# Indo: David McWilliams: Irish Deposits could be hit Argentinan Style



## Lightning (9 Mar 2011)

In a week that Irish sovereign debt has hit a record breaking 9.4% and 5 year credit default swaps hit an implicit default probability of 90% (from very low probabilities just a few years ago), I think it is important to look what could happen in a worst case scenario. 

David McWilliams believes that there are strong parallels between what happened in Argentina and here. Obviously, all Argentinian deposits where wiped out when Argentina defaulted. 

David McWilliams presents his thoughts here: [broken link removed]



> In Latin America, just before a bankrupt state entirely runs out of money, it is traditional to try one last smashand- grab for the savings of the private citizen. We have seen this trend not just in South America’s recent financial history but down through the ages.





> Could it happen here? Could the savings of the private citizen be expropriated by the State to pay the last of the Croke Park promises? Or worse, could the remaining wealth of the private citizens be used to pay the odious debt of the banks? The answer is yes, and you have to be aware of this because this is often the way things end when a state goes bust.





> When the likes of Argentina ran out of options, it swiped its people’s savings in various elaborate stitch-ups. We may be going down the same route. In Argentina this led a friend of mine to describe Argentinian compatriots as “great patriots and terrible citizens”. When they play football they are the most passionate supporters but ask them to keep their money at home and they will laugh, citing the last time patriotism was used to rob them. No gracias, amigo. Could it happen here? Cinnte!



Is David correct in his assertions? or is he overstating the risk of an Argentinian style sequence of events here?


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## bluemac (9 Mar 2011)

Very interesting so he saying basically the goverment are giving bonds to pension funds who are buying them as they are desperate for higher returns at the moment. so if the state goes bust those bonds wont be paid back so all the pension that are invested in them will be gone... hence picking the pocket of the irish people...

I still dont really believe it will come to that and buying bonds at 9.7% will seem like a great deal in a few years time... we may all wish we had done it?  We all live here do we really think Europe will allow us to lose our pensions, savings and futures now we have the IMF deal...


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## TomPetty (9 Mar 2011)

Thanks Ciaran - Very worrying article indeed. I assume if it came to Gov dipping into our savings, that even deposits that we have in UK / South African / Dutch banks, that are resident here in Ireland, are not safe from their grabbing hands ?


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## Marion (9 Mar 2011)

Thanks CiaranT

I love reading your posts. They give a fresh dimension to what is available in the print media.

Regards

Marion


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## horusd (9 Mar 2011)

I very much hope I don't live to eat these words, but I cannot see this happening. Expropriating depositors cash  in IRL would be a Lehmans moment in the Eurozone and would result in capital flight across the continent. I think McWilliams is beginning to believe his own doom-laden theatrics and sounds more and more like a modern day Nostradamus. The alternative is he doesn't believe it ( more than possible in my humble opinion) but enjoys the centre stage too much to let the facts get in the way of a good horror story.


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## Marion (9 Mar 2011)

> Could the savings of the private citizen be expropriated by the State to pay the last of the Croke Park promises?


What does he mean by this?

Are there promises in place to increase public sector pay in return for new work practices and increased working hours outlined in the Croke Park agreement?


Marion


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## horusd (9 Mar 2011)

TomPetty said:


> Thanks Ciaran - Very worrying article indeed. I assume if it came to Gov dipping into our savings, that *even deposits that we have in UK / South African / Dutch banks,* that are resident here in Ireland, are not safe from their grabbing hands ?


 
I can't see how the gov't could do this as money would be beyond the jurisdiction. Hence the flight of deposits to various other countries already taking place.


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## horusd (9 Mar 2011)

Marion said:


> What does he mean by this?
> 
> Marion


 
I assume it means tapping the depositors/pension funds to pay for it. On reading the article it seems to mainly relate mostly to pension funds rather than depositors _per se_. The comparison with Argentina is fallacious as it was a single sovereign country without the backup of a huge single currency zone. It could do this (perhaps it had to, without impacting on other countries). The ramifications of such a move here would reverberate around Europe and the world. We are not Argentina. 



> When the likes of Argentina ran out of options, it swiped its people’s savings in various elaborate stitch-ups. We may be going down the same route.


 
This is typical McWilliams bluster and scaremongering. _Que bono_? He does because its attention-grabbing, self-promoting  guff. The more I read him, the less I value him.


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## Marion (9 Mar 2011)

I don't discount David McWilliams at all.

