Cyprus-Forum.com

[Paphitis]

You usually talk a lot of sense, but on this thread what you are saying is just pie in the sky. The idea that poverty is a lifestyle choice and absolutely anybody can start a business and get rich flies in the face of common sense and hard reality. I have known plenty of people who have started businesses and none have ever succeeded. I have run two small businesses in my life and I had to throw in the towel on both occasions. Please don't say it was because I didn't work hard enough because I know how much effort I put in. I have been self-employed since I came to Cyprus in the summer of 2004 and that is a kind of small business, so that has been nearly sixteen years, but all I can say is that it is tough and barely worth the effort. In my experience, wherever there is a genuine free market there is cutthroat competition and the market sees to it that you can't earn much. Where businesses make a lot of money, it is because they can skew the market with monopolies or cartels, or sell things at inflated prices to the public sector by having the right contacts inside and using bribery. At the real top of the food chain, the ruling elites have whole national armies at their disposal and can even have whole countries taken over if it suits their business interests.

Anyway, on other threads you have said the reason you hate the EU is for what it has done to Greece and you talk about the crippling and humiliating poverty that you have witnessed there. Well, if you are going to remain true to the view that you are espousing here, you should be criticising all these lazy, good for nothing Greeks who have chosen poverty as a life style when everybody can easily open a business that is guaranteed to make them millionaires, when instead all they do is wallow in self-pity and jealousy in the face of others who make the effort to get out of poverty. That is obviously nonsense, but that it what you are telling us here.

Well, I'd love to stop and chat more, but I need to get back to running my microbusiness. Please, whatever you do, do not say that I do not work hard. I know how untrue that assertion would be.

No I didn't say it was a lifestyle choice. That was someone else who did that, and I would never in a million years mock anyone doing it tough. That is deplorable.

Not all markets are equal first of all, or as competitive. For instance, the food and tourism market is probably the most competitive. Too many people doing it and you earn a wage if you're lucky.

Other areas, are not like that at all. And certain sectors have unlimited amounts of growth and potential even during tough times. So it depends where you're at.

Yes of course, I don't like poverty and I maintain that to the nth degree. It was Pyro who said people should be content with an average job and be happy and that not everything is about money. I don't mind the latter part, but if everyone was content with seeking an average job, can you imagine the State of the World under such circumstances?

And no, there are no guarantees at all. Never said that either. But it's not at all impossible either, and yes you can succeed for sure and even make money. It depends on what drives that particular person and how they fund themselves as well as how well they have structured themselves and what industry they are taking on.

There are a lot of people getting very wealthy out there, especially in Asia.

Before we are talking about the 0.01 percenters. My posts illustrate you don't have to be a 0.01% or even a 1 percenter. And no one is saying or accusing anyone of not working hard enough. I'm saying that fortunes will favour the brave and it will only ever be the 1 in 1000 who will engage in some of the risky schemes I mentioned in earlier posts. If it were anymore than that, it is unrealistic. It depends what each individual wants out of life. Some people are chasing the dream, and today more and more people even with average salaries are chasing that dream.

That is how a Bank makes money. For instance, in London, new York, Sydney or Melbourne, it is desirable to live in the inner crust. Property Values are approaching 2 million. And yet people borrow that money and go to work for 35 years to pay for it and then get their pension. And yes they struggle a lot! But it is also self inflicted and driven by vanity.

You can also buy a house in the Outer Suburbs for 300,000 and pay the mortgage on minimum wage. Now if people are happy, then fill your boots. But I would never mock them. No way.

