# Does this mean that the deposit guarantees may be useless? Brendan Keenan: Indo



## monagt (23 Sep 2010)

"The Government may have to call upon the art of the possible. It would lay out its stall on the fiscally possible and set a limit to bank rescue costs so that total public debt remains in the realms of what it is possible to service.
It would even have to say *how losses would be shared between depositors, creditors and lenders to the Government itself*, should the bank costs prove in the end to be impossible to cover"

Informed observations on this article content please!

ref:
Brendan Keenan: We need a coherent fiscal strategy before it's too late. Independent today 23rd September.


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## Lightning (23 Sep 2010)

The deposit guarantee is as safe as the solvency of the Irish state.


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## monagt (23 Sep 2010)

*solvency*

I think we will default, but it wont be called that. IMF in and banks bankrupt and savings gone.


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## onq (23 Sep 2010)

"It would even have to say *how losses would be shared between depositors, creditors and lenders to the Government itself*, should the bank costs prove in the end to be impossible to cover."

Not even a word about the Bondholders I see.

Have they evaporated, or are they, as people now begin to suspect, the very same zombie banks we are supporting?

There was it seemed some logic to supporting the Irish Banks to protect depositors, bond holders and foreign creditors, insofare as failing to protect deposits, and foreign debts would destroy our economic health and international standing respectively.

This was back when we thought that the Bond Holders might have been the great and the good of Irish society and business, the High Net Worth individuals on whom the entrepreneur class might rely to finance new enterprise and initiatives.

But if it turns out that the biggest Bond Holders were the Banks themselves, how can that logic persist?

ONQ.


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## onq (23 Sep 2010)

"should the bank costs prove in the end to be impossible to cover"

What COSTS?

This is a hole in the Banks capital lending ratio, a fictional figure supposedly to be maintained in case there is a run on a bank.
In practice this is maintained to prevent any real competition to large banks from smaller banks.
So there are NO REAL COSTS - just the fictional ramblings of finance directors, based on the even more fictitious nonsense that Banks operate under principles of sound financial governance.

Just utter nonsense both three years ago and thirteen years ago.
Three years ago the Banks were shovelling money at everyone with a piece of land.
Thirteen years ago you couldn't get a loan to finance speculative development.
The first pumped up the Tiger economy after the second held it back unreasonably for years.

The problem was Cowan's lack of foresight and Ministerial ability in dealing with the boom, a failure than you cna be sure had Berti Ahearne's fingerprints all over it.


 no restraint, no regulation
 nothing done to reduce pressure
 the continuance of tax incentives long after they were needed
 the failure to implement even the 40% Capital Gains Tax
 the failure to prevent recycling of profits by developers into buying property pushing the values to unsustainable levels
 That's the danger of letting intelligent people without much common sense run a government.
So much for the "real government" those overpaid, overpensioned hacks in Grade 1 and 1 Civil Servant positions.
Tell the lot of them they have lost their pensions until they find us a way out of the financial black hole we're in - because its the truth!

The investing of profits in property drove prices up astronimically, and together with the easy availability of low interest credit, is I believe what led to private home owners borrowing far more than they could sustain in an even moderate interest level - say 4-5% - with only one job.
There was a mean to be found somewhere, and it was mere hubris to ignore warnings like the value or property here exceeding the property values in places like New York, Paris and Hong Kong, major urban and financial centres.

Now we face more "financial prudence" from the Masters of the World in the Bank for International Settlements in Basle, Switzerland.
They, arguably the architects of the current disaster, now appear to be planning to repeat their "mistake" and raise bank capital lending ratio requirements again.

Someone needs to give these unelected people a good boot in the behind.

ONQ.


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## UFC (23 Sep 2010)

I do not believe the EU will let Ireland default. We have done everything they have asked us to do. If they let us fail it would send the wrong message to other countries in financial difficulties, i.e. it is not advantageous to sell out your citizens to save the bondholders.

But saying all that... I am in the process of opening a bank account in Belgium.


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## Godfather (23 Sep 2010)

UFC said:


> I do not believe the EU will let Ireland default. We have done everything they have asked us to do. If they let us fail it would send the wrong message to other countries in financial difficulties, i.e. it is not advantageous to sell out your citizens to save the bondholders.
> 
> But saying all that... I am in the process of opening a bank account in Belgium.