I am just wondering what he meant by the statement that I quoted.



> Could the savings of the private citizen be expropriated by the State to pay the last of the Croke Park promises?


What does he mean by this?

Are there promises in place to increase public sector pay in return for new work practices and increased working hours outlined in the Croke Park agreement? 

If there are I am not aware of them. 

I am somebody who will, possibly, be affected by the Croke Park agreement. 


Marion


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## horusd (9 Mar 2011)

Not that I'm aware of. I think he is making a more general point about tapping savings/pensions to fund the promises already contained in Croke park and which the new gov't has committed itself to maintaining.


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## Marion (9 Mar 2011)

Horusd: "committed itself to maintaining" might be too strong


"endeavour" is the word used in the programme.

Marion


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## TomPetty (10 Mar 2011)

horusd said:


> I can't see how the gov't could do this as money would be beyond the jurisdiction. Hence the flight of deposits to various other countries already taking place.




No, I'm referring to those banks that are resident in this Country - ie Investec / Rabo / Nationwide UK. Would Irish Gov have ability to reach into peoples deposits on these instutions also ?


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## Chris (10 Mar 2011)

CiaranT said:


> Obviously, all Argentinian deposits where wiped out when Argentina defaulted.


No, this is not what happened. Depositors were restricted from withdrawing more than a certain amount of money per month, but their deposits were not wiped out. The default was on $130bn of foreign debt, which ultimately was restructured at about 30c on the $.



bluemac said:


> I still dont really believe it will come to that and buying bonds at 9.7% will seem like a great deal in a few years time... we may all wish we had done it?  We all live here do we really think Europe will allow us to lose our pensions, savings and futures now we have the IMF deal...


I have had this discussion with many people in the past year and have heard your argument several times. Could I ask you why you personally think that current bond yields are too high and why the market's default risk is too high? Is it just because someone is willing to fill the gap, i.e. IMF/EU?
By 2014 Ireland will have debt of €200bn or more with an annual interest bill of about €12bn. That is a fiscal problem far worse than what countries that have defaulted had encountered.



Marion said:


> Are there promises in place to increase public sector pay in return for new work practices and increased working hours outlined in the Croke Park agreement?


I think what he means is that given the current budget deficit the state is borrowing in order to pay for current expenditure. Current expenditure includes the public wage bill which under the Croke Park agreement cannot be touched. Now what would happen if the state could no longer borrow money to cover the existing public wage bill? Would the state start appropriating personal deposits?



TomPetty said:


> No, I'm referring to those banks that are resident in this Country - ie Investec / Rabo / Nationwide UK. Would Irish Gov have ability to reach into peoples deposits on these instutions also ?


I would imagine that the state would be able to restrict access and/or tax out funds, just like they can force foreign banks to subtract DIRT from any interest paid at present.


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## Godfather (10 Mar 2011)

I am in a state of shock for such article as I am starting to think that David likes the role of catastrophist who gains attention this way... 

In an European Community environment could Ireland expropriate money from Nationwide UK, Rabo, Northern Rock, etc? 

That would break lots of balances... I'm starting to think about moving the remaining 5% of my savings away...


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## bluemac (10 Mar 2011)

Chris said:


> I have had this discussion with many people in the past year and have heard your argument several times. Could I ask you why you personally think that current bond yields are too high and why the market's default risk is too high? Is it just because someone is willing to fill the gap, i.e. IMF/EU?
> B


Personally as bad as it is, we have our fall back the EU, hence why I dont think it will end up being as bad as everyone makes out, at some point they will step in and the reality is its not that much money to the whole of the EU to save us. Having said that would I buy bonds at 9.7% Yes if I could afford to lose the money.


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## Chris (10 Mar 2011)

Godfather said:


> In an European Community environment could Ireland expropriate money from Nationwide UK, Rabo, Northern Rock, etc?



They wouldn't be appropriating the money of the banks, but rather the money of the depositors. The banks merely hold and invest the money.
My dad indoctrinated two things in me regarding government and politicians:
1) Don't believe anything until it has been officially denied.
2) Desperate politicians will always do very desperate things.

The first one has proven extremely valuable in the last 2 1/2 years (we are not in a recessions; we are the first in a recession so we will be the first out, we do not need a bailout, we are not talking to the IMF, the list goes on); I'm waiting for something spectacular for the second.


