{"id":31339,"date":"2020-01-04T10:04:20","date_gmt":"2020-01-04T15:04:20","guid":{"rendered":"https:\/\/www.escapeartist.com\/?p=31339"},"modified":"2020-07-22T01:55:38","modified_gmt":"2020-07-22T05:55:38","slug":"you-can-buy-the-governments-debts-in-colombia","status":"publish","type":"post","link":"https:\/\/www.escapeartist.com\/blog\/you-can-buy-the-goverments-debts-in-colombia\/","title":{"rendered":"You Can Buy The Government\u2019s Debts In Colombia"},"content":{"rendered":"

I\u2019ve already written extensively on the economic future in light of existing economic circumstances. It doesn\u2019t look too great from where I\u2019m standing because the US-China trade war hasn\u2019t settled yet, the reelection of Boris Johnson speaks volume of a continued white nationalism in the UK calling for Brexit and Hong Kong\u2019s possible crash. <\/span>Wall Street thinks<\/span><\/a> that the trade war looks optimistic, but political and economic thinkers are of the opinion that it will never end.<\/span><\/p>\n

I\u2019m skeptical of Goldman-Sachs reports because I think it\u2019s in their best interests to make sure the economy keeps functioning. It\u2019s not the first time these people have put up a <\/span>little window-dressing<\/span><\/a> to influence markets\u2014they literally caused the crash of 2007. Many political thinkers say that, and I\u2019m inclined to agree with them, that this trade war is more of an <\/span>ideological concern<\/span><\/a> rather than a symptom of economic instability. Just because Trump closes the trade-war, there\u2019s no way he can convince the Chinese to let go of their comparative global trade advantages. The cheap labour, lower costs of production and the sheer amount of money necessitate that they\u2019ll continue with the same \u201cunfair\u201d trading practices they always have\u2014 that\u2019s what economic wisdom indicates anyway.<\/span><\/p>\n

Similarly, Hong Kong just hit its <\/span>first recession in a decade<\/span><\/a> and the <\/span>Chinese are incentivizing<\/span><\/a> people to move their money to Macau. Additionally, we don\u2019t even know what the consequences of Brexit will be.<\/span><\/p>\n

Considering these dynamics, it\u2019s time we all started moving to alternative investments like some of the novel ideas that the <\/span>Gutierrez Group<\/a><\/strong> is coming up with. They\u2019ve taken factoring to a whole new level, by buying up the Colombian government’s debt obligations from people who\u2019re don’t have to wait until the state pays up. I think that\u2019s a great way to hedge against any potential losses in your portfolios and I\u2019m writing this article to explain why.<\/span><\/p>\n

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Investing In Government Debts<\/b><\/h1>\n

It\u2019s not new that governments use bonds to help arrange capital and to increase capital to spend. A significant reason why people invest in government bonds is the safety that such an investment offers\u2014mostly because it is extremely rare that a government goes bankrupt. Even if the state can\u2019t meet its financial obligations to the people, an organization like the IMF or the World Bank will bail them out. It\u2019s nearly impossible that the investor doesn\u2019t get their money back if they\u2019ve lent it to the government.<\/span><\/p>\n

I suppose the real question is\u2014 what happens if the government can\u2019t pay back your money right now and you can\u2019t afford to wait for them? This is where the ingenuity of the Gutierrez Group comes in\u2014they\u2019re buying up the government\u2019s debt obligations in the form of judgment liens.<\/span><\/p>\n

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Debt Factoring As An Investment<\/b><\/h2>\n

Buying debts isn\u2019t a new financial strategy, at least not in the United States. It\u2019s those really convenient interactions between the financial and legal systems that create a way for a fail-safe investment in the Colombian government\u2019s debts. For better understanding, I\u2019ll explain through a simple case:<\/span><\/p>\n

Let\u2019s say you borrowed money from person A and told them that you\u2019ll return it within time T. For some reason you can\u2019t pay A back when they come calling for the debt and they take you to court for violating the terms of your agreement. The courts rule that you will pay them the money and until then the court hands over ownership of your assets to person A. Person A, in this situation, <\/span>has a judgment lien<\/span><\/a> over your asset and they can sell it if you still refuse to pay them back.\u00a0\u00a0<\/span><\/p>\n

Some independent investor then comes to person A and buys the lien from them. The ownership of the lien and the debt will pass on to the independent investor who can basically make your life hell until you pay them. The final amount you pay includes the full amount that you initially borrowed with interest.\u00a0<\/span><\/p>\n

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Buying The Government\u2019s Debt<\/b><\/h2>\n

I\u2019ve never heard of someone buying the government\u2019s debt, but the Gutierrez Group is doing that as we speak. They\u2019ve been in contact with people who have judgments against the Colombian government. These claimants have been in the system for anywhere from 5 to 8 years. The Gutierrez Group has nothing to do with the claimant until after the claim has been won. Once the Colombian Government recognizes these claimants and decide in their favor, it is added into the national budget in a first-come, first-served basis, and it’s payment usually takes another 24-48 months. At that point, The Gutierrez Group steps in and offer to pay the claimants out, at a slightly reduced rate so that the claimant can go along with their lives and not have to wait the 24-48 months for full compensation. <\/span><\/span><\/p>\n

Now, the government has to pay this debt in full, but not to the claimant, but to the investors. The government makes one single payment, at collection, and this payment includes both the principal and the interests generated all throughout the waiting period. If you wish to buy some or a portion of this debt, there are several points that you can.\u00a0 When the government finally pays out in full, you can receive a fairly tidy sum for your initial investment.\u00a0<\/span><\/p>\n

Think of this like any other government bond because the government is bound to pay its debts and will also pay interest over any late payments they make. So basically, you\u2019ll buy a share in this debt portfolio at a lower value relative to the actual value of the debt and make interest at the same time.\u00a0<\/span><\/p>\n

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The Set Out Investment Plan\u00a0<\/b><\/h1>\n

The people over at the Gutierrez Group were also nice enough to show me their investment plans and projected returns over the period. It\u2019s looks something like this:\u00a0<\/span><\/p>\n