[Paphitis]

You usually talk a lot of sense, but on this thread what you are saying is just pie in the sky. The idea that poverty is a lifestyle choice and absolutely anybody can start a business and get rich flies in the face of common sense and hard reality. I have known plenty of people who have started businesses and none have ever succeeded. I have run two small businesses in my life and I had to throw in the towel on both occasions. Please don't say it was because I didn't work hard enough because I know how much effort I put in. I have been self-employed since I came to Cyprus in the summer of 2004 and that is a kind of small business, so that has been nearly sixteen years, but all I can say is that it is tough and barely worth the effort. In my experience, wherever there is a genuine free market there is cutthroat competition and the market sees to it that you can't earn much. Where businesses make a lot of money, it is because they can skew the market with monopolies or cartels, or sell things at inflated prices to the public sector by having the right contacts inside and using bribery. At the real top of the food chain, the ruling elites have whole national armies at their disposal and can even have whole countries taken over if it suits their business interests.

Anyway, on other threads you have said the reason you hate the EU is for what it has done to Greece and you talk about the crippling and humiliating poverty that you have witnessed there. Well, if you are going to remain true to the view that you are espousing here, you should be criticising all these lazy, good for nothing Greeks who have chosen poverty as a life style when everybody can easily open a business that is guaranteed to make them millionaires, when instead all they do is wallow in self-pity and jealousy in the face of others who make the effort to get out of poverty. That is obviously nonsense, but that it what you are telling us here.

Well, I'd love to stop and chat more, but I need to get back to running my microbusiness. Please, whatever you do, do not say that I do not work hard. I know how untrue that assertion would be.

The other point I am trying to make is that can do all those things I mention from very low socio-economic or beginnings. Yes a driven person will find ways to succeed. That is the bottom line. And out of 1000 people from low socio-economic, you may invariably find 1 who is so driven, they open an engineering firm, or open an aircraft charter business, or set up a factory in China making Apple and Smart Phone Accessories, or become a specialist medical practitioner or a Law Firm Partner etc etc. You won't have to look far to find them.

Point is, all this stuff is available to all of us, who is willing or wanting to give it a try.

The other point is, that it is really these Business types who make the world spin. Fact is, every economy needs them, because they provide the jobs for the rest of us. We everyone was content, then you only end up with a basket economy, or rely on the State to provide everyone with all their needs just like in a true Communist State. How many are truly happy with that? It would be pretty boring life, and no reward for any ambition.

You see, if everyone wanted just an average job in Cyprus, then Cyprus will be no more than Zimbabwe or Cuba. Tell me if that isn't the case.

[Robin Hood]

Paphitis:

The other point I am trying to make is that can do all those things I mention from very low socio-economic. Yes a driven person will find ways to succeed. That is the bottom line. And out of 1000 people from low socio-economic, you may invariably find 1 who is so driven, they open an engineering firm, or open an aircraft charter business, or set up a factory in China making Apple and Smart Phone Accessories, or become a specialist medical practitioner or a Law Firm Partner etc etc. You won't have to look far to find them.

Point is, all this stuff is available to all of us, who is willing or wanting to give it a try.

Paphitis, I sometimes find it hard to believe you are of this world! Tim has a far more realistic view and with all the luck in the World I think he will admit that he will never be among the Super-Rich or even rich and even if he wins the lottery he will only be moderately well off,

All the great business ventures you have listed require one thing ......... MONEY!!!! (Actually currency .... because there is very little real money around these days ..... but let’s call it money to keep things simple?)

The banks are very reluctant to lend any real money to start-up businesses, they need lots and lots of collateral, which is something you don’t have when as an ordinary person, all you have is your home.(Usually mortgaged) Look at Victoria Beckham ......... her business is bankrupt and only stays afloat because David keeps bailing her out, a banker would shut her down! Imagine her plight if she had to rely on loans from a bank!

Of the £375bn created by QE in the UK ..... 98% went straight into the banks. What did they do with it? They bought bonds and lent ridiculous amounts for people to buy houses, much of it to people who could not afford to repay it (sub-prime, securitisation) .... and the banks knew it. That QE exercise did virtually nothing to boost the REAL economy, it boosted the asset markets and they do NOT generate jobs and hence do not generate wealth! They take money OUT of the economy!

In the world we have created since the 1970’s it has become more-and-more difficult to set up a viable business that can grow to provide jobs and create wealth. There are of course exceptions to the rule but when you look into it you find most of them were wealthy in the first place. There are businesses like Facebook, Micrsoft etc. and the like that were started by geeks often in a garage, a bedroom or some ones shed and grew from there but they are in single numbers.