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## frankmac (10 Mar 2011)

Marion said:


> I don't discount David McWilliams at all.
> 
> I am just wondering what he meant by the statement that I quoted.
> 
> ...


 
Marion Im afraid that all of us are people who will, without doubt, be affected by the Croke Park Agreement.


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## Sunny (10 Mar 2011)

There is so much rubbish written about Argentina. Argentina froze deposits when the crisis hit to prevent a bank run. Initially they froze all deposits which was a disaster but eventually in 2002, they only froze term deposits. (Same would happen here if we left the Euro). They were not wiped out though. Also in 2008, the Government seized control of private pension funds (basically closed the private pension system and did an asset grab). Despite what people inlcluding David McWilliams claim, we are nearly 10 years after the Argentinian crisis and they still don't have access to capital markets. And yet people still hold them up as an example to follow.


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## Chris (10 Mar 2011)

bluemac said:


> Personally as bad as it is, we have our fall back the EU, hence why I dont think it will end up being as bad as everyone makes out, at some point they will step in and the reality is its not that much money to the whole of the EU to save us. Having said that would I buy bonds at 9.7% Yes if I could afford to lose the money.


But simply having someone supply us with more money to plug the deficit does not solve the problem, it merely alleviates the symptom. The problem Ireland is facing is that there is too much debt; adding to the debt is only making things worse, not better.
Personally, if I could afford a full bond futures contract I would be shorting.



Sunny said:


> Despite what people inlcluding David McWilliams claim, we are nearly 10 years after the Argentinian crisis and they still don't have access to capital markets.



But how is having limited access to debt a bad thing when debt has just forced you to default? Countries that are faced with default because of debt problems should not want to get access to more debt. Just like a drug addict is better off by not having any access to drugs. 
In Ireland, just as in Argentina, excessive debt is the problem. The idea of default is to bring debt to a manageable level and then start paying it off, not to be able to borrow more money.
While I am no fan of McWilliams, and I agree with previous comments on him being an attention seeker, I do believe that Ireland is now in a situation where default is going to be inevitable. The earlier this is accepted and dealt with, the better.


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## Godfather (10 Mar 2011)

Guys, I believe that with the internet and google advent there are much more interconnections than 10 years ago... A freeze of Irish deposits would result on a domino-effect that would strongly impact other economies...

I still don't believe this can happen... Noone would allow that to happen...

Has anyone watched "Inside Job" which won an oscar as best documentary? Pls watch it and then let me know... We need to keep dancing on the economy rules which history has created... If we stop it's going to be a real catastrophe...

But this said I have to admit I've 40% of my savings in Germany, 55% in Italy and 5% in Ireland...


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## kastyz (10 Mar 2011)

'Inside Job' - an eye opener. Financial crisis and it's start. Scarry to see that nothing is changing.  Highly recomended - must see for everyone.


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## Sasol (10 Mar 2011)

Chris said:


> The default was on $130bn of foreign debt, which ultimately was restructured at about 30c on the $.


 
Do this mean that for evey $1000 you had in savings in a bank account, it suddenly became $300 ?

Or is it just a case that your (amount of) savings remained the same but you were just restricted as to when you could or could not withdraw it ?


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## Chris (10 Mar 2011)

Sasol said:


> Do this mean that for evey $1000 you had in savings in a bank account, it suddenly became $300 ?
> 
> Or is it just a case that your (amount of) savings remained the same but you were just restricted as to when you could or could not withdraw it ?



What happened, and in some cases is still ongoing, is that anybody that owned Argentine bonds, which were almost entirely denominated in US$, got $300 per $1000 invested.

Depositors lost out in a different way. They still had all their pesos, but they were suddenly no longer redeemable in US$. Therefore the pesos bought an awful lot less when the central bank devalued the peso. The other problem that people faced was that they were only allowed access to a certain amount of their deposits per month.


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## soy (11 Mar 2011)

I was in Argentina about 5years after the crash and people were still very very angry. All banks were heavily fortified and behind steel shutters. Presumably people kept breaking all the glass. The front of the banks were still being sprayed with graffiti each week to the effect that the bank were thieves and much worse. It was eye-opening stuff

I would think that if we were to leave the euro, the Govt would first have to freeze all Irish bank accounts to prevent a massive flight of capital


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## kdoc (11 Mar 2011)

Like the Cassandras, we know what the problems are. But now, in consultaton with our EU partners, we need solutions before being engulfed by a self-fulfilling prophecy.


