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Old 01-11-2010, 04:54 PM
 
Location: Marion, IA
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When you factor in 1% profit for the bank, how can a bank provide its investors with any kind of return? If I had $120,000 in the bank and I would be upset if I was only getting a 3% return. How does this work?
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Old 01-11-2010, 05:13 PM
 
Location: Pennsylvania
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Have you looked at the interest rates banks are offering on savings accounts?
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Old 01-11-2010, 07:50 PM
 
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Yeah, they pay less than 2%, and lend out at 4.5%. The banks are making a killing right now, and thus they justify massive bonuses for themselves. Of course, the US Taxpayer rescued them last year, but to the bankers that just shows how stupid we sheeple are. Actually, we are not stupid, but how can we stop our congress-people from bailing out their buddies at Goldman Sachs??
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Old 01-11-2010, 08:53 PM
 
Location: Marion, IA
2,796 posts, read 5,718,590 times
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Quote:
Originally Posted by Teak View Post
Yeah, they pay less than 2%, and lend out at 4.5%. The banks are making a killing right now, and thus they justify massive bonuses for themselves. Of course, the US Taxpayer rescued them last year, but to the bankers that just shows how stupid we sheeple are. Actually, we are not stupid, but how can we stop our congress-people from bailing out their buddies at Goldman Sachs??
2% profit sucks. Especially over 30 years. You can get 5%+ easily in a mutual fund on the stock market.
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Old 01-11-2010, 09:41 PM
 
Location: Texas
5,873 posts, read 7,358,013 times
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Quote:
Originally Posted by zz4guy View Post
2% profit sucks. Especially over 30 years. You can get 5%+ easily in a mutual fund on the stock market.
That 2% profit is a constant revenue stream, packaged together with thousands of other 2% revenue streams that are all of similar time frame, grade and asset. 2% x 250,000,000...yeah, I'll take that all day since it's a guaranteed asset. And with the swaps to insure them, in the secondary market you win either way. They perform you get your money in the secondary market when packaged to the street. They don't you get your money from the swaps at 5.5%.

THERE is the reason the market imploded and the crisis occurred.
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Old 01-12-2010, 06:01 AM
 
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the debate I remember, said we could go the Swedish route and nationalize the banks

or, we could go the Japanese route, and guarantee them not to fail. "They" said the problem the Japanese faced, was that Japanese banks did not earn their way out of the crisis fast enough, due to a flat yield curve. I guess we wanted to be damn sure we wouldn't have that problem.

I don't know enough about the topic to say whether that's a valid line of thinking or not. It seems to me that if consumers don't have the ability to service debt (like right now), then banks do not lend. If banks do not lend, then we will not have sustained inflation. If we don't have sustained inflation, then in that environment banks are just going to stockpile cash, maybe put it in the stock market or something - but not lend it. Right?
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Old 01-12-2010, 09:32 PM
 
Location: Conejo Valley, CA
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Originally Posted by rubber_factory View Post
If banks do not lend, then we will not have sustained inflation. If we don't have sustained inflation, then in that environment banks are just going to stockpile cash, maybe put it in the stock market or something - but not lend it. Right?
This is when you fire up the helicopters and start to dump cash across the nation.


Anyhow, the banks can lend money at 4.5% because:

1.) They are borrowing money at rates between 0~2%
2.) They are able to sell the debt to investors (eer...the FED) that will accept that yield.

The spread between what banks borrow at and what they loan money for is fairly constant.
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Old 01-13-2010, 04:48 AM
 
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Originally Posted by user_id View Post
This is when you fire up the helicopters and start to dump cash across the nation.


Anyhow, the banks can lend money at 4.5% because:

1.) They are borrowing money at rates between 0~2%
2.) They are able to sell the debt to investors (eer...the FED) that will accept that yield.

The spread between what banks borrow at and what they loan money for is fairly constant.

My thinking is that whether banks can lend or not is only one piece of the puzzle- right now it is the consumer's ability to take on debt that is the missing link.
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Old 01-13-2010, 06:03 AM
 
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Originally Posted by rubber_factory View Post
My thinking is that whether banks can lend or not is only one piece of the puzzle- right now it is the consumer's ability to take on debt that is the missing link.
My understanding is that the main issue is with small businesses, not with consumers. Small businesses that want to borrow, and can afford to borrow, cannot. And it is from small- and medium-sized businesses that the bulk of job growth would arise.

http://english.alrroya.com/content/d...-access-credit

Last edited by Teak; 01-13-2010 at 06:12 AM..
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Old 01-13-2010, 06:30 AM
 
302 posts, read 562,238 times
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Now, I am not a financial wizard of any sorts....

In my opinion...instead of our government bailing out the banking industry...that perhaps it would have made more sense to provide a bailout to the consumers.

If the consumers had been given the money - then they would have been able to spend it on making purchases (ie: cars, houses, education, etc)...creating an upward chain reaction. Because if the consumers had the money, they would spend...banks would receive loans, etc.

Basically, the opposite of the "trickle down effect". Perhaps I'm just missing information to make me think otherwise. It's great if the banks have the money to lend but it still doesn't help the consumers take on any additional debt...."the missing link" - just like rubber_factory stated.



Quote:
Originally Posted by rubber_factory View Post
My thinking is that whether banks can lend or not is only one piece of the puzzle- right now it is the consumer's ability to take on debt that is the missing link.
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