A run on the banks?

ref - gold

JoeBallantin said:

I'm not sure what a gold cert is.. is it an EFT?

Apparently these aren't 100% secure. There might also be a weight discount applied which I don't fully understand.

It's horses for courses perhaps, but I like the BullionVault arrangement, where they are paid to mind my gold, but my gold is my property, even if they go bust, and this arrangement is very secure under UK law. (BullionVault are British).

The EFTs... here I believe that you are only a creditor of the company selling EFTs, they don't do allocated gold I think, so if they go bust you must wait in line for your 50c in the Euro or whatever... allocated gold storage is more secure I think.

There's a huge amount of info on these issues in the BullionVault FAQs

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Hi joeballantin

This is not an EFT as such.The holding in a gold certificate such as the perth mint programme is stored on your behalf and you have the choice of allocated storage where your holding is held seperately within a safety deposit box type of vault, or unallocated where you pay slightly less and its held with the general holding. It is a less bureaucratic and more transparent system. The relative distance away from the european arena and hence a minimal exposure to its vagaries is the other attraction for punters from the EU area.

It is horses for courses as you say but what would happen if your storage company went belly-up in a big way ? would you not have to join the queue to gain possession of your goods and hope that the paper trail supported you ?

westgolf

Given the concerns being shown by many posters around the solvency of the banks and even the State, please have a look at some recent posts on my blog which can be found [broken link removed] for sensible strategies to cope in uncertain times.

Great article Marc! Thank you!

Kev said:

Uk will have to cope with 25% cuts across the board in the couple of weeks time. Also VAT is going up from 17 and half % in January to 20%. House prices are falling daily so it looks like all of the EU has problmes.

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Sorry, Kev, maybe you're trying to reassure yourself that everyone's in the same boat, but it's not the case. Ireland's problems exceed others:

From today's Guardian:

http://www.guardian.co.uk/commentisfree/2010/oct/01/ireland-economy-editorial

From Greece to Japan to the US, countries across the world have been devastated by the banking crisis. But no economy has been wrecked quite so brutally as Ireland's. The erstwhile Celtic Tiger has seen its national income shrink 17% over the past three years – the deepest and swiftest contraction of any western country since the Great Depression. At the height of the long boom from 1990 to 2007, property in Dublin was worth more than in London. Since then, prices have dropped by around 40% – and are still sinking. At this rate, the country will soon hold the dubious honour of hosting the biggest property bubble and bust in modern history. When financiers joked in 2008 that the only difference between bankrupt Iceland and hard-up Ireland was one letter and a few days, they got it wrong – the mess the Emerald Isle is now in is so much worse. [...] Yesterday's bailout will include Anglo Irish, the property developer's favourite bank, as well as Allied Irish and Irish Nationwide – and it is set to raise the budget deficit from around 12% of national income to an astounding 32%.

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Don't forget that right now Iceland can borrow money more cheaply than Ireland - it's seen as a safer bet.

canicemcavoy said:

Don't forget that right now Iceland can borrow money more cheaply than Ireland - it's seen as a safer bet.

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I am shocked! And in a documentary I was reading that people have 2/3 jobs in order to keep paying their mortgage there!

I've just finished moving my savings abroad, I wish you good shelters for your savings as well and that this nightmare could be lighter than we all think. I'm now taking a bit of break from RTE News, Freefall-style documentaries, & also a bit from AAM sorry (but I thank all the people that shared their suggestions on moving money abroad), in other words from the rush of panic that caught me in the last few weeks since Cowen released that horrendous interview...

Before you go....

Before you go....
Well done Godfather. Can you share your solution(s)? Did you manage to open an offshore account? If so can you let us know? Thanks in advance.

Just got word that some banks are reporting a very brisk trade this lunchtime.

Can you share your solution(s)? Did you manage to open an offshore account?

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From earlier postings he is an Italian citizen so can open accounts there. Much safer there than here. Now what did the acronym PIIGS stand for again .......

Maynooth said:

Just got word that some banks are reporting a very brisk trade this lunchtime.

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Read into the BOI, EBS and Ulster deposit rate increases lately. Why are they doing this? Why these banks? The answer is they are not getting more state funds and they are also, at the same time, desperate for more deposits.

There is more than anecdotal evidence that Irish banks are losing deposits heavily right now.

In a realistic view do people actually think a bank will be allowed to fail at this vital time when things do seem to be improving albeit it yesterdays clarify on the banks position going forward?

With Anglo ,AIB, INBS nationalised, BOI seem to be in good shape, EBS looks like it will have a new owner and my feeling is it will be PTSB. With EU heads, IMF Irish Gov all stating that Irelands debt is manageable etc... whats the obsession with moving funds out of irish banks?

I would assume BOI, EBS and Ulster rate increases are largely due to the need to compete with government owned institutions also, like An Post and Anglo Irish. An Post are offering 10% net for 3 years for instance, EBS are offering 9.50% gross... of course they have to increase their rates, no institution can afford to lose deposits

In a realistic view do people actually think a bank will be allowed to fail at this vital time when things do seem to be improving albeit it yesterdays clarify on the banks position going forward?

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In what way are things improving?

It looks like people are starting to not want to even keep deposits in Irish banks. That is not a good sign. If this becomes mainstream then we'll have even more problems.
The bank guarantee is only as good as peoples' perception of it.

umop3p!sdn said:

In what way are things improving?

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I was wondering the same thing. If anything things are getting worse:
The total cost of bailing out banks is now 10 times what it was said it would be. And I still don't believe this figure is correct and rather optimistic.
Unemployment may have stalled but there is still no improvement.
GDP is still going down.
Ever more people are joining the list of people in mortgage arrears.
Ireland is still seen as too expensive by tourists.
Budget deficit is still about 50% of annual outgoings.
Tax increases are on the way which will only exacerbate all of the above.

I see nothing positive on the economic ro political side of things here.

Bobby1 said:

In a realistic view do people actually think a bank will be allowed to fail at this vital time when things do seem to be improving albeit it yesterdays clarify on the banks position going forward?

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Thursday, did not bring final clarity. It was attempt number 4 to bring a line in the sand, there is far worse to come for Irish banking sector.

For INBS, we still do not know what is in the 5.4 billion estimate. Does it include the cost of a wind down and the cost of closing the 48 branches? What will happen to the deposit holders when INBS closes? Do their deposits actually exist beyond 7% capital?

For AIB, we do not know for certain what the final state holding will be in the bank. AIB is only been kept alive by huge ECB 1% repo's. Without ECB support, AIB would collapse. This is not a future for any bank. The EC decision on the future of AIB will be interesting to say the least.

For Anglo, I will only believe the 'final cost' when this basket case bank closes for good. From looking at their balance sheet, in a lot of detail, I believe they are still not been truthful about their non NAMA loan losses. 80% of value is fancifulness.

For BOI, we will see if their 2011 "funding cliff" does to it what the 2010 "funding cliff" did to AIB. If credit/debt markets do not improve, the Irish government could be forced to increase their stake in BOI in late 2011.