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## jman0war (14 Mar 2011)

TomPetty said:


> No, I'm referring to those banks that are resident in this Country - ie Investec / Rabo / Nationwide UK. Would Irish Gov have ability to reach into peoples deposits on these instutions also ?


I also wonder about these institutions.
What happens to deposits with the above, if Ireland has to opt out of the euro?

Would those places maintain their deposits in euro or what they have to change over to the punt?


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## shnaek (14 Mar 2011)

Can we remain in the Euro and default? 
I don't think we can. 
One reason why is moral hazard. If we can ineptly manage our finances and get away with it, then where's the incentive for any Euro-zone country to be fiscally responsible?
One solution is perhaps the German idea of constitutionally limited budgets. 
But in the end, full fiscal union is the only solution. That is probably not in our best interests. 
We are between a rock and a hard place. 
If our lenders allow us to default, there will be a price to be paid. As long as the responsible pay for the irresponsible, who is going to be responsible?

I think we are certain to default, it's the circumstances surrounding that default that I'm not sure of.


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## Chris (15 Mar 2011)

shnaek said:


> I think we are certain to default, it's the circumstances surrounding that default that I'm not sure of.



I agree with you, and the longer government keeps it's head in the sand chasing the delusional solution of a lower interest rate the bigger the problem will be.

As for will Ireland be allowed to default? I don't think there is anything the EU can do to stop it. It is certainly a big moral hazard, but it only became a moral hazard when governments collectively decided to bail out countries in the first place.


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## jman0war (15 Mar 2011)

If Ireland has to abandon the euro then i'd expect any deposit holder to run.
I just wonder about RaboDirect and Investec, are they euro havens?


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## flatfish (15 Mar 2011)

While I admire D Mc W I think he is now beating the doomsday drum too much.  Nobody really knows what is going to happen.  It could be far worse than he says.  The Japan situation may be a new tipping point in relation to world economy.  It could go any way.  But a stopped watch is correct twice every 24 hours and if Mc W keeps saying it he will be right some of the time but i dont think his current column is helpful.


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## dockingtrade (16 Mar 2011)

Argentinas central bank is I assume the Argentinian central bank and Argentina was broke. Our Central bank (I think) is the ECB,  wouldnt the whole of the ecb banking sector have to be in trouble before anyone takes a hit i.e. if deposits are in trouble in ireland and our central bank (ecb) has cash they plug the whole?
I dont think our situation can be compared with any other country as we are part of the Euro. All the comparisions are with stand alone situations.

Anywho if depositors in one part of the eu take a hit it will destroy the euro and the EU they will be hysteria in the PIIGS + belgium and the big boys will lose an awful lot of money.

China and the US biggest single market is the EU. No one wants a eurozone country losing deposits


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## Godfather (17 Mar 2011)

dockingtrade said:


> Argentinas central bank is I assume the Argentinian central bank and Argentina was broke. Our Central bank (I think) is the ECB,  wouldnt the whole of the ecb banking sector have to be in trouble before anyone takes a hit i.e. if deposits are in trouble in ireland and our central bank (ecb) has cash they plug the whole?
> I dont think our situation can be compared with any other country as we are part of the Euro. All the comparisions are with stand alone situations.
> 
> Anywho if depositors in one part of the eu take a hit it will destroy the euro and the EU they will be hysteria in the PIIGS + belgium and the big boys will lose an awful lot of money.
> ...



I agree, but despite the rational part of my brain is agreeing on this I admit it the emotional part took charge on this since the Black Thursday and I moved my savings back to my homecountry and to Germany as well...   

I remember when Northern Rock Ireland was in crisis and people were queuing outside to withdraw their money in Harcourt Street, at the end people who resisted were awarded with an extra in interest rate as an award to their loyalty... Would the same happen to the brave savers keeping their savings here? I guess not...  And of course in exchange for (apparent?) security I'm getting much less interest rate than in Ireland


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## sixshooter (17 Mar 2011)

Godfather,
I don't think anyone could doubt your logic in moving your deposits to Germany, but moving them from Ireland to Italy...? Talk about out of the frying pan into the fire! While Northern Italy is still a strong economic performer, the country's debt is colossal and growth practically non existent for 20 years. If there's one country to which the Argentian example is prescient, it's Italy.
So if we're talking about desperate government measures just before a bankrupt state entirely runs out of money, I'd have more faith in Enda & co than I would with Berlusconi...


