Inevitable Crash

4068ac1elhodqr

Even shorter: 中国 (or 中國).

Postit

Zenify wrote: »

This isn't a post where I'm telling people something is going to happen - just want some feedback on my thoughts. I'm no expert but there's a sense in my head that something isn't right.

I never expected the economy (irish and world) to take off again in the last few years and it doesn't feel "real" to me. The growth all has some sort of a fake feeling to it. Nobody is explaining where this new wealth is coming from.

Central banks have low interest rates and are in essence printing money with quntative easing. This means that the pubic are spening borrowed money and this in turn is powering growth, creating more jobs thus further increasing spending. Eventually the top of the pyramid will stop spending money due to amount of dept and the whole thing will collapse.

I'm only in my 20s so haven't been around that long to experience other times if they felt "real" or "fake"....

Thoughts?

Hey. Sounds like you’re really thinking about this. However, from your post I’m guessing that you haven’t much of a background in academic economics? If so, I highly recommend that you get a good grounding in basic economics. It will serve you well, and give you a certain degree of clarity in this area.

I’d recommend a book called ‘Economics: The Users Guide’ by Ha-Joon Chang. It’s pretty accessible.

Postit

JonDoe wrote: »

Think it was 2014 the bail in doctrine was finally pushed into law amongst G20 nations, no longer a depositor but a creditor to the banks when you lodge your hard earned cash.

Oh wow. This really is quite concerning. If you don’t mind, can you cite a link to this legislation?

JonDoe

Postit wrote: »

Oh wow. This really is quite concerning. If you don’t mind, can you cite a link to this legislation?

I think you should go to your bank and get this in writing, don't take my word for it go to your own bank and get someone to write down that the money is still yours and get them to sign it. Don't take my word for it.

JonDoe

Postit wrote: »

Hey. Sounds like you’re really thinking about this. However, from your post I’m guessing that you haven’t much of a background in academic economics? If so, I highly recommend that you get a good grounding in basic economics. It will serve you well, and give you a certain degree of clarity in this area.

I’d recommend a book called ‘Economics: The Users Guide’ by Ha-Joon Chang. It’s pretty accessible.

Can you tell me what is money? Where does it come from?

Bubbaclaus

JonDoe wrote: »

I think you should go to your bank and get this in writing, don't take my word for it go to your own bank and get someone to write down that the money is still yours and get them to sign it. Don't take my word for it.

You should stop spreading hysterical ****e

JonDoe

https://www.globalresearch.ca/g20-governments-all-agreed-to-cyprus-style-theft-of-bank-deposits-in-2010/5335567?utm_campaign=magnet&utm_source=article_page&utm_medium=related_articles

Can't find the exact document right now that states "we are going to steal your savings" but here's an article that points in that direction. I think if you want 100% clarification you should go to your bank and get an agreement in writing that they will not take your savings.

Postit

JonDoe wrote: »

I think you should go to your bank and get this in writing, don't take my word for it go to your own bank and get someone to write down that the money is still yours and get them to sign it. Don't take my word for it.

Good advice, thanks. I’ll definitely do that. However in the meantime, your exact words were “Think it was 2014 the bail in doctrine was finally pushed into law amongst G20 nations, no longer a depositor but a creditor to the banks when you lodge your hard earned cash.”

I’m merely asking you to cite the legislation you maintain is now law?

JonDoe

Postit wrote: »

Good advice, thanks. I’ll definitely do that. However in the meantime, your exact words were “Think it was 2014 the bail in doctrine was finally pushed into law amongst G20 nations, no longer a depositor but a creditor to the banks when you lodge your hard earned cash.”

I’m merely asking you to cite the legislation you maintain is now law?

Hey postit I don't have to answer any more of your questioning, who do you think you are?
What is Money? Where does it come from? Why is there more money now than there ever was before? Who gets to create it? Who gets it first? What do they do with it?

JonDoe

https://www.bis.org/review/r131001b.pdf

By redistributing the risk between tax-payers, depositors and debt holders, bail-in rules can
reduce the overall risk in the system.

