Banking scare threads and the truth.

DeVore · 08-09-2010 12:39PM #1

A few people like to start "scare threads" of the type "My mate works in <insert bank> and he told me to get my money out / everyones taking their money out / the manager told me we will collapse later today" etc.

Arm yourself with the truth:
http://www.moneyguideireland.com/irish-deposits-guarantee-after-september-2010.html

Cliff notes:

Up to 100K in most/all major banks is guaranteed, by the state, indefinitely.

Past 100K its guaranteed to the end of 2010 and will probably be extended.

Our banking sector, like everyone elses, is in rag order but lets not deal in fanciful nonsense. Stick to the facts.

DeV.

kfallon · 08-09-2010 12:45PM

My mate works in a sperm bank (she's a receptionist) and she says to get down there straight away and make a deposit cos they just got in October's edition of "Hairy Gusset" and she reckons the centre 'spread' is well worth a 'pedal' over.....she reckons it's that good it made her come over all lezzie when she saw it!!!

Terry · 08-09-2010 12:47PM

Feck off with your facts, will ye.

Nijmegen · 08-09-2010 12:47PM

Agreed, though I'm not sure anyone 'likes' to do it - depends on what your life savings amounts to, and where it is sitting, I'm not sure people like the idea of a run or similar, government promises or no.

Mr Benevolent · 08-09-2010 12:53PM

DeVore wrote: »

Our banking sector, like everyone elses, is in rag order but lets not deal in fanciful nonsense. Stick to the facts.

DeV.

Worried about your investments eh? Don't blame you really, I saw the deleted thread. Anyway, it's unlikely there'll be any sort of run on Irish banks.

Banned Account · 08-09-2010 12:55PM

I'd like to see a law passed that makes it fair game to shoot and rob anyone who partakes in a run.

Slydice · 08-09-2010 12:55PM

DeVore wrote: »

Arm yourself with the truth:
http://www.moneyguideireland.com/irish-deposits-guarantee-after-september-2010.html

Cliff notes:

Up to 100K in most/all major banks is guaranteed, by the state, indefinitely.

Past 100K its guaranteed to the end of 2010 and will probably be extended.

Excellent, Thanks for the advice Dev.

I'd been a bit worried looking at the 100 page discussion on politics.ie about a run by something to do with the bond market on Ireland itself.

The discussion seems to be something to do with Irelands chances of defaulting on Irelands debt.

So, then, the first question that comes to mind... that you might have an idea on...

If Ireland goes bust and defaults... then our money in Irish Banks still safe? As in... is our money in Irish banks guaranteed safe if Ireland defaults?

Banned Account · 08-09-2010 12:57PM

Slydice wrote: »

Excellent, Thanks for the advice Dev.

I'd been a bit worried looking at the 100 page discussion on politics.ie about a run by something to do with the bond market on Ireland itself.

The discussion seems to be something to do with Irelands chances of defaulting on Irelands debt.

So, then, the first question that comes to mind... that you might have an idea on...

If Ireland goes bust and defaults... then our money in Irish Banks still safe? As in... is our money in Irish banks guaranteed safe if Ireland defaults?

Why would Ireland defaulting on its debt (which won't happen because they'll just head to the stabilisation fund) have anything to do with your deposit account?

DeVore · 08-09-2010 12:59PM

Countries dont go bust. They go to the IMF with cap in hand and get ridden for $20 a go, but they dont go bust as such.

I'm not an expert, but then neither are the other armchair pundits so I figured some hard facts would be handy.

Oh and 100 page threads debating such things are what you get when you dont moderate the loonies.

DeV.

mike65 · 08-09-2010 12:59PM

Don't worry about defaulting, the EU/ECB will simply not allow it to happen for reasons that have nothing to do with Ireland

Sleepy · 08-09-2010 01:00PM

Possibly... If Ireland defaults on it's debts we'll be in trouble as a nation and wouldn't be able to access the level of borrowing required to pay out any of our guarantees should the banks default.

