NEVER IGNORE THIS NEWS! Only those who follow the land markets understand the significance. Make sure you are one of them

And just like that, the first warning shot of the upcoming land-price led depression is fired.

As per program, it was ignored by just about everyone.

I mean, since the release of the following article on August 7th, I’ve personally seen or read very little about it since.

From the Australian Financial Review (AFR):

Evidence of fraud and bribes, then.

However, can you really expect any difference? We are talking about the two greatest sacred cows of the Australian economy. Any western economy, in fact: the big banks and their mortgage loan books.

Today, I am going to tell you this is very important news.

And why you must be on alert for similar news when it appears in the future. Which it most certainly will. You will need to be keen-eyed as the relevant item, when it appears, won’t remain in the news for long.

Read on now. It’s time to admit the fuse has now been lit.

So, first of all: what has actually happened?

Don’t think for one minute that, because it occurred here in Australia, it doesn’t have global implications. It does, which I’ll explain soon.

Anyway, here’s the breakdown. RAMS home loans is/was a subsidiary or shadow bank spun out of its parent, Westpac Bank which is one of Australia’s renowned (or is it notorious?) “Big Four” banks.

RAMS was once the largest non-bank originator, funder, and servicer of home loans in the country.

Recently, Westpac made the decision to shut down RAMS after many fruitless months of trying to sell it.

The reason was the troubled business has been under investigation by the Australian Securities and Investments Commission (ASIC) and potentially faced penalties related to home loans originated over four years in which franchisees appear to have flouted credit rules, including those to safeguard responsible lending.

From the above AFR article:
Workers in rogue RAMS Financial franchises paid and took illicit kickbacks and faked tax returns and company statements in the years leading up to their termination, Westpac alleges in response to a class action threat hanging over the big-four bank.

So, no wonder they couldn’t find a buyer!

RAMS was a franchise model which allowed smaller brokerage businesses to trade and offer loans underwritten by Westpac while originating them under the RAMS lending license.

Allegedly there are at least sixteen franchisees involved. How do we know? Because that’s how many have subsequently taken Westpac to court for improperly cancelling their licenses.

In return, Westpac alleged one of the franchisees, Top Ryde Financial Services (TRFS), “breached the RAMS conflict of interest policy on 11 occasions by receiving banking payments totalling $102,800 from two brokers and other TRFS loan writer. The conflicted payments exceeded $150,000 – one $660 kickback was paid to a customer – with repeated ethical breaches…”

This really has all the hallmarks of the next great Netflix series. They could consider calling it “The Bulls can win, the Bears can win, but pigs will always get slaughtered.”

Further, Westpac claimed an internal investigation found anomalies in loan applications from TRFS, such as “false company tax returns and financials, personal tax returns, accountant letters, Australian Taxation Office notices of assessment, payslips, rental appraisals and rental statements.”

It doesn’t look really good, does it? I can’t say anyone involved comes out smelling of roses. But I must stress, everything above is alleged. All parties will have their day in court.

Not that you’ll likely hear about it. And that’s my point. Apart from a few articles, this will in all likelihood be quickly and summarily swept under the carpet.

Vested interests are to be protected. The government can’t be seen to have wasted tens of millions of dollars on a fruitless Royal Commission into banking, to investigate just such behavior, a few years ago, so close to an election year.

Likewise, the banks will use their levers to clamp down hard on just how much of this news will hit the media, and precisely how little the sitting government will be ‘permitted’ to comment.

But to focus purely on the melodrama of it all risks missing the more important point here. And the reason why I’m writing to you about it.

We have been here before. And thus, I can tell you that this type of behavior is a legitimate first warning shot across the bows.

And how you must treat news like this in the future.

If further evidence was even needed but let me demonstrate just how incredibly useful a little history can be to you. That is, the history of the 18.6-year Real Estate Cycle.

Let’s go back to a similar time today, but during the last completed real estate cycle.

