I have $10,000 and dont know what to do with it

What about shares/? they are still low and returning good yields. banks shares are returning aroun 7% before franking credits. lots of up potential

“Investors are valuing European banks at levels not seen since the depths of the credit crunch that followed the collapse of Lehman Brothers Holdings Inc. (LEHMQ) as concern over a Greek default and debt contagion escalates.”

And yesterday, the Wall Street Journal wrote:

“France’s largest publicly traded banks face another week of turbulence as Moody’s Investors Service may cut the credit ratings of BNP Paribas SA, Société Générale SA and Crédit Agricole SA because of their exposure to Greek sovereign debt…”

Meanwhile, across the pond, the Financial Times notes:

“Britain’s banks will face an annual bill of as much as £6bn ($9.5bn) to comply with the reforms of the Vickers Commission, according to the panel’s final report…”

And in Australia, our [cough] safe banks still need multi-trillion-dollar taxpayer support. Eric Johnston in the Age writes:

“Global market uncertainty has prompted the Gillard government to extend into next year its promise to stand behind bank and credit union deposits worth up to $1 million, before winding back the insurance scheme that has been in place since the global financial crisis…

“A new permanent cap for the Financial Claims Scheme of $250,000 per person per financial institution will be introduced from February 1 next year. The $1 million cap had been scheduled to expire in October.”

The mainstream argues Australia’s banks are safe. We ask: if that’s true, why do they need taxpayer support?

The mainstream replies it’s because of global banking fears rather than Australia-specific problems. We say, rubbish. It’s because the entire global banking system is built on a business model that’s inherently insolvent… and that includes Australia’s banks.

Still, most mainstream analysts will tell you about Aussie banks’ great yield and captive customer base.But what they won’t tell you is that banking stocks are the ultimate leveraged stock play.

The only way the banks can make money is to issue more loans.

If the banks stop expanding their balance sheets, the result is banking death. As you’ve seen in North America, it doesn’t take much for profits to disappear… or to make depositors want their cash… or to force governments into engineering taxpayer funded bailouts.

As we look at it, bank balance sheets are as bad as GM’s from seven years ago. GM made its crappy profit buying lots of metal, rubber and plastic and then expensively fashioning them into a car it could sell for a small profit.

Super-leveraged paper-thin profits

Australia’s banks (all banks in fact) make their slim profits by convincing ever greater numbers of people to take out ever bigger loans.

Source: Money Morning newsletter 12 Sep 11

Invest a portion of your money in books, magazines, seminars etc… on property and keep reading this forum. I was once told make your passion an obsession and you will never need to work again.

Engelo

Hi Jack, No bullshit, but I seriously admire your view on topics and attention to detail. Its very blunt and brutal but for some reason I like it. Keep em coming as its always an interesting read.

Regards,
Engelo