As I said to you previously ..... if you and I, and I am sure many on this forum, were to set out today and tried to emulate our success and recreate the lifestyle we enjoy now, in our old age, by working hard in our younger years ....... we would fail . The banks took over the Worlds economy starting at the turn of the last century and have grown stronger and immensely more wealthy, in comparison to the wealth creators you describe, over the years since WWII.

This guy is an expert in the field ..... if you want verification ..... check him out .......

Prof. Richard A. Werner - Centre for Banking, Finance and Sustainable Development, Southampton Business School, University of Southampton, United Kingdom

This is a shortened version of the paper but the article does provide a link to the full thesis.

http://www.blacklistednews.com/A_Loopho ... 8/Y/M.html

This is how the world you are looking at has changed and is still changing. An entertaining and informative video.

The Four Horsemen (1hr 38m) https://www.youtube.com/watch?v=5fbvquHSPJU

FINGS AIN’T WHAT THEY USED TO BE.

[Paphitis]

Paphitis:

The other point I am trying to make is that can do all those things I mention from very low socio-economic. Yes a driven person will find ways to succeed. That is the bottom line. And out of 1000 people from low socio-economic, you may invariably find 1 who is so driven, they open an engineering firm, or open an aircraft charter business, or set up a factory in China making Apple and Smart Phone Accessories, or become a specialist medical practitioner or a Law Firm Partner etc etc. You won't have to look far to find them.

Point is, all this stuff is available to all of us, who is willing or wanting to give it a try.

Paphitis, I sometimes find it hard to believe you are of this world! Tim has a far more realistic view and with all the luck in the World I think he will admit that he will never be among the Super-Rich or even rich and even if he wins the lottery he will only be moderately well off,

All the great business ventures you have listed require one thing ......... MONEY!!!! (Actually currency .... because there is very little real money around these days ..... but let’s call it money to keep things simple?)

The banks are very reluctant to lend any real money to start-up businesses, they need lots and lots of collateral, which is something you don’t have when as an ordinary person, all you have is your home.(Usually mortgaged) Look at Victoria Beckham ......... her business is bankrupt and only stays afloat because David keeps bailing her out, a banker would shut her down! Imagine her plight if she had to rely on loans from a bank!

Of the £375bn created by QE in the UK ..... 98% went straight into the banks. What did they do with it? They bought bonds and lent ridiculous amounts for people to buy houses, much of it to people who could not afford to repay it (sub-prime, securitisation) .... and the banks knew it. That QE exercise did virtually nothing to boost the REAL economy, it boosted the asset markets and they do NOT generate jobs and hence do not generate wealth! They take money OUT of the economy!

In the world we have created since the 1970’s it has become more-and-more difficult to set up a viable business that can grow to provide jobs and create wealth. There are of course exceptions to the rule but when you look into it you find most of them were wealthy in the first place. There are businesses like Facebook, Micrsoft etc. and the like that were started by geeks often in a garage, a bedroom or some ones shed and grew from there but they are in single numbers.

As I said to you previously ..... if you and I, and I am sure many on this forum, were to set out today and tried to emulate our success and recreate the lifestyle we enjoy now, in our old age, by working hard in our younger years ....... we would fail . The banks took over the Worlds economy starting at the turn of the last century and have grown stronger and immensely more wealthy, in comparison to the wealth creators you describe, over the years since WWII.

This guy is an expert in the field ..... if you want verification ..... check him out .......

Prof. Richard A. Werner - Centre for Banking, Finance and Sustainable Development, Southampton Business School, University of Southampton, United Kingdom

This is a shortened version of the paper but the article does provide a link to the full thesis.

http://www.blacklistednews.com/A_Loopho ... 8/Y/M.html

This is how the world you are looking at has changed and is still changing. An entertaining and informative video.

