# "All my money is in Irish banks" - Alan McQuaid of Bloxham



## The Ghoul (1 Dec 2011)

Alan McQuaid, chief economist with Bloxham Stockbrokers thinks that there is a 50% chance of the euro continuing in its current state. Even with these relatively pessimistic odds, he stated that he "thinks we'll get through this" and that he has *all* his money in Irish banks. 

The comment is at 5:54 in the below recording.

[broken link removed]


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## Brendan Burgess (1 Dec 2011)

That is a very odd thing to say for an economist ( well actually it's probably not odd for an economist.)

That is a very odd thing to say. It's pretty meaningless unless we know how much he is worth and what he means by money.

if he has not diversified some of his assets away from Irish banks, he has no appreciation of risk.

Brendan


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## Jim2007 (1 Dec 2011)

Brendan Burgess said:


> if he has not diversified some of his assets away from Irish banks, he has no appreciation of risk.


At this point in time Irish banks have some of the best T1 ratios in Europe and when you combine that with the fact that they have little exposure to Greek/Spanish/Italian sovereign debt, it is kind of hard to see why you'd consider them to be more risky than a bank with a lower T1 ratio and exposure to this sovereign debt!

As I understand it, from legal point of view the best the Irish government could do is introduce a new currency - for as long as the Euro continues to exist they would have no authority to convert Irish deposits held in Euros.  Only the people of Europe can do that with a treaty change, which in Ireland's case would require a referendum!

All in all I would think his strategy is as good as anyone else's ideas.


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## Lightning (1 Dec 2011)

Well said, Brendan. Alan clearly has not attended diversification 101 classes. 

People say "there is a 50% chance" when they have no clue what will happen. Alan is clearly sitting on the fence when his job is to supposed to be to predict economic direction.


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## RabbitHutch (1 Dec 2011)

Where did you get the below info?



As I understand it, from legal point of view the best the Irish government could do is introduce a new currency - for as long as the Euro continues to exist they would have no authority to convert Irish deposits held in Euros. Only the people of Europe can do that with a treaty change, which in Ireland's case would require a referendum!


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## Brendan Burgess (1 Dec 2011)

Jim2007 said:


> All in all I would think his strategy is as good as anyone else's ideas.



Hi Jim 

It's very difficult to forecast what will happen. Under the circumstances, he should not have all his assets exposed to one banking system or even one currency. 

Irish banks may be the only ones to survive. But then again, they might not. 
The Irish government may go bankrupt and it's hard to see the Irish banks surviving that. 

Brendan


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## serotoninsid (1 Dec 2011)

Jim2007 said:


> As I understand it, from legal point of view the best the Irish government could do is introduce a new currency - for as long as the Euro continues to exist they would have no authority to convert Irish deposits held in Euros.  Only the people of Europe can do that with a treaty change, which in Ireland's case would require a referendum!


That's an interesting one - first time I have seen this mentioned.

IF the above is fact, then I guess there's no way we can wake up one morning to listen to media reports that we have switched to the punt nua...


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## Marc (2 Dec 2011)

This was covered extensively in a UBS research note back in September.

It isn't possible under the current legal treaties for a member of the Euro to be evicted.

To make the necessary change ALL the member states would need to agree to a new treaty including the State being kicked out.

Also, again as currently drafted it isn't possible to leave the Euro without also leaving the EU! 

If a State did this and was subsequently readmitted to the EU under the Mastrict treaty they would have to prepare for Euro membership.

Welcome to the Hotel California you can check out but you can never leave.


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## Brendan Burgess (2 Dec 2011)

> At this point in time Irish banks have some of the best T1 ratios in  Europe and when you combine that with the fact that they have little  exposure to Greek/Spanish/Italian sovereign debt



Hi Jim

Do the Irish banks have an exposure to Irish government debt?


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## Chris (2 Dec 2011)

Brendan Burgess said:


> Hi Jim
> 
> Do the Irish banks have an exposure to Irish government debt?



I would imagine so. In order to borrow money from the ECB, which Irish banks are reliant on, banks have to put up collateral which usually is government debt. Can't say I'm an expert on this, but was this not why Irish banks were issued the so called promissory notes? Would be interesting to see exact figures though.


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## The Ghoul (2 Dec 2011)

Jim2007 said:


> At this point in time Irish banks have some of the best T1 ratios in Europe and when you combine that with the fact that they have little exposure to Greek/Spanish/Italian sovereign debt, it is kind of hard to see why you'd consider them to be more risky than a bank with a lower T1 ratio and exposure to this sovereign debt!
> 
> As I understand it, from legal point of view the best the Irish government could do is introduce a new currency - for as long as the Euro continues to exist they would have no authority to convert Irish deposits held in Euros. Only the people of Europe can do that with a treaty change, which in Ireland's case would require a referendum!
> 
> All in all I would think his strategy is as good as anyone else's ideas.


Agreed. I posted what Alan said in an attempt to to balance what I see as hysteria. The assumption on this site and others seems to be that anyone with money in Irish banks/Ireland is a fool. Stirred up by the likes of Eddie Hobbs and Jill Kerby (who I hear was on liveline yesterday preaching her doom and gloom yet again) 

I have all my money in (several) Irish banks, Ulster Bank and State Savings and I'm pretty happy with how things are going so far. Because of interest rates offered by these banks I'm better off than I would be had I opened an account in Belgium (remember all the buzz about Keytrade?) or Germany. 


			
				CiaranT said:
			
		

> Well said, Brendan. Alan clearly has not attended diversification 101 classes.


Fairly patronising comment Ciaran. Maybe Alan hasn't read "how to be a good little sheep" either. While diversification seems like a good strategy, diversification into what? 