Below is an article from 28^th July 2005. Co-incidentally, almost a similar time then as we find ourselves today in the current cycle.

Now, the chap at the centre of the above image may not be known by those outside of Australia.  His name is Steve Vizard, an Australian television and radio presenter, producer, writer, lawyer and businessman. Also now a professor I believe.

For the layman/woman, he is best remembered for creating, producing, writing, and starring in the iconic and multi award winning Fast Forward (and subsequently Full Frontal), which for ten years was Australia’s highest-rating and longest-running prime time television comedy show.

So, what is the article about?

The Federal Court has fined disgraced businessman Steve Vizard $390,000 and banned him from being on company boards for 10 years for misusing confidential Telstra board information. The Australian Securities and Investments Commission (ASIC) took civil action against Mr Vizard for breaching his duties as a company director five years ago.

Oh, that! Well, everyone makes mistakes. And it is good to see those in charge of oversight taking decisive action whenever ‘mistakes’ are made.

Further from the article.

The Federal Court heard Mr Vizard used confidential information he received as a Telstra board director to buy and sell shares in three companies Telstra was involved with.

Ah, my bad. Did I write mistake before? Sorry, what I should have written was this: blatant fraud, insider trading and breaking known corporate confidentiality agreements.

That, dear reader, both in 2005 and today, is an offence that carries with it a jail sentence!

So, it must hearten you to know that ASIC brought down to bear on Mr. Vizard its most significant legal tool, the tail feather from a not-quite mature pelican, and strike hard against Vizards wallet to the tune of almost $400K.

One rule for you, one rule for them. If you tried this, you would be receiving this week’s newsletter from me in your own jail cell.

Besides, what on earth is a writer and star of the nation’s then most popular comedy show doing on the board of Telstra? The article explains how. Bolded text is my own.

Justice Ray Finkelstein told the court it was a dishonest and gross breach of trust, with Mr Vizard gaining the position because of a belief that he was honest.

WTF!!!???

You can’t make it up. At the time, I recall my own folks saying that the court should have been lenient with the bloke, that he was your typical Aussie larrakin and was taking it to the big end of town. Besides, my father said, everyone else is doing the same thing.

Precisely, which brings you nicely to the point here.

You have to ask just how many others were doing it too in 2005? Back then, people were making serious money, no one wanted to rock the boat, and you can bet there was no appetite for the good times many were forecasting were coming to ever stop.

It was a warning shot that went unheeded. With the benefit of post-crisis hindsight, we have a sense of just how many were doing this – and worse. Think of the poor Telstra investors: take a look at the chart for Telstra in 2005 and compare it to today. Most holders are mum and dad investors.

Is that how they should have been treated by the Telstra board?

Most news stories these days last but a few fleeting moments. But at this specific time, right now, when you start to read or hear about what Westpac has alleged certain mortgage brokers are doing, it matters!

They represent glimpses of what you can expect from now on, and the manner in which they are reported to you are telling.

They are also key moments in the timeline to destruction when the land market peaks turn into devastation. You must learn to keep a close eye open for such news. Or you can make it easy on yourself and become our latest Boom Bust Bulletin (BBB) members.

For just $4USD a month you can learn the hidden order of the economy by researching the history of the 18.6-year Real Estate Cycle, and by extension discover just ‘why’ it continues to repeat, over 200 years and counting, and how to turn such knowledge to your benefit.

Each month you’ll receive a brand-new edition that allows you to follow the cycle as it turns, highlighting the most important events you need to follow.

A few years from now, any bad news that comes out will be countered by economist saying, “the economy is strong”, any reports about bad loans will be pushed back on by central bankers saying, “the financial system is resilient”, and when someone under the age of 30 years old announces “real estate will never fall again…”

You will finally learn who is beholden to whom: the financial system, or the government?

Let’s just say, BBB members will be prepared.

You need to be one of them.

Sign up now.