BIS 2013 review, to be implemented no later than Jan 1st 2014 G20 nations

The legislation is out there somewhere but I'm not ****d digging it out and I don't do legalese, banks do.

caviardreams

Postit wrote: »

Oh wow. This really is quite concerning. If you don’t mind, can you cite a link to this legislation?

There is a 100,000 central bank guarantee for deposits. Above this, your money is not guaranteed should a bank go bust etc. However, up to 100,000 there is no issue with deposits.

Sarn

Customer deposits of up to €100k are guaranteed. That is further supported by the document you linked to.

Postit

JonDoe wrote: »

Hey postit I don't have to answer any more of your questioning, who do you think you are?
What is Money? Where does it come from? Why is there more money now than there ever was before? Who gets to create it? Who gets it first? What do they do with it?

Yeah, I hear ya. What is money? So many questions.

However, your exact words were “Think it was 2014 the bail in doctrine was finally pushed into law amongst G20 nations, no longer a depositor but a creditor to the banks when you lodge your hard earned cash.”

I’m merely asking you to cite the legislation you maintain is now law?

kaymin

JonDoe wrote: »

https://www.globalresearch.ca/g20-governments-all-agreed-to-cyprus-style-theft-of-bank-deposits-in-2010/5335567?utm_campaign=magnet&utm_source=article_page&utm_medium=related_articles

Can't find the exact document right now that states "we are going to steal your savings" but here's an article that points in that direction. I think if you want 100% clarification you should go to your bank and get an agreement in writing that they will not take your savings.

It was always the case that if a bank goes under bondholders / depositors become creditors that ultimately get what's left from the liquidation of the banks assets. Governments took it upon themselves to step in in the last crash - there was no legal obligation to do so though.

In any case, depost holders still benefit from the 100k government deposit guarantee regardless of whether the bank has sufficient funds to pay it.

Shai

from the linked document

And since bail-in rules have confirmed that insured depositors are protected by deposit guarantee schemes, i.e. ultimately by the taxpayer, the banking supervisor can be represented as the public authority to whom insured depositors delegate the monitoring of bank behaviour.

JonDoe

Are you still classed as a depositor with your bank? What does your account say you are?

Shai

also, the legislation: https://www.centralbank.ie/regulation/how-we-regulate/resolution-framework/legislation

Shai

JonDoe wrote: »

Are you still classed as a depositor with your bank? What does your account say you are?

it says I'm awesome. Thanks for asking. Probably because I don't type things like

JonDoe wrote:

Think I hit a nerve. Go ahead if you can prove my "Dangerous" thoughts incorrect, come up with the necessary documentation.

Bubbaclaus

JohnDoe sitting in the corner in a tinfoil hat, yet can't even show us the legislative source of his paranoia. It would be funny if it wasn't so worrying.

Suppose chemtrails are a thing also.

JonDoe

Bubbaclaus wrote: »

JohnDoe sitting in the corner in a tinfoil hat, yet can't even show us the legislative source of his paranoia. It would be funny if it wasn't so worrying.

Suppose chemtrails are a thing also.

Chemtrails you've been ingesting too many of them. I do occasionally look up in the sky and think "what lovely patterns" and "don't they do flight paths any more".
As for alluding to my mental state , you can just go and fuc* yourself in that corner your in wearing whatever gets you off.

Well go leave your money in the Bank, I'll pass you whistling when you're queuing for your €60 per day from an empty ATM, just like the "lazy" Greeks (no offence to Greek people, it was a nice summer and no body mugged me).
Why do ordinary Greek "depositors" get treated this way, it's their money isn't it, they have the same banking regulations, why are they limited in cash withdrawals? I know so many questions.

JonDoe

Shai wrote: »

it says I'm awesome. Thanks for asking. Probably because I don't type things like

Show me where it says your awesome

Bubbaclaus

JonDoe wrote: »

Chemtrails you've been ingesting too many of them. I do occasionally look up in the sky and think "what lovely patterns" and "don't they do flight paths any more".
As for alluding to my mental state , you can just go and fuc* yourself in that corner your in wearing whatever gets you off.

Well go leave your money in the Bank, I'll pass you whistling when you're queuing for your €60 per day from an empty ATM, just like the "lazy" Greeks (no offence to Greek people, it was a nice summer and no body mugged me).
Why do ordinary Greek "depositors" get treated this way, it's their money isn't it, they have the same banking regulations, why are they limited in cash withdrawals? I know so many questions.