Which bank pls? Can we all help each other? Tomorrow I'll call the italian banks I'm talking with asking if the italian passport is needed or if irish passport can be accepted.

Pls let's help each other. It looks like we are starting a battle against the time.


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## serotoninsid (23 Sep 2010)

Bugger..i put my few pennies in a 1 year fixed with Anglo 2 months ago on the basis that it looked safe (not anglo - but the guarantees in place).


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## UFC (23 Sep 2010)

Godfather said:


> Which bank pls? Can we all help each other? Tomorrow I'll call the italian banks I'm talking with asking if the italian passport is needed or if irish passport can be accepted.
> 
> Pls let's help each other. It looks like we are starting a battle against the time.


 
http://www.keytradebank.com/en/banking/savings

Also, their presence in Switzerland:

http://www.keytradebank.ch/en/banking/term


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## joe sod (23 Sep 2010)

*what about investments*

what about investing the deposits in an investment fund (obviously it would need to be a good one). surely the government would not be able to confiscate investments. Still i cannot see such a doomsday scenario happening, firstly it would spread around europe , and would not be an isolated irish case, in such a scenario no country would be safe, if a huge currency like the euro came under threat it would have global ramifications, simply put it is not possible to isolate ireland out of the euro because so much of our debts are entangled in europe,


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## kinglynn (24 Sep 2010)

Is Saving Certs and Savings Bonds in An Post safe??


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## jpd (24 Sep 2010)

kinglynn said:


> Is Saving Certs and Savings Bonds in An Post safe??



As safe as all the other debts guaranteed by the Irish State.


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## Lightning (24 Sep 2010)

jpd said:


> As safe as all the other debts guaranteed by the Irish State.



Kinda. 

I would say 
1) Most risky if Ireland defaults - 100% state owned deposits - i.e. Anglo, INBS, An Post etc
2) Slightly less risky - state guaranteed but not 100% owned - i.e. BOI etc


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## Godfather (24 Sep 2010)

Oh dear what a moment... I remember this is my 3rd wave of panic:
1st - NR Ireland
2nd - before the full guarantee of some deposits
3rd (this one) now Ireland having to pay such high interest to borrow money 

I'm praying that this nightmare can end somehow as soon as we've discovered how much the hole in Anglo is going to cost to us


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## TSThomas (24 Sep 2010)

I'm intending to move deposits to non-Irish banks as well in the next month. I say that as someone who was confident of sticking with Northern Rock while others queued along streets to get their money out, and was similarly content to not withdraw from Anglo Irish Bank and Irish Nationwide as they imploded.

I'm not so confident lately though...


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## joe sod (24 Sep 2010)

*excelent article from economist on the euro*

http://www.economist.com/node/17093339

at the end it says that the ECB will have to tolerate higher levels of inflation in order to allow ireland and other countries on the periphery to regain competiveness


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## Godfather (24 Sep 2010)

I like this article as well:
http://www.marketoracle.co.uk/Article22961.html

Expecially the honest words at the end:
However, in Ireland it  would appear an end game is shaping up. There is  a limit to the level of  borrowing the country can run up particularly  with exploding interest costs.  Should the Irish political system  continue to prove itself incapable of  restructuring its bloated public  service expenditure it is inevitable that at  some stage the IMF,  probably through the auspices of the European Central Bank,  will wade  in and directly instruct the Irish Department of Finance to act. From   my point of view the sooner this happens the better because it is only  then  that people will realise that the bottom is in. It is then and  only then that  confidence will be restored to the wonderful Emerald  Isle.


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## Happy Girl (24 Sep 2010)

Godfather said:


> I like this article as well:
> http://www.marketoracle.co.uk/Article22961.html
> 
> Expecially the honest words at the end:
> However, in Ireland it would appear an end game is shaping up. There is a limit to the level of borrowing the country can run up particularly with exploding interest costs. Should the Irish political system continue to prove itself incapable of restructuring its bloated public service expenditure it is inevitable that at some stage the IMF, probably through the auspices of the European Central Bank, will wade in and directly instruct the Irish Department of Finance to act. From my point of view the sooner this happens the better because it is only then that people will realise that the bottom is in. It is then and only then that confidence will be restored to the wonderful Emerald Isle.


