Find out how banks work and make money. Read this report right now to get the real truth:
Banks are businesses and need to make profit just like any other business. Many people (mostly poor) associate this type of business with something evil. The truth is that we need banks and they need us. Banks need to thrive and if they did not, our economy would be in a really bad state. Yes these are economically challenging times already but things would be a lot worse if the banks suffered.
Here are 5 Ways they make money:
They offer us loans and make money in the form of interest. There is always risk involved and this type of business is no exception. They charge higher interest rates for loans that pose a higher risk and charge lower interest rates on loans that pose less risk. The amount that they charge in interest in most typical cases depends on how many people wanting to borrow and how much that they can afford to lend.
2. Savings Accounts:
- Most banks offer their customers around 4% in interest on the amount of money that they have deposited in their savings accounts. They will in turn offer someone who wants a mortgage at lets say 7% as an example. They make their profit by the difference of (7% – 4%) 3%. These figures are used as examples only and the system in which they use is not so cut and dry. This is just to give you an idea how money is made on savings accounts.
- Some banks will also use your savings to invest in other things…
Everybody knows that the holy grail of trading is the possession of a blackbox system that crunches all the numbers and does everything for its owner, who only lives to spend all the cash.
Such a system is a stand alone system that works all the time, never gets tired or complains and right all the time.
Such a system is called a blackbox, because not only is it dark in there, nobody but a few math geniuses knows what went in it. Such a system is secretive, a closely guarded secret because of its value to the owners and its importance to them.
In Forex trading, there are the elephants and the mice. The retail traders are the mice. When they move, the forest hardly rustles. The banks and governments and the biggest hedge funds are the elephants. You know what happens when they move. The whole forex forest shakes mightily devouring many an unsuspecting mice in the process.
You have heard before that 95% of retail forex traders lose money. They are losing it to the banks with their humongous accounts and their hidden blackboxes.
To create a blackbox, you need an exceptional amount of brain power of the right kind, with resources to make it happen. The banks established their own financial Manhattan Projects long ago in other to help them win the trading war.
In trading, you are either right or wrong. The banks with huge amounts of money cannot afford to be wrong often. Case in point, Societe Generale. Billions could be lost. It has happened before, could happen again but it rarely…
Source by Olumuyiwa Ojo
It is really hard to think, that activities in a smaller place with a inhabitants of just 320,000 individuals could have globe wide effect. Flooded with a deluge of data through initial 10 times of Oct, most traders most likely did not even sign-up what was occurring in Iceland. However it might have been there, according to some market place watchers, where by the recent economical turmoil started.
Around very last several yrs Icelandic Krona has been pretty higher yielding forex, spending extra than fifteen%. For this motive, it has been popular preference in the “carry” participate in enjoyed by a lot of traders from predominantly Japanese Yen an Swiss Franc. This pushed the ISK to lofty concentrations, which, in flip, aided gas the growth of Icelandic economical sector, in particular its banks. The nations 3 banks founded branches abroad, predominantly in British isles and Europe. Business enterprise flourished.
During the “unwind of carry trade” in summer very last yr, Krona experienced a promote off, which was noticed, at the time, as short-term. However factors got a great deal worse before this yr, through Bear Stern’s bailout. ISK’s slide ongoing and was substantially steeper than any other forex. With economical sector getting disproportionately huge relative to country’s financial system, Iceland begun to put up with. In truth, authorities launched an investigation into, what was noticed as, hedge fund attack.
The nations 3 banks, Glitnir, Landsbanki and Kaupthing Lender, discovered it ever more challenging to refinance financial debt around very last two months as credit rating crunch shook the globe. One by one particular banks…