I hope you don't actually say this crazy stuff to people in real life.

As for your last paragraph, maybe you should watch It's A Wonderful Life. Great xmas film.

Jim2007

JonDoe wrote: »

Hey postit I don't have to answer any more of your questioning, who do you think you are?

You are not able to answer the questions, anyone looking at your post history would know that, really what was he thinking!

You are just mindless repeating the same old nonsense that I have heard for the past 35+ years. You have not even added a single new thought or perspective to it. But then I would not expect you to, your role is to just repeat what you were told.

So best put you on ignore as any expectation of a discussion is not there.

crusier

It's coming and it's going to hit hard, get yourself sorted while you can. Brexit and trump are going to crash world economies in the next 12 months IMO. I predicted the last one for the record, we forget too easily.

JonDoe

Jim2007 wrote: »

You are not able to answer the questions, anyone looking at your post history would know that, really what was he thinking!

You are just mindless repeating the same old nonsense that I have heard for the past 35+ years. You have not even added a single new thought or perspective to it. But then I would not expect you to, your role is to just repeat what you were told.

So best put you on ignore as any expectation of a discussion is not there.

How about I just never show up at one of your Dinner parties, I'm sure there' scintillating affairs full of sage commentary (35+ years). your location status says Switzerland. Are you in the Cuckoo Clock Business?
I've really inspired a few here to come out of the shadows ans spew vitriol on my views. It's only reinforced my convictions, in fact I think I'll go and buy some hmmm. Silver today it is, yes silver it's more substantial and undervalued.
https://www.youtube.com/watch?v=TGwZVGKG30s

https://www.youtube.com/watch?v=9gPV9Tu0D-E

dubrov

In fairness to Jonjoe, the Cyprus experience proves that governments will make up the rules to suit as they go along.

I'd be fairly confident that deposits (below 100k) would be raided if governments felt there was a need to do so.

The only place safe for assets in a crash is somewhere outside of government reach

Shai

No deposits below 100k were touched by the Cypriotic government.

caviardreams

dubrov wrote: »

In fairness to Jonjoe, the Cyprus experience proves that governments will make up the rules to suit as they go along.

I'd be fairly confident that deposits (below 100k) would be raided if governments felt there was a need to do so.

The only place safe for assets in a crash is somewhere outside of government reach

The deposit guarantee scheme is backed/governed by the ECB in terms of minimum standards (and locally the Irish Central bank) however if I am not mistaken, so the Irish government can't just raid it - it would be a big deal
https://www.ecb.europa.eu/explainers/tell-me-more/html/deposit_guarantee.en.html

JonDoe

That BIS review document was a framework for each individual government to introduce legislation. I can't find the legislation Ireland enacted so I can't point to it's content. The treatment of small business accounts and natural persons is a crime though. How could you have a functioning payroll account under such a bail in doctrine.
Think under 100k Cypriots were affected, the really big guys, the Russian Oil and Gas guys just turned up at the London branches and were made whole. Think there was an element of "we know where you live " pressure applied.

Phoebas

dubrov wrote: »

In fairness to Jonjoe ...

In fairness to everyone else following this thread, Jonjoe has made a very specific claim:

"the bail in doctrine was finally pushed into law amongst G20 nations"

He's just being asked to provide the details of this law. That shouldn't be too difficult - unless he's just making stuff up.
And if he's just making stuff up, why should anyone be 'fair' to a scaremonger?

caviardreams

JonDoe wrote: »

.
Think under 100k Cypriots were affected, the really big guys, the Russian Oil and Gas guys just turned up at the London branches and were made whole. Think there was an element of "we know where you live " pressure applied.

Think? Really?

Do you have any evidence of this?
From my reading it appears there were only "haircuts" above the 100k threshold, which in fairness is very transparent and well known at this stage.

lawred2

BrokenArrows wrote: »

Yes it much more responsible. But that isn't that much saying much comparing to what it was before the last crash which was "hey take our money".

If the price of any house is significantly above its actual value and they are still giving mortgages then it's irresponsible.