 
Excellently put and in wholehearted agreement.


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## Shakespeare (25 Sep 2010)

*Deposit safety*

Hi all
What would your advice be re the following:
I've taken all our life savings and have them ready to lodge to Anglo for 1 year as it has the best rate and "guaranteed" if deposited by September 29th....
I cannot afford to lose any of this money.
Am I mad? We will be wiped out totally if any of this disappears.
Any advice appreciated please. The rates are so poor everywhere that I'm trying to get a rate that at least beats our mortgage rate.
Thanks
S


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## Lightning (25 Sep 2010)

I don't think it would be wise to have 100% of your savings in Anglo. 

Have you read the best buy threads here?


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## Godfather (25 Sep 2010)

Shakespeare said:


> Hi all
> What would your advice be re the following:
> I've taken all our life savings and have them ready to lodge to Anglo for 1 year as it has the best rate and "guaranteed" if deposited by September 29th....
> I cannot afford to lose any of this money.
> ...



I agree with CiaranT, in this uncertainty you need to spread your savings wisely.


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## Shakespeare (25 Sep 2010)

Hi again
Thanks, yeah I know what you mean I'm  just getting a little addled with options, the best buys show Anglo and INBS to be the best rate but similar issues with both.
BOI, AIB, EBS - isn't any guarantee likely to be in trouble if the possible IMF scenario happens.
Currently I only have accounts in UB and BOI but very poor rates.
would PTSB Interest first be safer than Anglo? Are they only "guaranteed" up to Eur100k? Is UB/FA covered  to just Eur100k also?
sorry for all the questions, as I say, I'm getting a little addled and conscious of the 29th of September deadline if I want  term deposit protection (for what it's  worth) - better to be part of this  scheme than not surely.

Any  advice would help.
If it helps at all, there's Eur350k to deposit and I don't know how  best  to split it for max protection while trying to get some return also.
Thanks


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## pascal12 (26 Sep 2010)

If all garantees included in this document below maybe useless 
is there any evidence on a run on the banks yet

http://www.*****************.com/category/elg

I am locked in to a term loan under the ELG scheme with 1 month before mature should I stop it now and spread it around foreign and more secure banks?


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## Godfather (26 Sep 2010)

My God, it looks like there is a run against the time. But would the EU really allow Ireland to go bankrupt? 

PS: still checking if there are any options at italian banks for non-italians


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## gInvestor (26 Sep 2010)

Panic stations !! From what I'm reading it would seem that even if savings are spread and Ire is in a state where IMF needs to come in (and Wall st going against ireland). Are Rabo or Northern Rok safe ? 


Link
http://www.independent.ie/business/irish/wall-street-titans-bet-against-ireland-2353394.html


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## Lightning (26 Sep 2010)

> Are Rabo or Northern Rok safe ?



NR are owned by the AAA UK government. 

Rabo are rated AAA by the credit agencies.


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## onlyonpaper (27 Sep 2010)

Can anyone definitively state that the fact that NR and Rabo are AAA rated make them safe or is it the case that they have Irish operations which are regulated here and consequently these deposits are as exposed as any other Irish bank in the event of IMF intervention/default


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## Greta (29 Sep 2010)

UFC said:


> I do not believe the EU will let Ireland default. We have done everything they have asked us to do. If they let us fail it would send the wrong message to other countries in financial difficulties, i.e. it is not advantageous to sell out your citizens to save the bondholders.
> 
> But saying all that... I am in the process of opening a bank account in Belgium.



How do you go about opening a bank account in Belgium? Do you not need proofs of address in Belgium to do that? Can you do it online/by phone/post or are you travelling to Belgium or using a broker to open an account for you?


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## Chris (30 Sep 2010)

onq said:


> That's the danger of letting intelligent people without much common sense run a government.


That's the danger of letting *anyone* interfere with the economy. No matter how intelligent or how much common sense, the end effect is the same. The economy, which is a collection of billions of human actions cannot be steered by some super human being at the top.
Hayek: "The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design." 



onq said:


> The investing of profits in property drove prices up astronimically, and together with the easy availability of low interest credit, is I believe what led to private home owners borrowing far more than they could sustain in an even moderate interest level - say 4-5% - with only one job.