However, Ireland defaulting is extremely unlikely. The ECB have mechanisms in place (or nearly in place) such as the lending granted to Greece earlier this year which roughly mean that if the markets won't lend to us any more (not entirely unthinkable with such a useless government in place), the ECB will act as a lender of last resort as long as we agree to a set list of austerity measures etc.

stovelid · 08-09-2010 01:00PM

I took that thread at face value and now have my life savings down my underpants.

DeVore · 08-09-2010 01:01PM

The bond markets are one of the markets I was talking about before in the previous piece I wrote about it being the wrong time for violent protest. Bonds are like an IOU from a country... China has been buying fracking billions of the US bonds, hence you wont see any stringent criticism of the Chinese by Obama any time soon. They basically own the states at this point.

DeV.

Slydice · 08-09-2010 01:03PM

So like, do you know if we're in danger of defaulting?

I was reading that international websites have us having more than a 25% chance of defaulting (higher than iraq but lower than iceland)?

Plus back to my big worry, if Ireland Defaults and we have to go cap in hand to the imf like you say...

will our money in Irish banks be safe if Ireland defaults and we have to do a IMF/EU/Whatever deal?

Dravokivich · 08-09-2010 01:06PM

DeVore wrote: »

China has been buying fracking billions of the US bonds, hence you wont see any stringent criticism of the Chinese by Obama any time soon. They basically own the states at this point.

DeV.

They're like the Chelsea and Man City of International Politics ey?

Can't beat'em, buy'em!

:pac:

Logical Fallacy · 08-09-2010 01:06PM

Dearest Dev,

please stop damping the flames of ignornace.

Churs.

08-09-2010 01:08PM

DeVore wrote: »

Oh and 100 page threads debating such things are what you get when you dont moderate the loonies.

DeV.

That's a terrible thing to call the boards community

aliens ate my brain

DeVore · 08-09-2010 01:08PM

As for the "useless government"... while I personally agree they are a shower of retarded monkeys, they have done a couple of things right. guaranteeing the banks right off the bat was smart. It really hacked off the Brits because they played the game to the spirit of the law while the irish kinda stole a march on everyone.

We also enacted SOME kind of austerity measures early on... ok they werent exactly hard hitting and they will be worse this time round but thats what the markets want to see, they dont care if you are in trouble, they want to see that you (the country) are going to take some actions to rectify the situation. Greece didnt, Ireland didnt really either but we made lots of noise about doing so and a big deal out of what was done.

Markets operate on the perception of reality, rather then reality itself. Even if they KNOW themselves that that perception is false. Example, using shares:

You offer me a share for 100 euros. I know the company that the share is in, is a dog with fleas, but I also know that the general perception is that its great and the share will sell for 120 euros easily. So, I buy the share (despite my factually accurate knowledge that the company is ****), because I know the perception is that its good, (false).

Yes, it hurts lots of peoples brains.

DeV.

Banned Account · 08-09-2010 01:09PM

Ironically, the States owns China now - they have to keep buying the bonds or they'll devalue their own national reserve.

DeVore · 08-09-2010 01:11PM

Slydice wrote: »

So like, do you know if we're in danger of defaulting?

I was reading that international websites have us having more than a 25% chance of defaulting (higher than iraq but lower than iceland)?

Plus back to my big worry, if Ireland Defaults and we have to go cap in hand to the imf like you say...

will our money in Irish banks be safe if Ireland defaults and we have to do a IMF/EU/Whatever deal?

I'm not an expert but the country would remain a distinct entity with autonomous control so yes, the deposits would be guaranteed imho, but as I said, this is all hypothetical.

Realistically, the worst case is that the IMF come in and carve up the public sector and hike taxes.

DeV.

Slydice · 08-09-2010 01:12PM

DeVore wrote: »

Example, using shares:

You offer me a share for 100 euros. I know the company that the share is in, is a dog with fleas, but I also know that the general perception is that its great and the share will sell for 120 euros easily. So, I buy the share (despite my factually accurate knowledge that the company is ****), because I know the perception is that its good, (false).