Actual value!!?

dubrov

Phoebas wrote: »

In fairness to everyone else following this thread, Jonjoe has made a very specific claim:

"the bail in doctrine was finally pushed into law amongst G20 nations"

He's just being asked to provide the details of this law. That shouldn't be too difficult - unless he's just making stuff up.
And if he's just making stuff up, why should anyone be 'fair' to a scaremonger?

My point is that although JonJoe is not correct, there is some truth in his statement. The G20 agreed to legislate for bail-ins including depositor accounts and many countries have already done so.

Before Cyprus, depositor accounts were previously seen as sacred but that has all changed. Of course there is a deposit guarantee of 100k but history tells us that the rules tend to be rewritten in times of crisis.

I still don't think deposits will be touched as they are a core foundation for trust in the monetary system. Messing with that could have unexpected effects.

Postit

JonDoe wrote: »

That BIS review document was a framework for each individual government to introduce legislation. I can't find the legislation Ireland enacted so I can't point to it's content.

Just to save you some time, Ireland isn’t a G20 nation so that could be why you can’t find it in Irish legislation?

JonDoe wrote: »

Think it was 2014 the bail in doctrine was finally pushed into law amongst G20 nations, no longer a depositor but a creditor to the banks when you lodge your hard earned cash.

dubrov wrote: »

My point is that although JonJoe is not correct, there is some truth in his statement. The G20 agreed to legislate for bail-ins including depositor accounts and many countries have already done so.

I’m really learning so much in this discussion that I wasn’t previously aware of (more fool me eh?). I’ve been so naive. Such excellent commentary and thoughtful empirically produced insight into financial economics. Top notch stuff indeed.

However, at the risk of interrupting the discussion unnecessarily again (I hope you’ll forgive me for asking for the third time). Can you provide a link to the specific legislation you are claiming has been enacted in twenty countries?

dubrov

See Article 55 of Directive 2014/59/EU for a start.

I'd provide more information but can't be bothered with the sanctimony on this thread

Postit

dubrov wrote: »

See Article 55 of Directive 2014/59/EU for a start.

I'd provide more information but can't be bothered with the sanctimony on this thread

Great stuff, thanks. However, you appear to be confusing EU directives with actual legislation. Directives are merely broad instructions for each nation. They allow member states a certain amount of leeway as to the exact rules to be adopted into legislation.

The claim from JohnDoe (and backed up by you) specifically says “pushed into law amongst G20 nations”:

JonDoe wrote: »

Think it was 2014 the bail in doctrine was finally pushed into law amongst G20 nations, no longer a depositor but a creditor to the banks when you lodge your hard earned cash.

Is it so unreasonable to ask for proof of this claim?

dubrov

Postit wrote:

Great stuff, thanks. However, you appear to be confusing EU directives with actual legislation. Directives are merely broad instructions for each nation. They allow member states a certain amount of leeway as to the exact rules to be adopted into legislation.

I didn't confuse anything. You can do your own research into what countries have already enacted legislation.

I also never agreed with Jonjoe' s claim

Postit

dubrov wrote: »

I also never agreed with Jonjoe' s claim

Yes you did:

dubrov wrote: »

The G20 agreed to legislate for bail-ins including depositor accounts and many countries have already done so.

dubrov

Postit wrote: »

Yes you did:

The subtle difference appears to be lost on you.

Anyway, apologies to the OP for derailing this thread.
I am out.

Postit

dubrov wrote: »

I am out.

Scaremongers are dangerous folks. False claims purported as facts should always be rigorously challenged and exposed for what they are, lies and misinformation.

Amirani

The BRRD (Bank Recovery and Resolution Directive) is the applicable directive that has been implemented into law. Various countries have enacted slightly different pieces of legislation, but the main difference between these is the rankings of senior bondholders and whether or not bank holding companies are required in the jurisdiction in order to absorb losses.

Basically, the core tenets of the legislation are:
- Differentiation is now provided between senior bondholders and ordinary depositors. Previously these were ranked pari-passu in most countries (hence Ireland could not legally impose losses on holders of senior bank bonds without also hitting depositors). Now, deposits receive preference across jurisdictions versus most senior debt.
- Deposits are guaranteed up to €100k.
- Banks are required to hold additional levels of loss absorbing capital. Particularly CET1 capital, but also additional tier 1 and also tier 2 loss-absorbing capital. As mentioned previously, there's an additional tier of either holding company issuances or special sub-senior capital that will also absorb losses ahead of deposits.

