Sunday, Nov 01, 2009

Do banks really make profit?

Greg Pytel: How to make money? (revisited)

As governments injected trillions of dollars into the banking system it is not really a rocket science to find a way to take out billions out of it (1/1000, order level). Are banks' profit really a profit or simply taxpayers' money taken out by the banks and booked as banks' profit and, in fact, it is a loot? This article should give you an idea about an answer.

Posted by ant @ 10:26 AM (734 views)
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1. paul said...

Greg Pytel is taken seriously by some economists and his Pyrmaid article has been aired in he Treasury Select Committee by the LibDems.

He's right here. The profits slooshing around the banking system are not profits at all. If you can borrow money at 0% (courtesy of QE) and then buy government bonds that yield 3%, you can book a 3% profit on however much money you borrow - the more the better. Bingo! Profitable balance sheet, champoo on ice, hookers in the limo.

At what point is the worm going to turn on this little merry-go-round game the Bank of England is funding with our money?

Sunday, November 1, 2009 03:28PM Report Comment

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