The Four Horsemen (1hr 38m) https://www.youtube.com/watch?v=5fbvquHSPJU

FINGS AIN’T WHAT THEY USED TO BE.

Well I disagree with you completely RH only because in my experience the Banks have always been very eager to throw money around, and in addition to this, you don't even have to go to a Bank and tell them you need to borrow to fund a new venture. Yes that is the truth.

You can literally go to a Bank and borrow 80% without insurance against all your worldly possessions, and then set up a Pty Ltd and lend this Company all that money you borrowed from Home Equity Loan products and even write yourself up as a CREDITOR to this company and make this company (Your Company) make interests payments to yourself, which you will one day hope to wipe off from the bottom line. The downside is that you might have to pay Income Tax. You can even use that money as Collateral to borrow again or double dip but that would be stupid because one day the chickens will come home to roost. I am sure many entrepreneurs have done it though.

It's all very doable because I have done it and still do it.

Only a week ago I took out another loan and told the Bank I was renovating etc but that is not what I used the money for. I used the money to buy an OPTION (Don't ask). Yes and I actually have a number of a Pty Ltd with various assets in each just to protect myself.

That thing I told you about Corporate Jets is actually something in the pipeline as well, and there has been a contract signed with a Middle Eastern Construction firm which builds luxury resorts. China is another scenario very much on the table, and there are even negotiations with a Melbourne Charter Firm involving cross hire. Oh and I am not the brain behind the entire thing nor the person putting my neck on the line because I am not wealthy enough to own this kind of stuff. But I am literally watching this unfold before my eyes. So RH, there is a firm Contract in hand, with guaranteed revenue but they don't own a plane....YET! Oh and that piece of paper is now collateral, or income they can use to borrow in order to buy some pretty flash equipment. Yes a Banker will look at it.

Yes you can also create the lifestyle you want by working hard, because many people are only ever interested in buying a house, putting their kids through a good school and these goals are easily attainable. Yes, if you gonna play with jets, then there is a good chance you will get your fingers burnt etc.

But everything is possible. And the Banks can be your friend too.

Oh and if there is know collateral, then refer to my post about Angel Investors and Consortiums/Partnerships. The bigger the Consortium, then the bigger the Collateral.

And just so I am very clear, I honestly believe they're on a winner because there are no shortage of people willing to pay 100K for a charter from Dubai to Kong Kong, Beijing to Sydney etc. These planes won't stop flying.

No shortage of very rich people hiring these planes to fly to Sydney from Shanghai just to look at a 20 million dollar house on Sydney Harbour.

[Robin Hood]

Paphitis:

The other point is, that it is really these Business types who make the world spin. Fact is, every economy needs them, because they provide the jobs for the rest of us. We everyone was content, then you only end up with a basket economy, or rely on the State to provide everyone with all their needs just like in a true Communist State. How many are truly happy with that? It would be pretty boring life, and no reward for any ambition.

You see, if everyone wanted just an average job in Cyprus, then Cyprus will be no more than Zimbabwe or Cuba. Tell me if that isn't the case.

I freely admit to not being a main stream thinker and I contest what you say. I agree with your first couple of sentences ............ from that point on I disagree!

Do you not think it is a basket case economy if those that create money out of nothing; lend it at interest, to a government that could create money in exactly the same way without debt; and then get the people to pay taxes ..... just to repay these ‘money creators’ something they never had in the first place? Is it not just a little bit queer to have a system that relies upon perpetual debt, when it could do the same thing debt free? A basket case system where those that had nothing to begin with, get richer and richer and those that are paying off these hypothetical debts through their wealth creation (jobs) get poorer and poorer?

Why is true communism so bad? Of course, it has yet to be practised anywhere, which is why ‘communist’ countries tend to fail ........ the business types you described, get into power and as CAPITALISTS, they exploit the system to make themselves rich, to the detriment of the ordinary people who would like just enough to live comfortably, with food in their bellies and a roof over their head ...... and access to education and health care. When the gap between the rich and the poor gets too extreme ..... you get revolution

Surely a content life for the majority is not a lot to ask is it?