BRRD really does strengthen deposit protection and makes banks in general much more stable. A criticism often is that this stability means that banks can't really act counter-cyclically and may not be able to provide liquidity to the wider economy in times of stress.

With reference to this discussion though; Johnjoe is talking complete nonsense. Depositors have far more protection now than before BRRD. Firstly the 100k explicit guarantee, and secondly, all the additional layers of loss-absorbing capital that will be burned before deposits. He made 1 semi-correct point in that derivatives will be protected ahead of deposits - but this is only in the case of derivatives contracts that have a valid credit support annex and ISDA. But this isn't new, and only applies to netted derivatives. Daily collateral rules mean that there won't be extremely large outstanding margins on these anyway.

s7ryf3925pivug

How do the following compare in terms of security:
Government bonds
Pension fund
Deposit account in a bank
Deposut account in a credit union

At my age (40 next year) it seems sensible to liquidise deposits to facilitate directing the maximum tax-free portion of my earnings into a pension fund (once mortgage is paid off). Avoid a huge amount of income tax that way. Any flaw in that plan?

s7ryf3925pivug

I was interested to realise that the predominant economic system has only been around for a few decades. Before that the state controlled aspects of the economy that are now left to banks and the market. For example interest rates and the issue of currency used to be state-controlled.

The control of large businesses has also changed. Instead of captains of industry you have stock market tycoons. One effect of this is that unprofitable parts of businesses are readily liquidated now. This has not been shown to improve productivity (as it was expected to) and has the effect of job losses and the destruction of means of production.

This means that the current economic system - where businesses and markets have most of the control - is relatively unproven. A massive crash seems more plausible when considered in that context - I have no real idea if one is looming, but I wouldn't dismiss the notion without trying to gain insight into the concerns.

NSAman

Louisa Purring Cuckoo wrote: »

How do the following compare in terms of security:
Government bonds
Pension fund
Deposit account in a bank
Deposut account in a credit union

At my age (40 next year) it seems sensible to liquidise deposits to facilitate directing the maximum tax-free portion of my earnings into a pension fund (once mortgage is paid off). Avoid a huge amount of income tax that way. Any flaw in that plan?

As I said pervious I am no economic expert, the one flaw in your plan from my perspective is the pension fund.

While we all want a nice return from pensions, and the tax advantages (lesser now) I am skeptical of them personally. Open to abuse and mismanagement and many dont perform well... but that is a personal belief.. I commend you for being so forward looking.

Jim2007

JonDoe wrote: »

How about I just never show up at one of your Dinner parties, I'm sure there' scintillating affairs full of sage commentary (35+ years). your location status says Switzerland. Are you in the Cuckoo Clock Business?
I've really inspired a few here to come out of the shadows ans spew vitriol on my views. It's only reinforced my convictions, in fact I think I'll go and buy some hmmm. Silver today it is, yes silver it's more substantial and undervalued.
https://www.youtube.com/watch?v=TGwZVGKG30s

https://www.youtube.com/watch?v=9gPV9Tu0D-E

Like I said unable to answer the questions asked.

Cute Hoor

NSAman wrote: »

and the tax advantages (lesser now)

Why are the tax advantages lesser now - income tax relief is still available at the higher rate of income tax (currently 40%).

NSAman wrote: »

Open to abuse and mismanagement and many dont perform well.

Of course everything is open to abuse and mismanagement, but all (I presume?) pension funds are managed by professional fund managers whose job it is to get a reasonable return on the funds that your pension is invested in. If they don't deliver then their fund and career are both at risk. I might like to think I'd be better than any of these fund managers, but of course nothing could be further from the truth, I have neither the expertise nor time to compete with these guys. Will funds perform poorly from time to time, of course they will, funds are reflective of the way that particular asset class is performing at any given time.

Many don't perform well - at particular points. Pension funds took a hammering in the recession, losing something like 30% of their value, but they weren't unique, many had their wealth more than wiped out.

