While the Canadian economy struggles, the Big Five Banks see a profit of $22 Billion

December 6, 2011 by
Filed under: Bank's Profits, Bankruptcy, Statistics 

In the news today: “Big banks made $22.4B in 2011.” In a nutshell:

  • Canadian Bank profit in 2011 was  $22.4 billion, 15% more than the last year.
  • Last years profit was “only” $19.5 billion.
  • One of the predominant contributors to growth was loans; the other was retail growth.

Retail growth means two things: increased consumer spending, which also means increased consumer debt and a greater need for debt relief. It also means increased retail deposits. Both savings and loans translates into bank profits (please read an earlier post explaining this).

Meanwhile, unemployment in BC goes up as well as throughout Canada, Personal debt levels are on a steady increase. The economy is said to be holding steady, but I suspect it’s because we are spending like crazy, not earning. And we are not in an economic bubble. As the world finances melt down, we can expect to be side-swiped.

Who will remain uneffected? Well, the ones who are reaping the profits today. The banks.

Banks are uniquely positioned as legal money-laundering organizations, done with the government’s blessing. For only they can take a $10,000 deposit and turn it into $100,000 in additional loans. It’s called “fractional reserve.” Look it up.

And as much as we may abhor banks, we are also indebted to them. Individuals are indebted to them as they let us start our businesses, travel on credit, and buy buy buy our way to happiness. City infrastructures are indebted to them as the building of bridges and highways and railroads all begin with a big bank loan. And governments are indebted to them, as most of our taxes go toward paying down the Canadian debt (who did you think we owed it to?). The big banks truly are the kings of the castle.

Their business model is an interesting one: The more of their product they give away, the more they earn. And to be effective in their business, they follow a very tried and true marketing technique: A key concept in marketing is too keep the customer struggling, without bringing them to the brink of failure.

Consider dieting, which is also a multi-billion dollar industry. The industry depends on the infamous 95% failure rate. If dieters were actually to succeed, the industry would collapse. The trick is to not let the consumer surrender to defeat. Which is why we are inundated with the images of skinny models and crazy success stories of how just “these three dieting secrets” led to permanent weight loss.

Likewise with banks. Their profit necessarily depends on your struggle with debt. On your continued struggle with debt. The banks fail when one of two things happen: when you are debt-free; or, when you are bankrupt. Because in both those cases, they cease to make a profit on you.

When you are pushed to the brink of debt and cannot carry the burden any more, then it’s time for you to consider the alternatives. If you declare bankruptcy, submit a proposal, or negotiate a repayment of pennies on the dollars you owe, keep in mind that this is done in the face of burgeoning profits. Whatever it is that you owe, whatever the pile of debt that you need to walk away from, just remember this: you won’t even dent the profit margin of banks.

There is no shame in restoring your life, in getting back to the land of the living. And, yes, there are legal ways to do this. Do your research online or listen to one of our informative seminars. Or contact us. The first meeting is always free.

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