Not everyone wants to be rich ............. I’m not, but I have a lifestyle that gives me the above, the State provides the healthcare ...... and you give all the ‘education’ (rather entertainment) that I need at my time of life to keep the brain working,

I am content with what I have and live within my means (just!) but the State could provide this for all and still let entrepreneurs have their head. Switzerland is currently putting together a proposal to be voted in a referendum, to pay everyone, rich and poor, a living wage (circa €1500 month)..... paid directly by the State. It has a lot of credibility and Switzerland cannot by any stretch of the imagination be classed as Communist.

[Paphitis]

I freely admit to not being a main stream thinker and I contest what you say. I agree with your first couple of sentences ............ from that point on I disagree!

The thing is RH, these guys are as much "mainstream" as you are. They are not especially wealthy rich in my eyes, but they have cobbled a good group of people who are comfortable shall we say but nothing more than that.

They also know the industry and there is a lot of experience there. Chasing the dream I spose and what a dream it is too.

Do you not think it is a basket case economy if those that create money out of nothing; lend it at interest, to a government that could create money in exactly the same way without debt; and then get the people to pay taxes ..... just to repay these ‘money creators’ something they never had in the first place? Is it not just a little bit queer to have a system that relies upon perpetual debt, when it could do the same thing debt free? A basket case system where those that had nothing to begin with, get richer and richer and those that are paying off these hypothetical debts through their wealth creation (jobs) get poorer and poorer?

No I think that as long as the money keeps circulating and there are people willing to spend it, then the economy will be ok. And we need businesses to keep the economy going in whatever sector, as well as people engaged in good employment otherwise where stuffed and then you got a basket economy. As long as the Banks don't do stupid things, everything should tick over they way it should. I don't care how Banks create money as long as they give me some when I have a responsible need for it. I'm happy with that.

Why is true communism so bad? Of course, it has yet to be practised anywhere, which is why ‘communist’ countries tend to fail ........ the business types you described, get into power and as CAPITALISTS, they exploit the system to make themselves rich, to the detriment of the ordinary people who would like just enough to live comfortably, with food in their bellies and a roof over their head ...... and access to education and health care. When the gap between the rich and the poor gets too extreme ..... you get revolution

Well if you like Communism there is nothing stopping you from living in a Communist country. I really don't want Communism to succeed because where does that leave us if you want a bit more than just earn a wage or if you have a dream. Can you still own a Gulfstream IV for instance? Why shouldn't I be allowed to own one?

Surely a content life for the majority is not a lot to ask is it?

Of course its not. I want everyone to be content and usually you find most people are.

Not everyone wants to be rich ............. I’m not, but I have a lifestyle that gives me the above, the State provides the healthcare ...... and you give all the ‘education’ (rather entertainment) that I need at my time of life to keep the brain working,

I agree not everyone wants to be rich. But those that do, should be free to do it and succeed or fall flat on their face. You can't restrict Free Enterprise or people buying what appears to be obscene extravagance if they are willing to put their necks on the line for it.

I am content with what I have and live within my means (just!) but the State could provide this for all and still let entrepreneurs have their head. Switzerland is currently putting together a proposal to be voted in a referendum, to pay everyone, rich and poor, a living wage (circa €1500 month)..... paid directly by the State. It has a lot of credibility and Switzerland cannot by any stretch of the imagination be classed as Communist.

And there is nothing wrong with being content.

But I don't want the State to provide me with anything and hope that it won't have to. It should only provide for the poor. What's wrong with that?

Some people want to provide for the damn country, through tax, employing people and creating economic activity and these people should be encouraged to do as much as they possibly can.

[Pyrpolizer]

Just to explain to you guys that it can even be a bit of a rort. Wealth is only on paper after all.

Let's say there are 10 guys that form a business. They each have a 10% share in that businesses.

They each own property worth 2 million each on average. They can each borrow up to 1.6 million from their equity.