Investing in a pension from an early age, availing of the tax advantage, hoping that your fund manager (could be yourself) will average a reasonable annual return (some will be bumper years, some negative), is an absolute no-brainer in my opinion.

The following is an actual example of how a pension pot has performed.
€100k (nett) invested between 2003 and 2010 (some good and some bad years in that period.
Pension payout to date €94,851
Current pension pot €231,663 (after one of the worst performing years for many asset classes, particularly stocks)

I would hope though that somebody wouldn't be basing pension decisions on casual generalised comments (from me or anybody else) on an internet forum.

s7ryf3925pivug

Cute Hoor wrote: »

Why are the tax advantages lesser now - income tax relief is still available at the higher rate of income tax (currently 40%).




Of course everything is open to abuse and mismanagement, but all (I presume?) pension funds are managed by professional fund managers whose job it is to get a reasonable return on the funds that your pension is invested in. If they don't deliver then their fund and career are both at risk. I might like to think I'd be better than any of these fund managers, but of course nothing could be further from the truth, I have neither the expertise nor time to compete with these guys. Will funds perform poorly from time to time, of course they will, funds are reflective of the way that particular asset class is performing at any given time.

Many don't perform well - at particular points. Pension funds took a hammering in the recession, losing something like 30% of their value, but they weren't unique, many had their wealth more than wiped out.

Investing in a pension from an early age, availing of the tax advantage, hoping that your fund manager (could be yourself) will average a reasonable annual return (some will be bumper years, some negative), is an absolute no-brainer in my opinion.

The following is an actual example of how a pension pot has performed.
€100k (nett) invested between 2003 and 2010 (some good and some bad years in that period.
Pension payout to date €94,851
Current pension pot €231,663 (after one of the worst performing years for many asset classes, particularly stocks)

I would hope though that somebody wouldn't be basing pension decisions on casual generalised comments (from me or anybody else) on an internet forum.

More a sanity check than a basis. Been planning it for a while. "Inevitable crash" made me ask the question.

I remember reading about the pending burst of the property bubble on this site and deciding not to buy a house at the time, after researching... So there can be some good info here.

NSAman

Cute Hoor wrote: »

I would hope though that somebody wouldn't be basing pension decisions on casual generalised comments (from me or anybody else) on an internet forum.

Absolutely not....anyone would want to be an idiot to take such advice.

I am talking about me personally as outlined in my post. Nothing is without risk, it is after all the future we are talking about. Pensions for me are a small amount of my future planning, of course I could be wrong. I am no financial genius. I personally, do not trust pension funds. I have a diversity of income for retirement. Pension, property, business and other assets.

Planning early in life is essential (if you can afford it) even small investments can grow.

soirish

ArnieSilvia wrote: »

My biggest worry is that I have cash in the banks that I don't trust at all (BOI) and unfortunately Santander bought the bank I had my account in in Poland.
I think that the only thing I could do is to spread the risk, maybe keep money in a basket of different currencies as well.
So yeah, it is too scary to invest anywhere but to keep cash in banks is even more scary.

I'd suggest to keep some euros in a German bank account.

Andycap8

Lots of references to the depositor guarantee scheme.

Sounds great but when you think about it how does it work. There's no secret fund somewhere with cash sitting to pay back depositors if Banks go bump in the night. So where's the money to come from if it does exist currently?
So who's the backstop. It's administered by the Central Bank of Ireland but they're an ECB entity. They collect a levy from each of the banks but they aren't actually liable for the final bill.

- that levy is tiny
- there was €98bn in Irish deposits covered at Y/E 2017
- the target balance for the fund is 0.8% (80bps) of total covered deposits by 2024 (so less than €1bn by 2024 versus €98bn in deposits)
- If the Central Bank has to refund deposits in excess of the current fund balance then the Exchequer has to fund it.

So, do you honestly think the Irish state could bail out the depositors in the Irish banks within 2 weeks? Nope.

And the issue is timing. The scheme works to refund depositors within a few weeks, then complete an ordinary wind-down of the institution. Could the Irish govt raise 10's of billions in short notice? At a time when one or more of its major banks are going bust? I doubt it.