Dividends and God’s Bankers part 3

In the US, we all have opinions about religion, and there are many who practice religion and focus on becoming better people. If that is all the majority do, then it is very worthwhile and helps form a valuable people in society. Sometimes we disagree with the administration of religion and how rich is the religion. Most people do not know, that is why there are books such as God’s Bankers – A History of Money and Power at the Vatican by Gerald Posner, published by Simon & Schuster, NY, 2015.

In many countries, the country tries to impose currency controls to ensure people continue to reinvest in the country. It does not always work as people find methods to move money outside the country where the money originated. For the Church, although the country of Italy imposed currency controls, the Vatican City was not legally part of Italy, it was and is its own small community although highly dependent upon Italy for its infrastructure. With the rise of offshore banking havens and a change in people who ran the accounts for the Catholic Church. Offshore banking ventures were highly utilized to ensure secrecy and hid information from the tax authorities. One of the rationalizations was “You can not run the church on Hail Marys”

In the book, there are chapters on using stolen securities to use as collateral for residential development deals. If the property is developed and sold, all benefit. If the venture is a bust, then the bank would look at the collateral and the organization would claim they were an innocent victim of a complex fraud. Fortunately, in the present day securities are electronic form.

Often those that use every possible method to evade taxes also take more risks in the speculation of assets. From currency, to gold and metals, to everything that can be bet on. The example is people like to remember George Soros’ bet on the English Pound going down, they forget he lost money on the Japanese Yen. No one is perfect all the time. The trick is to ensure whatever is lost does not affect the entire portfolio or keep the risk-reward limited. For the Catholic Church in the 1970’s, they were involved with money in the Franklin National Bank failure, because the President of the Franklin had built up a strong relationship.

With the bankruptcy of the Franklin National Bank and other related companies, the Vatican tried damage control through an interview with Institutional Investor. The cardinal said the portfolio was not as big as people thought and the Archdiocese of Chicago brought in $170 million a year, which was more than the Holy Church in Rome. The funds primarily came from Peter’s Pence, trusts, last testament gifts from the faithful, sales of stamps, gasoline and religious artifacts.

The Vatican Bank through various people became involved characters that make spy novels interesting to read, In real life, it has taken many years to straighten out the operations of the bank. By 2012 the size of the Catholic Church has expanded to over 1.2 billion followers; 6 million lay employees; 4,500 bishops; 412,000 priests, 865,000 members of religious institutes and school. Catholic charities help over 20 million people a year.

Pope Francis appointed Rene Bulhart to overhaul the bank and when Mr. Bulhart needed to push back to straighten things out, the Pope backed him. The bank is now going to be run above reproach.

Linking to dividend paying stocks, in the financial world there are many many alternatives, the more money you have the more alternatives there are to invest in. If you can keep it safe and invest the overwhelming majority of your assets into profitable companies paying dividends then you will miss many of those who wish to reward themselves first before rewarding you.

There are more questions than answers, till the next time – to raising questions.

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