HOW CAN THE BANKS MAKE SUCH PROFITS?

It's easy peasy.

THEY CREATE IT!!

It really is that simple.

They create the money for the loans, mortgages etc. They don't have it physically. They have some in hard currency, but only a fraction.

That is where the name FRACTIONAL RESERVE BANKING comes from.

Lord Josiah Stamp once said

"Banking was conceived in iniquity and was born in sin. The bankers own the earth. Take it away from them, but leave them the power to create money, and with the flick of the pen they will create enough deposits to buy it back again. However, take it away from them, and all the great fortunes like mine will disappear and they ought to disappear, for this would be a happier and better world to live in. But, if you wish to remain the slaves of bankers and pay the cost of your own slavery, let them continue to create money ."

The banking system is basically a means of the banks creating money for themselves, but they only get to see that money by using us to repay it back over several years or decades. They need us to take out loans so that they can lend us money they simply create and then we pay it back with interest after years of work and labour!

So banking is not rocket science.

It's legalized fraud on a global scale.

And one must ask how such vast profits have been used in modern history? clue: think tanks. A double entrende.

One should also ask who would do such a thing?

From http://business.guardian.co.uk/story/0,,2016195,00.html

Bank profits go through roof despite bad debts

· HSBC likely to lead way in record-breaking year
· Increased range of bank charges still expected

Jill Treanor
Monday February 19, 2007
The Guardian

Britain's banks are on track to report more than £40bn of profits in the coming days despite being saddled with the cost of unpaid loans from customers trying to protect themselves from their burgeoning debts.
HSBC, the country's biggest bank and the third biggest in the world, may even break last year's record of $20.9bn (£10.7bn) of profits despite its unprecedented warning about problems in its US arm, which caused City analysts to knock up to 10% off their forecasts.

Barclays, which reports tomorrow, is likely to make profits of more than £7bn despite being hit by debts from customers failing to make credit card payments. The country's third-biggest bank may signal an attempt to pull back from riskier loans with reports yesterday that it was considering the sale of its Monument operation, which targets lower-income customers.
Banks set the scene for their record tally after reporting a combined £20bn profit for the first six months of 2006. They swallowed charges of more than £2.5bn in the first half to cover the cost of customers struggling to repay loans.

Though bad debts will again be closely watched, there is also speculation that the end of "free" banking is not far away. Intervention by the competition authorities into a variety of areas - ranging from credit cards to payment protection and last week the voluntary banking code itself - has led to forecasts that banks will soon start to charge for even the most basic facilities.

HSBC's phone bank First Direct has initiated charges in some instances and others may follow, according to Natasha Miller at Accenture. "More of that will happen as banks show they've got to fund the cost of banking," she said.

Scrutiny of bad debts may occupy investors most, though. Lloyds TSB, the country's largest unsecured lender, and Barclays have felt the most pain. In trading statements issued ahead of the reporting season, they indicated that the picture may be stabilising. The City will be watching for any fresh information about the impact that individual voluntary arrangements are having on bad debts.

"They are going to be big numbers and they are going to be going up," said John-Paul Crutchley, analyst at Merrill Lynch. "But there should not be a lot of surprises and we should start to see evidence of them stabilising."

Analysts at Keefe, Bruyette & Woods believe there will be only a marginal deterioration in the situation.

Most of the rapid profits growth is expected to come from outside the UK. Banking experts at Accenture believe that the major banks' high-street businesses will show pedestrian growth in comparison with the faster pace of expansion in investment banking, corporate markets and investment management.

Some banks also face scrutiny of strategies on acquisitions and disposals. Analysts at KBW wonder if Barclays - often cited as a target for Bank of America - is eyeing a deal in the US after taking out a $400m sponsorship deal. Standard Chartered may also be planning acquisitions, the KBW analysts said.

At Fox-Pitt Kelton, analysts regard Barclays as a "hunter, not the hunted" and they see Alliance & Leicester and Bradford & Bingley as the mostly likely targets.

Lloyds TSB, often also seen as a takeover target, will face questions about its plans for Abbey Life amid reports that it may sell off the insurer, which has been closed to new business for the past six years. Lloyds declined to comment.

HSBC caused most excitement in the run-up to the reporting season by admitting it is increasing its bad-debt provision to cover poor lending decisions in its US mortgage business. The chairman and chief executive usually split up to present the figures to audiences in Hong Kong and London simultaneously, but this year Stephen Green and Michael Geoghegan will both be in London to face hostile questions. They may point to rapid growth in Asia to deflect attention from their US problems. Even so, the consensus for its profits - in the range of $21.9bn to $23.2bn - signals that the City believes the bank will still produce record results.