81 billion; Citigroup and Bank of America ponied up $30 billion each; and JP Morgan threw in another $28 billion.

By funding these “shadow” banks, the big financial players are still in the risky loan business

“Shadow banking” was an unnamed co-conspirator in the financial crisis, concluded economist Paul Krugman back in 2008. If that’s the case, they’re at it again. Bloomberg tells us that shadow lending is now “larger than the world economy and poses a risk to financial stability.”

An astonishing 6 out of 10 Mortgage lenders in the U.S. are now shadow banks – many operating online and peddling subprime loans. It was precisely this type of non-transparent, under the radar, backdoor lending that led to the soaring foreclosures, cratering home values, failing banks and dwindling retirement accounts of a decade ago.

And early next year, Fair Isaac and Company, the creator of the FICO score, is launching a new opt-in program that will enable consumers to enhance their credit scores by using checking and savings account data. Astonishingly – a decade after subprime lending crashed the housing and financial markets – the new ultraFICO score will boost loan approvals to those who were previously considered subpar borrowers.

The Wall Street Journal reports that “some 26 million subprime borrowers will end up with higher credit scores.” So those who were previously deemed financially irresponsible will soon have much greater access to credit.

And Here We Go Again On Our Way to the Next Financial Crisis

Dr. Benjamin Keys, a member of the Real Estate Department at the University of Pennsylvania’s prestigious Wharton School, stated that an important lesson of the housing crisis is that “just because someone is willing to make you a loan doesn’t mean that you should accept it.” Might we suggest an equally important lesson: “Just because banks are behaving badly again doesn’t mean you have to suffer from it.”

If the prospect of another subprime debacle that could bankrupt tens of millions of folks is not motivation enough to finally get away from big banks, then what is?

Quicken Loans, Loan Depot, PennyMac, Freedom Mortgage, Caliber Home Loans – you’ve heard their names. By using non-banks and secret backchannels between their money and risky borrowers, the big banks and fat cat investment houses have again put you in jeopardy!

This time won’t be different! Don’t become a victim of greedy lenders and those who borrow beyond their means.

The Bank On Yourself safe wealth-building strategy is the ideal financial bunker for scary times. It helped millions of people survive the financial crises of the last 160 years… just as it will protect them from the next housing crisis, market crash, banking collapse and economic downturn.

The Bank On Yourself Strategy Provides You These Advantages… Which Ones Are Most Important to You?

If you still remember the staggering number of “For Sale” and “Foreclosure” Signs… or the amount of money you lost in your 401(k) or IRA account… or the friends who lost homes… or the first time you heard the term “Short-Sale”… or how tough it was to get a loan for anything…

You owe it to yourself to find out how the Bank On Yourself strategy can give you the financial peace of mind you want and deserve.

Request a free, no-obligation Analysis here to take the next step to Bank On Yourself.

Don’t trust the bailout bandits again – Bank On Yourself this time!

October 2018 Was Among the Most Volatile Month for Stocks in 118 Years

October was one of the most volatile months for the Dow since 1900. Back then, we were hopping on the first electric buses in New York City and enjoying a new kind of sandwich called a “hamburger” in New Haven. And, we were piling onto an early “Loop the Loop” roller coaster on Wall Street.

Fast forward to October 2018… and enter the Zero-G Inversion Coaster. The Dow fell by over 1,000 points in two days. The S&P 500 dipped in and out of correction multiple times. The Nasdaq plummeted 700 points mid-month, soared over 300 points the next week, and then tumbled back down over 500 points toward month-end. It comes as no surprise that the Fear Index also hit a 3-month high.

It wasn’t Halloween that spooked the markets last month…

Investors had plenty to fear with trade wars, tariffs, rate hikes, Fed policy, underwhelming earnings, slumping housing data, and political partisanship run wild. And as the sugar high of tax cuts, low interest rates and low inflation wears off, there’s a pervading sense that we’ve reached some sort of flashpoint.

What keeps economists up at night? One very sobering question:

What if This Economy is “as Good as It Gets”?

[Read more…] “October 2018 Was Among the Most Volatile Month for Stocks in 118 Years”

Why You’ll Lose Money in the Market Even When You Invest Rationally

In his 1865 poem “If,” Rudyard Kipling famously wrote, “If you can keep your head when all about you are losing theirs … yours is the earth and everything that’s in it.”

That’s a big “if” at the moment. Let’s face it; few people are “keeping their heads” right now.

We’re drowning in a reactionary stew where everything from an exchange of ideas to a “taper tantrum” seems to cause a convulsive panic in the stock market.

And even if you don’t lose your head, you can STILL lose your money! Here’s why…

Admittedly, October has always been a devilish month for Wall Street. Black Tuesday was October 29, 1929. Black Monday was October 19, 1987. And the crash of 2008 happened on October’s doorstep on September 29, 2008,  when the Dow dropped over 777 points. On October 10 of this year, the Dow dropped 832 points – the third-worst point drop in history.

These are the days of falling acorns and Chicken Littles! It’s in this climate – despite historically low unemployment, robust GDP, and soaring consumer confidence – that 800-plus point sell-offs are even possible.

The problem is not just the prevailing concerns about high debt, trade wars, and rising interest rates; it’s the collective uncertainty and reactionary group-think over which we have no control.

Contagion Has Become the Wild Card Enemy of Wealth Accumulation

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Flat Earthers and Blind Faith Stock Market Bulls – What Do They Have in Common?

They are the ultimate conspiracy theories – the beliefs that the earth is flat and that economies are not cyclical.

The Flat Earth Society (a movement that is active and growing today) finds the notion of a horizontal earth far more plausible than a round planet perched on an axis. To their members, gravity is an illusion and objects are not pulled down, but rather continually accelerate upward.

Adopting this notion requires one to reject all prevailing scientific wisdom and research. And despite centuries of empirical evidence, some Flat Earthers believe that one could literally walk off the end of the world.

Those who think the current bull market will continue to rise without a crash or major correction are equally illogical. Despite generations of economic theory, Blind Faith Bulls have sunk most of their net worth into equities on the unquestioning belief that stocks will climb unabated.

Flat Earthers and Blind Faith Bulls Share a Common Suspension of Disbelief…

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Will Household Debt Lead to the Next Financial Crisis?

Those of us who remember the 1960’s TV action series, Batman, recall how the caped crusaders defended Gotham City from super villains. At the very instant our heroes had their backs to the wall, the announcer would urge us to “Tune in next week. Same Bat Time – Same Bat Channel” for the continuation of the episode.

As we sit ten years out from the financial crisis, it feels like we’re at a similar juncture in the story of the U.S. economy. It has literally picked up where it left off – with the usual suspects and the same, unsuspecting victims.

If history is any guide, we’re on track to experience another economic downturn, triggered by similar conditions – with a similar outcome.

On a visit to Fortune magazine back in July of 2007, Treasury Secretary Hank Paulson declared, “This is far and away the strongest global economy I’ve seen in my business lifetime.”

A Year Later, We Were in a Global Financial Crisis Many Consider to Have Been the Worst Since the Great Depression

[Read more…] “Will Household Debt Lead to the Next Financial Crisis?”