They then form their Company. They can also set up a number of subsidiaries under that Company and each company is Limited. You can bankrupt one if things go bad to protect the other businesses and so that the Partners can also protect their personal assets which they have leveraged. You can do other stuff like put everything under Trusts or under a spouses name.

So basically, you can own a number of assets as part of the business but form Business units based on their Geography or whatever. So if one part is not performing, you only lose the assets in that Company but the rest will still operate and still owned by the same people if that makes sense.

.

You can’t turn anything to anyone else’s name after you ‘ve put it down as a guarantee to the Bank to get the loans on the first place. The deeds themselves get engaged by the Bank.
Making the subsidiaries Limited companies won’t save the original properties of the owners

Well these Businesses now have 10 x 1.6 million in funds in the Bank. That's 16 million. They can now see the same Bank Managers they borrowed Equity Loans from and borrow another 12.8 million.

Their businesses now have 28.8 million in liquidity which they can use to buy Plant and Equipment, Parts, employ people, advertise and travel etc etc.

Now, if you're smart enough, work out how the Banks get their money if things go wrong!

Basically, the Banks are shelling out money that doesn't exist and can't be paid back unless this business is successful. These business People, have basically used the same Equity to borrow from a Bank/s at least twice over.

Now if you're a smart business person, you wouldn't do things to this extent and you would borrow conservatively and expand slowly. But I offer this as an illustration of just how easy it can be to many people with not a lot of money to begin with.

Not true. To get another 12.8 million you must have used those 16 in setting up something e.g a factory that’s worth that much. The Bank will come and estimate it’s value AND VIABILITY/PROFITABILITY and put it’s name on the deeds. If by next day you decide to go bankrupt, then you will simply run away with those 12.8 million, while the Bank will confiscate both the 20 million of your original property and the 16 million worth of a factory. The Bank would have spent 28.8 million, while finally confiscate 36 million (profiting 7.2 million), and you would have run with 12.8 million cash, losing immovable property worth 20 million (= 7.2 million loss for you). Maths don’t lie. You just messed around and lost 7.2 million.

I am not sure if you are trying to describe a "pyramid" plan here or not. Such tricks may work with unsuspected individuals, but don't work with Banks.
I think what you are trying to tell is just the usual method of getting liquidity. Well that’s true but it costs dearly. You better get liquidity to do something really profitable or else the Banks will plunge you into huge interests and expenses that might drag you down to Bankruptcy

[Paphitis]

You can’t turn anything to anyone else’s name after you ‘ve put it down as a guarantee to the Bank to get the loans on the first place. The deeds themselves get engaged by the Bank.

Making the subsidiaries Limited companies won’t save the original properties of the owners

What do you mean you can't turn it over to someone else? You just put it under the name of whoever you want on the deed when you buy it, and you put yourself down as a Guarantor so that your income is included when wanting loans. So if you are gonna go into risky ventures, you just put everything under your wife's name and children or better still, into a Trust.

The companies don't have any property other than Plant and Equipment. Everything is separate provided you structure everything right.

Well these Businesses now have 10 x 1.6 million in funds in the Bank. That's 16 million. They can now see the same Bank Managers they borrowed Equity Loans from and borrow another 12.8 million.

Their businesses now have 28.8 million in liquidity which they can use to buy Plant and Equipment, Parts, employ people, advertise and travel etc etc.

Now, if you're smart enough, work out how the Banks get their money if things go wrong!

Basically, the Banks are shelling out money that doesn't exist and can't be paid back unless this business is successful. These business People, have basically used the same Equity to borrow from a Bank/s at least twice over.

Now if you're a smart business person, you wouldn't do things to this extent and you would borrow conservatively and expand slowly. But I offer this as an illustration of just how easy it can be to many people with not a lot of money to begin with.

