Wednesday, March 29, 2006

There's something about banks.

What's with all the Bank Branches.

In my city, the great Windy City of Broad Shoulders, Chicago, I have been noticing an incredible bubble most likely the conceived progeny of the housing and credit bubble instituted by that communist yet private entity the Federal Reserve. What I am referring to is the number of Bank branches that are popping up like mushrooms on every corner of this city.

These bank branches are just little stores with ATMs. No, they are quite nice actually, probably costing upward of at least one to two million dollars each. As I watch them grow everywhere I wonder how are they making all this money that the can afford these million dollar statues of their economic prowess? Well, when I dug a little deeper I find out that they don't really earn it at all.

You see banks are really just legalized larceny and Ponzi schemes all rolled into one. Let me quote the definition of larceny from

"In the United States, larceny is a common law crime involving stealing. Under the common law, larceny is the trespassers taking and asportation of the (tangible) personal property of another with the intent to deprive him or her of it permanently."

Now let me quote the definition of a Ponzi scheme from the above said source:

"A Ponzi scheme is a fraudulent investment operation that involves paying abnormally high returns ("profits") to investors out of the money paid in by subsequent investors, rather than from net revenues generated by any real business."

As I mentioned before, it is quite apparent that this boom in banks is directly related to real estate and to a certain degree credit cards. I am sure they are not generating these huge profits via their lock-box revenue. In fact, I am not so sure these branches even have lock boxes or vaults. Probably they have some little safe that they keep the days cash secure. Cash, that quaint piece of paper that loses its value daily, but I digress.

Is it possible that they are making their money from account fees? Hardly, as most of them are offering "Free" checking and savings. So, where are they making their huge profits then? Well, I can only think of the real estate market, credit cards (for the bigger banks) and of course business loans.

Now the way a bank works these days is that for every $1.00 they actually have they can loan out $100!! It used to be closer to $10 per $100, but, I think I read somewhere, and I am to lazy to research it, that it is now down to about a $1.00. Now, I am sure you have all seen "It's a Wonderful Life" and saw what happened when everyone decides to take out their money at once. They can't. The bank doesn't have it! However, if you don't have it, say for a few months, they can foreclose on your asset. Normally this is your house, home, car, or say your favorite musical instrument. This is where the larceny comes in. They can demand and seize your asset even though they don't have the money to actually cover it.

The Ponzi scheme is the fact that they are taking everyones money and then lending it out. So for instance, for each $1.00 they have they loan out $100 and a compounded interest rate. If you decide to buy a CD, the rate you receive is always less than the rate they will collect when they loan out that CD money at a 100:1 ratio. Couple that with compound interest and you have quite a scam going.

Now to cap off my utter contempt for the banking industry, are bankers themselves. Have you every run into this species? They think so highly of themselves that I get vertigo just looking at them. They think they are geniuses! Oh, they will feign that they are looking deep into your numbers, financial statements, and divining whether you will be able to make the payments, but in fact, if it is a secured loan they really don't care as they will take the property at a greatly reduced rate. I think bookies, and the mob are actually more honest individuals.

This then gets me to my final point. Why don't we all just walk on down to the bank and demand our money at once?! If they don't give it to us, why don't we just take the bank for ourselves? It would be such a nice turn of the tables and we could all then get a real piece of the action at an incredibly reduced price. The sweetness and profitability of it all would be wonderful, most likely legal, and finally profitable for us the common man.

What do you think? Any lawyers out there? How about a viral marketing blitz? We pick a decent sized bank and just do it! Who knows maybe we can cut all our loans in half.

- jimijon


Jen said...

A bit long winded, James. Is that the tip for good blogging:) Still very interesting

Just being me. Are you being you? said...

Wow... just now reviewing the miniscule number of comments on my blog.

Yea a bit long winded. Just like me a bit eh?