No, what drove up prices was the availability of too much cheap credit to investors, builders and private individuals. And that was the sole fault of governments and their central banks.



onq said:


> There was a mean to be found somewhere, and it was mere hubris to ignore warnings like the value or property here exceeding the property values in places like New York, Paris and Hong Kong, major urban and financial centres.


Yes, there is always a mean, which is the market clearing price based on supply and demand. Any form of government interference results in that balance being offset one way or another, always resulting in a mess.



onq said:


> Now we face more "financial prudence" from the Masters of the World in the Bank for International Settlements in Basle, Switzerland.
> They, arguably the architects of the current disaster, now appear to be planning to repeat their "mistake" and raise bank capital lending ratio requirements again.


First of all the new capital ratios will not come into affect until 2019. What caused the crisis was too much easy credit, here and all over the world, resulting in asset prices increasing into bubbles. The reason there was so much credit available is because fractional reserve ratios were lowered along with interest rates, and the money supply was increased. This was the cause of the credit bubble. Any steps taken to lower the ability to create as much credit as had been is a very positive move. The only negative about the BIS announcement is that it doesn't go far enough. 
Reserve requirements will be increased from 2% to 4.5%. This still means that banks will be a mere 3% away from effectively being insolvent!



UFC said:


> I do not believe the EU will let Ireland default. We have done everything they have asked us to do. If they let us fail it would send the wrong message to other countries in financial difficulties, i.e. it is not advantageous to sell out your citizens to save the bondholders.


Actually, letting countries default would send the right message. It would send the message that if you mess up your finances you have to pay the price. A default would be very positive for the €.


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## canicemcavoy (30 Sep 2010)

> No, what drove up prices was the availability of too much cheap credit to investors, builders and private individuals. And that was the sole fault of governments and their central banks


 
So artificially increasing the price of credit isn't interfering the economy then?


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## Godfather (30 Sep 2010)

monagt said:


> "*how losses would be shared between depositors, creditors and lenders to the Government itself*



Query: why are not property owners included? Just because we can't get part of the property and have a barbecue with the few bricks we got as taxation? 

So would just people saving for their future having to "forgive" the debtors? 

Maybe I'm missing something. If so, can you pls help me? Otherwise I find this sentence extremely opinionated in order to protect only the writer's interests...


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## Kev (30 Sep 2010)

What happens in Ireland affect the UK as well, according to the news today it says that Ireland is a very importer of goods more than spain.  Also, Ireland has a lots of UK organisation such as M&S and Tecsos and I am sure there are many others as well.  So I think that Ireland will have to go to the EU for a bailout like Greese but not just yet.


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## Commercial (30 Sep 2010)

*What do we do?*

We have our life savings in AIB and BOI.
The AIB funds are fixed in until January and BOI are on demand.

What is the safest route to protect this money?

I have heard of German government bonds.

I have read all of the other posters and I am wondering are we panicking? Will the IMF come in as a worst case scenario and our deposits would be safe?

I have heard we have money to fund the country for a few months yet.

I would love to hear the truth, the whole truth and nothing but the truth. Not just guesswork.
Does anybody know?


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## penguin (30 Sep 2010)

"Does anybody know? "

is that anybody , as in here on this site ?
or anybody  , as in , running the goverment ?

"Not just guesswork"

how can you expect any more than that ?

Nobody on here would be in a position to do other than educated guess work and sometimes uneducated.


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## Peter54 (30 Sep 2010)

Commercial, I second what Penguin has just said.  It's anyone's guess whats going to happen within the coming the months.  If you read between the lines it does not look good.  

It's an uneducated guess from me but I personally think that we will have to be bailed out.  

As far as I've read the money we have to fund the country will run out in June 2011.  Please correct me if I'm wrong.


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## Godfather (30 Sep 2010)

I don't understand if it's the EU+IMF instructing the Government to pull as much as possible until a riot happens and then they'll kick in or if FF is too proud to ask for help... 

Furthermore, the guesses are open... When will the IMF kick in? In my opinion already in 2011, sorry maybe I'm pessimistic but I see weird things happening around...


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