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## Godfather (17 Mar 2011)

sixshooter said:


> Godfather,
> I don't think anyone could doubt your logic in moving your deposits to Germany, but moving them from Ireland to Italy...? Talk about out of the frying pan into the fire! While Northern Italy is still a strong economic performer, the country's debt is colossal and growth practically non existent for 20 years. If there's one country to which the Argentian example is prescient, it's Italy.
> So if we're talking about desperate government measures just before a bankrupt state entirely runs out of money, I'd have more faith in Enda & co than I would with Berlusconi...



I quite agree, but Italy contributes quite a bit to the IMF ( http://en.wikipedia.org/wiki/International_Monetary_Fund ) and I think in the balance of power (like Spain) due to its dimension it's a bit more visible than here. Furthermore, as I'm planning to retire there I decided to follow the destiny of the old italian Lira at the moment...

One more update after posting this: actually now I'm thinking of moving more money to DKB as soon as my short term italian bonds expire


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## coin (18 Mar 2011)

flatfish said:


> While I admire D Mc W I think he is now beating the doomsday drum too much.  Nobody really knows what is going to happen.  It could be far worse than he says.  The Japan situation may be a new tipping point in relation to world economy.  It could go any way.  But a stopped watch is correct twice every 24 hours and if Mc W keeps saying it he will be right some of the time but i dont think his current column is helpful.



I think it is helpful. The comment could be reminiscent of the boom years when McWilliams stated the property bubble would send this country into a economic recession. Everyone thought this guy was crazy to even state it. Now we should look at all possibilities and the odds are looking much more towards a default.

However I think he was wrong to say people lost *ALL *of their money. Deposits were devalued by nearly 50%. Your money was worth less *outside* of Argentina but a freeze was in place to prevent a run on the banks. $250 was the maximum allowed to withdraw per week. The country suffered hyperinflation.

I think our situation would get alot worse if Ireland were to delault on the debt. We rely on imports so hyperinflation would happen and foreign companys will leave the country. It would send us into a worse crisis than we are now in. I am too intested on how accounts with Nationwide UK, Rabo & Northern Rock would be effected if we were to default. Can the government impose a freeze on accounts in those banks? Would this explain it(taken from the crisis in Argentina):



> The _corralito_ almost completely froze bank accounts and forbade withdrawals from U.S. dollar-denominated accounts.
> 
> No withdrawals were allowed from accounts denominated in U.S. dollars, unless the owner agreed to convert the funds into pesos


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## bullworth (19 Mar 2011)

coin said:


> I think our situation would get alot worse if Ireland were to delault on the debt.



Currently default is inevitable as debt increases and growth is suppressed to be much lower than the interest rate on increasing debt. There is no other vista currently.



coin said:


> We rely on imports so hyperinflation would happen and foreign companys will leave the country.



Why would we experience hyperinflation during a period of financial deflation and austerity ? It's the creation of money via ''magic wand'' as debt which is one of the factors that creates inflation. Defaulting means the destruction of debt and the disappearance of money so how would this cause inflation ?
And why would foreign companys leave the country ? We cannot be forced to leave the Euro or the EU and its free trade area even if we default on bank debt which was never morally our problem. A way has to be found to separate bank debt from sovereign debt. Without the burden of bank debt , bond yields would fall back to normal and we would be able to borrow on the financial markets.


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## Kev (19 Mar 2011)

I reside in the UK and have Anglo Irish bank saving accounts a very small amount os savings in UK and not a very big amount that I had in my saving account in Euros with them in Dublin. Got letters recently telling saying that my accounts have been moved to AIB Group (UK) plc. and one in Ireland not much in both.  Have not been able to contact the AIB UK group to find out about this or look at the contents of their letters in great detail but will do next week. 

Will this mean however that my irish depost in Euros will be in the same currancy in in AIB Group UK.


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## Lightning (19 Mar 2011)

Another great piece by David McWilliams in The Sunday Business Post. The article is not yet online. 

He compares the attack on depositor's to the attack on a castle but one where the depositor's can flee. He believes that depositor's are at risk if the Irish banks fail. 



> If the attack is successful, the occupiers of the castle will fail too. If the bank fails to defend itself from the markets, then the depositors too will fail.





> The banks are under attack but, for the depositors, stuck in the castle, things are not as bad as they could be for the defenders of a castle. Depositor's are not stuck where they are - they can leave at any time. You can move your deposits in the morning, if you want.