Not true. To get another 12.8 million you must have used those 16 in setting up something e.g a factory that’s worth that much. The Bank will come and estimate it’s value AND VIABILITY/PROFITABILITY and put it’s name on the deeds. If by next day you decide to go bankrupt, then you will simply run away with those 12.8 million, while the Bank will confiscate both the 20 million of your original property and the 16 million worth of a factory. The Bank would have spent 28.8 million, while finally confiscate 36 million (profiting 7.2 million), and you would have run with 12.8 million cash, losing immovable property worth 20 million (= 7.2 million loss for you). Maths don’t lie. You just messed around and lost 7.2 million.

Not true at all. You can actually use money in the Bank as further Collateral. You can also use Plant and Equipment as collateral. So if you use the 16 million to buy Plant and Equipment outright, you can borrow up to 70% of that once again which is actually the same thing. because in the eyes of the Bank, the plant and equipment is owned outright and hence a Company asset. And there are Banks that specialize in these types of loans as well.

I am not sure if you are trying to describe a "pyramid" plan here or not. Such tricks may work with unsuspected individuals, but don't work with Banks.
I think what you are trying to tell is just the usual method of getting liquidity. Well that’s true but it costs dearly. You better get liquidity to do something really profitable or else the Banks will plunge you into huge interests and expenses that might drag you down to Bankruptcy

No these are not Pyramid plans. These are just ways some businesses set themselves up, especially if the individuals involved don't have that much money. If you have a lot of money, then this type of structuring is not necessary. This is all the forte of a good accountant and plus you need a Lawyer.

[Pyrpolizer]

You can’t turn anything to anyone else’s name after you ‘ve put it down as a guarantee to the Bank to get the loans on the first place. The deeds themselves get engaged by the Bank.

Making the subsidiaries Limited companies won’t save the original properties of the owners

What do you mean you can't turn it over to someone else? You just put it under the name of whoever you want on the deed when you buy it, and you put yourself down as a Guarantor so that your income is included when wanting loans. So if you are gonna go into risky ventures, you just put everything under your wife's name and children or better still, into a Trust.

The companies don't have any property other than Plant and Equipment. Everything is separate provided you structure everything right.

Well these Businesses now have 10 x 1.6 million in funds in the Bank. That's 16 million. They can now see the same Bank Managers they borrowed Equity Loans from and borrow another 12.8 million.

Their businesses now have 28.8 million in liquidity which they can use to buy Plant and Equipment, Parts, employ people, advertise and travel etc etc.

Now, if you're smart enough, work out how the Banks get their money if things go wrong!

Basically, the Banks are shelling out money that doesn't exist and can't be paid back unless this business is successful. These business People, have basically used the same Equity to borrow from a Bank/s at least twice over.

Now if you're a smart business person, you wouldn't do things to this extent and you would borrow conservatively and expand slowly. But I offer this as an illustration of just how easy it can be to many people with not a lot of money to begin with.

Not true. To get another 12.8 million you must have used those 16 in setting up something e.g a factory that’s worth that much. The Bank will come and estimate it’s value AND VIABILITY/PROFITABILITY and put it’s name on the deeds. If by next day you decide to go bankrupt, then you will simply run away with those 12.8 million, while the Bank will confiscate both the 20 million of your original property and the 16 million worth of a factory. The Bank would have spent 28.8 million, while finally confiscate 36 million (profiting 7.2 million), and you would have run with 12.8 million cash, losing immovable property worth 20 million (= 7.2 million loss for you). Maths don’t lie. You just messed around and lost 7.2 million.

Not true at all. You can actually use money in the Bank as further Collateral. You can also use Plant and Equipment as collateral. So if you use the 16 million to buy Plant and Equipment outright, you can borrow up to 70% of that once again which is actually the same thing. because in the eyes of the Bank, the plant and equipment is owned outright and hence a Company asset. And there are Banks that specialize in these types of loans as well.

I am not sure if you are trying to describe a "pyramid" plan here or not. Such tricks may work with unsuspected individuals, but don't work with Banks.
I think what you are trying to tell is just the usual method of getting liquidity. Well that’s true but it costs dearly. You better get liquidity to do something really profitable or else the Banks will plunge you into huge interests and expenses that might drag you down to Bankruptcy

No these are not Pyramid plans. These are just ways some businesses set themselves up, especially if the individuals involved don't have that much money. If you have a lot of money, then this type of structuring is not necessary. This is all the forte of a good accountant and plus you need a Lawyer.