And to protect against what exactly - inflation, hyperinflation, deflation?

If the doomsday scenario that many are predicting happens do you really think that a normal person having a bank account in Germany or the UK is going to do them much good. 

One problem I have with much of the diversification advice from the likes of Hobbs and Kerby is that it is dramatic yet also wishy washy. They'll make a big fuss about a certain country, currency or asset class. Their readers immediately get excited/frightened. Then they recommend putting no more than 10% of one's wealth into it. And they'll have a disclaimer about how nobody knows what will happen and to seek professional advice. Or a good one I heard from Jill recently "people who know more than I do have recommended" x or y. Nice way of absolving herself of any responsibility.

Contrast that with an economist who comes straight out on national radio and says "I have my money in Irish banks...all of it".


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## Bobby1 (2 Dec 2011)

Well said Ghoul...agree with every single point you made in that post, I think certain posters on AAM indeed operate like sheep and post comments that they think people want to see, in exactly the same way the media only gives airwaves and newspaper space to the likes of Hobbs etc...


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## MoM (2 Dec 2011)

This Sheeple arguement doesn't stack up - people use it because everyone bought houses like sheep. 

But there were also sheep who followed certain posters once agon a time ago on here in selling houses at the peak. 

So my point is you can be a rich or a poor sheep, we'll only know which side of the fence we end up on in 5 years time.

Certain people may end up laughing at others for moving money abroad or they may end up laughing at people who didnt.

There is no right answer now. *It's a personal call. *

*Listen to both sides of the arguement and make the call that suits you best.*


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## Lightning (2 Dec 2011)

The Ghoul said:


> Maybe Alan hasn't read "how to be a good little sheep" either. While diversification seems like a good strategy, diversification into what?



Alan says there is a 50% risk of a Euro break up but yet has all his money in Irish banks. If Alan believes that the risk is really as high as 50% then he should diversify his deposits into other currencies and/or locations. That's all I am saying.


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## Firefly (2 Dec 2011)

I'm not for a second questioning the man's honesty, but given his position if he did admit to moving his deposits abroad his own company would stand to lose a lot of money surely?


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## regvw (2 Dec 2011)

Well done Ghoul, you made some great points. For the last few years the trend has been to play up dooms day on AAM with all sorts of ideas around moving your money out of ireland. 

Could someone tell me how much I would have lost if I moved 100 euro into a sterling account in UB for example two years ago as oposed to saving in a fixed term deposit account that had a particular rate of interest then, compound this with the fact that I convert my money back to euro and where would I be.


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## serotoninsid (2 Dec 2011)

regvw said:


> For the last few years the trend has been to play up dooms day on AAM with all sorts of ideas around moving your money out of ireland.


Playing up dooms day or 'contingency' or 'worst case scenario' planning?

I don't have much in the way of savings - but what I have has been hard earned - and I'm damned if I'm going to have someone slice god knows what % off it.  I think the debate on different strategies eg. euro a/c's in other EU states, sterling, dollar and other currency accounts here or abroad - all have been useful. I've pursued none of them - but the debate can only help.  The reality seems to be that nobody really knows all the right moves (right now at least).  However, I'd rather inform myself than just forget about it ....and I guess that's the whole point of a discussion board such as this one, is it not?


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## Brendan Burgess (2 Dec 2011)

regvw said:


> Could someone tell me how much I would have lost if I moved 100 euro into a sterling account in UB for example two years ago as oposed to saving in a fixed term deposit account that had a particular rate of interest then, compound this with the fact that I convert my money back to euro and where would I be.



Reg, there were very few people on askaboutmoney or elsewhere suggesting to people to move their money from euro into sterling. 

Even if there had been, it would not necessarily have been wrong. Diversifying some of your assets away from the euro and from Irish banks is a good idea.

In the summary I did on protecting against a Euro breakup, there is one advantage mentioned and at least 5 disadvantages. 



> *Open an account in a bank outside the eurozone in a non-Euro currency
> 
> *Pro
> 
> ...


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## regvw (2 Dec 2011)

guys, yes i think its great to have a forum like this to discuss all the options. 
yes its good to diversify, but couldn't keeping a few pound in irish banks be part of the diversification plan.


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## Brendan Burgess (2 Dec 2011)

regvw said:


> yes its good to diversify, but couldn't keeping a few pound in irish banks be part of the diversification plan.



One should take a holistic look at your finances. 

Most people have their earnings in euro and will have them in punt nuas if the euro breaks up. They will not be able to diversify them. 

For most people moving all their cash out of Irish euro is only diversifying a very small part of their assets.


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## Palerider (3 Dec 2011)

I'm with the Ghoul on this, AAM has leaned to the left for a long time on this issue and has actively in my opinion promoted the doom scenario, it does not matter what this economist has or has not in the way of cash assets, that is his business, he has declared his position and fair play to him, where do the AAM moderators have their cash...have they reserves at all..?.. are they in the game..or armchair observers..?...you know what I don't care, everyone is entitled to a voice but keep the balance please.

As it happens I'm with this economist, I considered going to Germany but could not be bothered, what stopped me was the likely scenario that I would get back whatever I was entitled to in the ' new ' Irish Euro / Punt Nua / whatever etc and that is a real possibility without a German address, same for other European countries.. 

I have cash guaranteed by the Irish and U.K. Govt and am getting a good, risk weighted return, pity about the D.I R T , I sleep well, I agree with diversification and do not have everything in cash, only a clown would not know that cash deposits over the past 24 months have become an asset class at the rates available and I am prepared to take the risk, each to their own and all that..


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