> The more resources we throw at defending the castle wall, the less we will have to cover the deposits. The stakes couldn't be higher.





> Depositor's in Irish banks have already been fleeing. Is it any wonder that defenders deep on the inside are now beginning to panic?


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## Guest105 (19 Mar 2011)

A few weeks ago Enda Kenny called the banking system a national emergency.  

The more I read the above, the more I feel that something just awful is going to happen.  I hope I am wrong


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## Godfather (20 Mar 2011)

I'm sorry for sounding a bit... insensitive... But I'd like to launch a little survey please: who's already moving away their remaining savings with Rabo/NR Ireland/Nationwide UK Ireland/NIB? I'm not moving them yet, but I'd like to know if I'm the only one...


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## horusd (20 Mar 2011)

Nope, you are not alone Godfather ! I've kept savings here with Ulster. Tho havin said that, I most of my money is in shares held with a foreign broker.


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## Time (20 Mar 2011)

Will the government be able to raid peoples current accounts?


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## coin (20 Mar 2011)

Your are not the only one godfather, I moved 30% of my deposits to NUK ireland and 7% into shares in America. Still have the rest in Irish banks but looking at moving this eventually.


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## dec1892 (20 Mar 2011)

savings with Nationwide UK and Ulster - contemplating moving abroad, probably Germany but from looking on this forum, there doesnt appear to be any easy route except to actually travel over there....


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## Chris (21 Mar 2011)

coin said:


> I think our situation would get alot worse if Ireland were to delault on the debt. We rely on imports so hyperinflation would happen and foreign companys will leave the country.


Inflation is a monetary phenomenon and can only be created by central banks' monetary policy and government fiscal policy. If/when Ireland defaults, high or hyper inflation would be the result of Irish government and Irish central bank policies, nothing else.



Godfather said:


> I'm sorry for sounding a bit... insensitive... But I'd like to launch a little survey please: who's already moving away their remaining savings with Rabo/NR Ireland/Nationwide UK Ireland/NIB? I'm not moving them yet, but I'd like to know if I'm the only one...



I have a little bit of my money left in Rabo, mainly some emergency cash and money some for holidays and other larger discretionary spending; rest of cash and investments are abroad. The reason I chose Rabo is that I think that in a worst case scenario it would possibly take a little longer to freeze those accounts, hopefully giving me enough time to transfer the money into one of their mutual funds on offer.


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## Firefly (21 Mar 2011)

I keep a "float" in AIB to cover expenses. I moved our savings to a few different foreign banks before Xmas and I add to these every month with what's over and above this float.


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## Vega (21 Mar 2011)

Godfather said:


> I'm sorry for sounding a bit... insensitive... But I'd like to launch a little survey please: who's already moving away their remaining savings with Rabo/NR Ireland/Nationwide UK Ireland/NIB? I'm not moving them yet, but I'd like to know if I'm the only one...


 
I moved most from Irish banks to NUK/Rabo as I assumed foreign banks were safer than Irish banks but how safe are their deposits that are located here?   

I have a Keytrade account as well but the rate is poor and Belgium doesn't look too safe either.


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## Godfather (21 Mar 2011)

Pls let me know if you're planning to move the remaining savings abroad. To Vega: you might try DKB which is described in my post "Did anyone of you try to open an account with one of the biggest german banks?"


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## Payeman (21 Mar 2011)

*Non Irish banks*

The fact we're even contemplating deposit security just shows how far that the banks have fallen. Client manager in UB advised me that up to €200k is guaranteed per couple for joint account under Irish govt scheme. Didn't mention anything about it's parent company RBS which is effectively the UK Govt. I presume they'd step in to cover deposits there (same with Nationwide UK, Rabo etc) or am I just being naive?!


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## cremeegg (21 Mar 2011)

Payeman said:


> The fact we're even contemplating deposit security just shows how far that the banks have fallen. Client manager in UB advised me that up to €200k is guaranteed per couple for joint account under Irish govt scheme. Didn't mention anything about it's parent company RBS which is effectively the UK Govt. I presume they'd step in to cover deposits there (same with Nationwide UK, Rabo etc) or am I just being naive?!



The Irish govt guarantee is only as strong as the Irish govts finances, ie dependent on the kindness of strangers.

If your UB manager thought that mention of the Irish Govt guarantee would reassure. There is something else to be said, recent evidence has shown that Irish bank managers dont know anything about banking.