So you think you just declare those tangible assets to the Bank and the Bank just gives you money without actually asking you to sign legal documents that deprive your ownership rights?

[Paphitis]

You can’t turn anything to anyone else’s name after you ‘ve put it down as a guarantee to the Bank to get the loans on the first place. The deeds themselves get engaged by the Bank.

Making the subsidiaries Limited companies won’t save the original properties of the owners

What do you mean you can't turn it over to someone else? You just put it under the name of whoever you want on the deed when you buy it, and you put yourself down as a Guarantor so that your income is included when wanting loans. So if you are gonna go into risky ventures, you just put everything under your wife's name and children or better still, into a Trust.

The companies don't have any property other than Plant and Equipment. Everything is separate provided you structure everything right.

Well these Businesses now have 10 x 1.6 million in funds in the Bank. That's 16 million. They can now see the same Bank Managers they borrowed Equity Loans from and borrow another 12.8 million.

Their businesses now have 28.8 million in liquidity which they can use to buy Plant and Equipment, Parts, employ people, advertise and travel etc etc.

Now, if you're smart enough, work out how the Banks get their money if things go wrong!

Basically, the Banks are shelling out money that doesn't exist and can't be paid back unless this business is successful. These business People, have basically used the same Equity to borrow from a Bank/s at least twice over.

Now if you're a smart business person, you wouldn't do things to this extent and you would borrow conservatively and expand slowly. But I offer this as an illustration of just how easy it can be to many people with not a lot of money to begin with.

Not true. To get another 12.8 million you must have used those 16 in setting up something e.g a factory that’s worth that much. The Bank will come and estimate it’s value AND VIABILITY/PROFITABILITY and put it’s name on the deeds. If by next day you decide to go bankrupt, then you will simply run away with those 12.8 million, while the Bank will confiscate both the 20 million of your original property and the 16 million worth of a factory. The Bank would have spent 28.8 million, while finally confiscate 36 million (profiting 7.2 million), and you would have run with 12.8 million cash, losing immovable property worth 20 million (= 7.2 million loss for you). Maths don’t lie. You just messed around and lost 7.2 million.

Not true at all. You can actually use money in the Bank as further Collateral. You can also use Plant and Equipment as collateral. So if you use the 16 million to buy Plant and Equipment outright, you can borrow up to 70% of that once again which is actually the same thing. because in the eyes of the Bank, the plant and equipment is owned outright and hence a Company asset. And there are Banks that specialize in these types of loans as well.

I am not sure if you are trying to describe a "pyramid" plan here or not. Such tricks may work with unsuspected individuals, but don't work with Banks.
I think what you are trying to tell is just the usual method of getting liquidity. Well that’s true but it costs dearly. You better get liquidity to do something really profitable or else the Banks will plunge you into huge interests and expenses that might drag you down to Bankruptcy

No these are not Pyramid plans. These are just ways some businesses set themselves up, especially if the individuals involved don't have that much money. If you have a lot of money, then this type of structuring is not necessary. This is all the forte of a good accountant and plus you need a Lawyer.

So you think you just declare those tangible assets to the Bank and the Bank just gives you money without actually asking you to sign legal documents that deprive your ownership rights?

Yes and they continuously do.

If they didn't then the world stops spinning.

It's very simple, individuals can borrow against their assets. Those borrowings find their way into the business, to start up. This business now has tangible assets.

The business can now buy stuff without borrowing. We will call that plant and equipment. They company can now borrow against these assets by up to 70% but they have to give the Banks their Profit/Loss and Balance Sheets. If the numbers fit, then away you go. Banks are always looking to find qualified borrowers as it is in their best interest to lend.

The Banks will even lend more than 70% and up to 90% but for that you have to take out very expensive insurance which they will happily up sell you on and they make more money.