Do Savings Certs have the same (non) safety as Irish government bonds?

Marc Point of clarification (not being combatitive), is the first 100K more guaranteed than the rest? Is it funded or is it also merely a government promise like the ELG?

I still think that the availability of selective default to the government greatly changes the picture and that neither the rating of either the bank or the sovereign is very relevant to assessing the safety of deposits. You really have to examine the socio/political dimension rather than the mere national accounts. Of course, into this mix comes thoughts like do depositors with more than 100K have the same implicit political protection as your widow with 50K. It is this latter thought, rather than concerns about ratings, which makes me agree that you should spread it around, though one wonders would Pearse Doherty distinguish between a "fat cat" who had 5 x 100K deposits and one with one 500K deposit.

It is populist to call for burning of bondholders. But deposits seem sacrosanct and as for An Post savings well "hands off" would be the univeral clamour from our elected representatives.

moved from another thread
I don't see any clear evidence there that the Post Ofiice is untouchable. I'm a cynic, and I believe our Gov would wipe out elderly savers, and apologise afterwards. Not even a clear statement by Enda would change my mind.. that's the problem with lying in the past,.. Ernda lied before the election, so now he is forever tainted.. in my view he is untrustable,.. especially on this type of iissue. So no, I don't believe that the Post Office is somehow safe.

I think our politicial system is flawed, as no responsibilty is ever taken by individuals, no one loses their job for lying and incompetence, and people can tell outright lies during electioneering. If policitions were fired for breaking election promies, that would be a huge start,.. although of course then no promises would be made.


This is the contributor from newstalk (most likely)
[broken link removed]

above link said:

Niall Brady, Money Editor with the Sunday Times will be in studio tomorrow morning [Thursday August 4th] on Newstalk Breakfast with Ivan Yates and Chris Donoghue to answer your queries. If you have a question you would like to put to Niall, ...

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He did make an error in my opinion, . .when he said that credit card companies would charge interest for cash withdrawals, EVEN IF the account was in credit.. I think he's wrong on that.

I don't accept it.

I can easily imagine our Gov clouding the issue with technical language, and claiming they had no choice, and refusing to answer straight questions. (Similar to the bank bailout for example, which did happen, for bad reasons, at exceptional speed, behind closed doors, and was then 'irrereversible'). They may have the IMF or the EU announce the PO burning measure.. but however it's done, I can easily see a situation where savers are burned, and our government apologise profusedly. But so what the money would be gone, and you can't eat apologies.

Anyone leaving money on deposit in Ireland is exposing themselves to the way things work here.. which is often dysfunctional, and mostly unfair.

I can easily see a situation where the Gov is on radio saying that on advice from the Attorney General they had to burn all debts equally, .. and well, they're very sorry, but it's now done. I wouldn't trust them at all, and they can hardly complain, they have lied and lied.

There is no perception that our government is genuine and honest, at least not to me. It'd be similar to the RC church saying that they took child abuse seriously.. well, there is no evidence for that, and much evidence to the contrary, so I believe the RC church condones and facilitates child abuse, regardless of what they might say.. their actions speak louder than words. If our government had any courage the Papal Nuncio would be gone, or in prison.. and our embassy to Rome would be recalled, I can't believe it's still there. My point being that our Gov makes strong statements on this issue, but doesn't take any strong action... so it's just words.

Post Office Savers are at risk in my view.

Duke of Marmalade said:

I still think that the availability of selective default to the government greatly changes the picture and that neither the rating of either the bank or the sovereign is very relevant to assessing the safety of deposits.

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OK, so let's assume that the government were forced into default and they decided to try and spare private residents with various types of post office savings and other bonds. Sovereign defaults in the last 20 years suggest a payout of about 30c on the Dollar.
Does anyone have the numbers of how much private Irish resident money is in state issued debt? If this is a small amount then a selective default would be easier to achieve. But if you have following scenario then I think there would be insurmountable difficulty (note I'm just picking numbers for convenience):
Total debt: €100bn
Privately held: €30bn
In this case the state would have to default 100% on all non privately held debt in order to pay out 100% to private citizens.

NTMA State Savings

The term "Post Office Savings" is not accurate as An Post do not retain or manage any Government savings money. The post office is a collection agent of the NTMA (National Treasury Management Agency) in respect of personal savings with the Government. All such money received each day is handed over to the NTMA. This savings money from individuals and families is known as NTMA State Savings, is managed by the NTMA and it forms part of the National or Sovereign Debt of Ireland.

NTMA State Savings are accounted for in the annual accounts of the National Treasury Management Agency (NTMA) and at end 2010 amounted to €12,680 million representing 14% of the National Debt of €93,445 million. See page 10 of the Annual Report 2010 (within the pdf it is page 11 of 123).
Web Link to http://www.ntma.ie/Publications/2011/NTMA_Annual_Report_2010_English.pdf

That page shows the breakdown of the amounts in each of the NTMA State Savings products [ Savings Bonds, Savings Certificates, Instalment Savings, Deposit Accounts (such as the Ordinary Deposit Account and the Deposit Account Plus) National Soldidarity Bond and Prize Bonds ].

Marc

Would it be possible for you to expand on the possible conservative alternatives?