Belize - Commercial Bank De-Risking and Karma
The local commercial bankers in Belize colluded with the regulators of the financial sector...convincing themselves that the world financial crisis of 2008 would not have negative impact on Belize...they said as much publicly within Belize, even as they understood and recognized the negative implications privately and at international forums.
BUT the realities were very different...
Many businesses that felt the impact through lower sales, higher costs and lower profits ran into difficulties meeting their banking obligations....most of them had been meeting those obligations, while expanding, for over 10-30 years.
The commercial banks and financial regulators, instead of following the example of the developed countries of the world....who did everything possible to preserve value...remember QUANTITATIVE EASING?...facilitating companies and individuals to refinance at much lower rates (at or near zero) and longer terms....here they tightened the noose on Belize-based investors....aggressively closing off their financing and dumping their hard-earned assets through mass auctions and receiverships (still ongoing)....flooding the market with properties....destroying value by selling of these assets at 50-70 cents on the dollar.
They said that they were protecting the domestic financial system....de-risking it by getting rid of investments that suffer from so-called poor management who failed to meet their choke-hold terms and conditions.
Local and foreign sharks welcomed this....and continue to snap up Belize properties for cheap....while many Belizean investors, who worked hard to build industries...but ran into problems as a result of the world financial crisis....are now under-productive, semi-retired, retired, dead or depressed/suicidal.....Belize importation is surging, while its production is stagnant or declining.
This mind-set among the local commercial bankers and financial regulators have not changed...this destruction will continue....many sugarcane farms, citrus farms, tourism properties and other productive sectors will run into this wall....and they will be dumped for cents on the dollar to the sharks....destroying more Belizean lives.
These mindless bankers and regulators had found ways to make a lot more money from provision of financial services to offshore customers...vast majority being very shady characters with questionable/corrupt money.....they did not longer depend as much on success of local entrepreneurs investments....they were now too small to be worth the risk....in fact, the commercial banks shifted their focus to lending short-term, high-interest loans for consumption and vacations, vehicles, etc (all of which destroys Belize's value).....they no longer invest in industry or agriculture (all of which builds Belize's value).
Now the bigger banks in the developed countries no longer want to do business with the local commercial banks....they are too small to be worth the risk....and their business is tainted with very highly questionable transactions and obscure clientele.
What goes around comes around....karma.
The de-risking of the local commercial banks and their loss of correspondent banking relationships with the big USA banks is just the tip of the iceberg....there will be more disaster in the Belize financial system coming....if the local commercial banks and Belize financial regulators do not change their mindset....and take drastic measures to halt and reverse the destruction in value of assets that local investors and individuals have worked so hard to build....especially those investments in the productive sector....small, medium and large are equally important.
The Belize commercial bankers and financial regulators are running around like chickens with their heads in their hands....desperately searching for solutions to their one concern....correspondent banking relations....so they can continue their slaughter of hard earned Belize property values....they care less about halting and reversing this destruction.
There will be more disaster before the dust settles on this injustice...the principal cause is small-mindedness among our very own.