The Irish banks have already failed. They are being propped up with up to €160bn from ECB at the moment. If you think that can continue long term I would disagree. Maybe all will turn out for the best, I am not betting my life savings on it.

If (when?) the govt introduces legislation that adversely affects depositors, it will affect all banks operating in Ireland irrespective of their country of orgin.


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## shnaek (22 Mar 2011)

CiaranT said:


> Another great piece by David McWilliams in The Sunday Business Post. The article is not yet online.
> 
> He compares the attack on depositor's to the attack on a castle but one where the depositor's can flee. He believes that depositor's are at risk if the Irish banks fail.



I read that article alright, and it read to me like a covert warning. A warning I think I'll have to heed.


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## Sasol (22 Mar 2011)

This is probably a stupid question, but I'll go for it anyway. 

Some of you mention that it is a possibility that deposits could be devalued by a certain percentage. In this scenario, would a persons liabilities also be devalued by a similiar percentage. 

For example, if I had a mortgage of 200K with BOI and I had savings of 50K with them. And in the process of a default,  my deposit was devalued by 50% to leave me with 25K, would my mortgage be devalued similarly (i.e. by 50% to 100k) ??


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## Guest105 (22 Mar 2011)

Sasol said:


> This is probably a stupid question, but I'll go for it anyway.
> 
> Some of you mention that it is a possibility that deposits could be devalued by a certain percentage. In this scenario, would a persons liabilities also be devalued by a similiar percentage.
> 
> For example, if I had a mortgage of 200K with BOI and I had savings of 50K with them. And in the process of a default, my deposit was devalued by 50% to leave me with 25K, would my mortgage be devalued similarly (i.e. by 50% to 100k) ??


 

No you still have to pay your mortgage in full.


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## bullworth (22 Mar 2011)

cashier said:


> No you still have to pay your mortgage in full.



It doesn't sound fair does it ? If I give someone a loan of my money (a deposit) and they also give me a loan, why should I have to repay them the money I borrowed off them if they won't repay me the money I loaned to them ? Suppose a deposit was far in excess of the mortgage taken out for example ? Under various consumer laws, normally you only deal with one company if you do your business through that one company e.g if my laptop doesnt work when I take it home I don't take it back to the HP factory, I take it back to Dixons, Peats etc.


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## dockingtrade (22 Mar 2011)

sorry for making this point again but if Euro based deposits take a hit it will destroy banks in all Eurozone countries. The Domino effect will be catostrphic in the piigs and throw in belgium at least. The German and French banks will be the biggest losers. The question about paying back your mortage in full if you take a hit on deposits... No one will pay a penny off their mortgage if deposits are hit not to mind paying a discounted mortgage back. The situation cant be compared to Argentina Iceland etc because we are part of a single currency market. Its like saying 20 years ago deposits in cork take a 10% hit because cork is broke and the rest of the country remains untouched. 
The eu are forcing us to take pain and make a correction to the point where we cant take anymore and then a "solution" will kick in but we wwould have made the adjustment.


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## Godfather (23 Mar 2011)

dockingtrade said:


> sorry for making this point again but if Euro based deposits take a hit it will destroy banks in all Eurozone countries. The Domino effect will be catostrphic in the piigs and throw in belgium at least. The German and French banks will be the biggest losers. The question about paying back your mortage in full if you take a hit on deposits... No one will pay a penny off their mortgage if deposits are hit not to mind paying a discounted mortgage back. The situation cant be compared to Argentina Iceland etc because we are part of a single currency market. Its like saying 20 years ago deposits in cork take a 10% hit because cork is broke and the rest of the country remains untouched.
> The eu are forcing us to take pain and make a correction to the point where we cant take anymore and then a "solution" will kick in but we wwould have made the adjustment.



I promise that the rational side of my brain agrees with you 100%... 

But why at my university some of my teachers predicted that the Euro was the worse project the EU was going to undergo without first unifying taxation and political system?


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## pat'O (26 Mar 2011)

*Isle of Man*

Hi

Just wondering if anybody has considered the Isle of Man as banking options? 
It is an international *B*ank haven with several British Bank options including National UK.


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## kdoc (27 Mar 2011)

I just listened to Colm McCarthy on Marian Finucane's programme and he argued that depositors' money is safe. He also disagreed with the McWilliams banking solution but, in the absence of McWilliams, he didn't elaborate too much.
The first segment of the programme deals with the Moriarity fall-out and the second deals with our financial crisis. It's probably available on podcast.


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