Friday, February 12, 2021

The weirdness of the Rebel News "loan," Part One.

Just recently, Rebel News Obergruppenfuhrer Ezra Levant gleefully celebrated liberating the more gullible yobs of "Rebel Nation" of over $450,000:

One has to give props to Ezra, as it is a rare man who finally appreciates that his only discernible talent is convincing the terminally gullible to shovel almost half a million dollars in his direction simply because he asks for it, and good for him, as it would be a tragedy to let such a talent go to waste. But that's not why we're here. No, we're here because there are some truly odd features of that story that bear puzzling over, and this is going to take long enough that we'll do it in two parts, possibly three, so let's get started.

It was back in December 2020 that Ezra announced that his boutique media outlet and white nationalist merchandise emporium had a problem, as you can watch here. In short, Ezra's "lender" (and I use that term in a foreshadowing kind of way you'll need to return for Part Two to understand) was calling in $380,000 of loans, and Ezra was asking his perpetually fawning groupies to foot the bill for him, as he apparently had no intention (or possibly ability) of footing it himself. And here's where things get a bit odd.

As Ezra explains, he's had these loans for almost exactly three years and, upon them being called in, he is being asked to fork over $380,000. Fair enough, I guess, but it raises the obvious question -- if that is the amount that is currently outstanding, what was the original amount of the loan? That is, having borrowed money three years ago and making regular payments on that money, if $380,000 is what is currently due, what was the original principal that Ezra has been paying down all this time? And the answer can be found in a couple screenshots from the above YouTube video:

OK, that's just weird, since the above screenshots establish that that original loan (actually two loans) was for a total of ... $380,000. Which is exactly what Ezra claims is being called in. Which, if you can believe the above, means that in the three years since Ezra borrowed $380,000, he has reduced the principal he owes by exactly nothing. This is not speculation, it is precisely what one reads in Ezra's own publications and video.

Think about that for a minute ... in the three years that Ezra has had the loan(s) of which he speaks, he has reduced the principal by exactly zero. But if you think that's a bit odd, it gets weirder.

As Ezra explains in that YouTube video (and as you can see in the screenshots), the original loans had an interest rate of eight and one half per cent, which seems a tad on the high side. I am not a banker, but I am reasonably confident that, as long as I had a decent credit rating, I could find a lender who would charge me less, so that's another oddity. But here's where it gets truly strange.

As Ezra openly described in that video, he had been fine chugging along for the last three years, with his $380,000 in loans at eight and a half per cent, and paying (in Ezra's own words) "around $2,500 a month"  ... and that's where you sit back in your chair and think, "Um ... wut!?!?" Because those numbers simply don't work.

If you have any background in loans or mortgages, chances are you looked at those figures and realized immediately they can't possibly work, and it takes only a few seconds with a mortgage calculator to ask, if you have a $380,000 mortgage at eight and a half per cent and are paying it off at $2,500 per month, how long until it is paid off in its entirety?

And the answer you get back is ... never.

That's right, any mortgage or loan calculator you play with is going to tell you the same thing -- given the loan attributes above, $2,500 per month is not even covering the interest. Just for fun, you can verify that, if you crank up the monthly payment to $3,000, it will still take almost 27 years, and cost you over half a million dollars in interest alone:

In other words, given all of the data straight from Ezra's own mouth, what seems to have happened is that, three years ago, Ezra/Rebel News borrowed $380,000 at what seems like an unusually high rate of interest, whereupon Ezra was asked(?) to make monthly payments that were not just "interest only," but appear to have been in fact less than interest only, which would normally mean that the principal still outstanding would be going up, not down, and yet, three years later, the loans were being called at their original value.

The obvious question at this point is -- what sort of lender would draw up such a bizarre and clearly unsustainable loan arrangement? And for the answer to that, well, you'll have to come back for Part Two.

Deal with it.

AFTERSNARK: I would be remiss in not pointing out that Ezra has a weird history of unusually pricey loans/mortgages, as explained in detail by Frank magazine here but, what the hell, here's the money shot:

Money *quote*. I meant money *quote*. You knew that, right?


Anonymous said...

This is really weird. What legitimate lender loans that much money and accepts monthly payments that don't even cover the interest? That's the sort of thing that just fucken screams "money laundering."

MgS said...

You had it at "legitimate".

I suspect that this is the kind of "lender" that sends a couple of big guys to collect payment by breaking joints ... and is perfectly happy to take "interest only payments" until ... well ... they aren't any more.

"Nice shop you got here, be a shame if anything happened to it".

Anonymous said...

Assuming a bit of wiggle room with the $2500/month number, it looks like these payments do cover the interest (only).

I would be pretty happy to get an 8.5% annual return right now (not that I would want to invest in this enterprise).

CC said...

Anonymous: I did calculate that an actual "interest only" repayment would have been $2,691.67 per month so, sure, assuming a bit of wiggle room, but I was being strictly pedantic and working off of exactly and precisely what Ezra said in the video. I'd hate to be accused of misrepresenting him. :-)