Well that does sound reassuring.

but

What happens to our bank accounts if we default though?

As in, what happens if the person knows the company is **** and the perception is bad so the person doesn't buy ... and then... the company reneges on it's money?

I've not seen anyone say that the guarantee means anything if we default or that our money is safe if Ireland defaults

Cheap Thrills! · 08-09-2010 01:15PM

It's at time like this I'm glad I'm a pauper!

Ya can't lose what you haven't got! :pac:

Slydice · 08-09-2010 01:16PM

DeVore wrote: »

I'm not an expert but the country would remain a distinct entity with autonomous control so yes, the deposits would be guaranteed imho, but as I said, this is all hypothetical.

Realistically, the worst case is that the IMF come in and carve up the public sector and hike taxes.

DeV.

Seriously though, I wasn't wondering about the public sector and tax hikes, I can look at greece to see that.

This thread was created because of "banking scare threads" which I presume is due to a thread about a bank runs that I noticed disapprearing earlier. I get that. That's fine.

I don't think people worry as much about tax hikes and public sector pay when talking about banks though

I think they worry about their bank savings.

So that's why I would really like to know what would happen to our bank savings if Ireland defaults.

alwaysadub · 08-09-2010 01:22PM

I'm off to watch It's A Wonderful Life to prepare myself just in case :pac:

Not that i have any money in the bank in the first place..

Hail 2 Da Thief · 08-09-2010 01:25PM

I'm not at all worried about the safety of my savings being stored in an Irish bank!

Because my cash is safely stored in British banks! :P

DeVore · 08-09-2010 01:27PM

Ireland Inc defaulting on its governmental borrowings is HIGHLY UNLIKELY to be allowed to happen. If it did, it would mean the cost of borrowing for the government would rocket and we'd have to "live within our means".

However, the Bank of Ireland / AIB / Etc are not national banks, they are effectively privately owned businesses and as such wouldnt be immediately affected. The knock on effects might not be pleasant (the guarantee would probably be seen as unsustainable for a start) but again, this wouldnt be allowed to crash the banking system.

So, if Ireland Inc defaulted (very unlikely to be allowed happen) there would be no direct effect on banking here. There may be ramifications but everything along this chain is in the "highly unlikely to be allowed happen" category.

DeV.

DeVore · 08-09-2010 01:28PM

Hail 2 Da Thief wrote: »

I'm not at all worried about the safety of my savings being stored in an Irish bank!

Because my cash is safely stored in British banks! :P

We've never had a bank collapse, even Anglo is being bailed out (wrongly imho). In the UK they have had Northern Rock, RBS, Barings etc etc.

Good luck.

DeV.

newman10 · 08-09-2010 01:29PM

Sleepy wrote: »

Possibly... If Ireland defaults on it's debts we'll be in trouble as a nation and wouldn't be able to access the level of borrowing required to pay out any of our guarantees should the banks default.

However, Ireland defaulting is extremely unlikely. The ECB have mechanisms in place (or nearly in place) such as the lending granted to Greece earlier this year which roughly mean that if the markets won't lend to us any more (not entirely unthinkable with such a useless government in place), the ECB will act as a lender of last resort as long as we agree to a set list of austerity measures etc.

Are they not due in the next budget

ANXIOUS · 08-09-2010 01:29PM

How many people and how much would you have to withdraw to get a run on the banks? I reckon if you went into a busy bank in Dublin city center and withdrew €5000 the daily limit, then start screaming why won't you let me withdraw more money. It would get the rest if the people freaked out and they would try withdraw more money.

AlmightyCushion · 08-09-2010 01:33PM

Your money's in Bill's house and Fred's house.

Slydice · 08-09-2010 01:37PM

DeVore wrote: »

everything along this chain is in the "highly unlikely to be allowed happen" category.

hasn't everything that has happened in the last 3 years been like that?

this new set of banking discussion is revolving around Ireland possibly defaulting from what I can tell.

people want to know their savings are safe and with the banking collapses... the government stepped in with the guarantee and so people knew their savings were safe

but now, it's about Ireland Inc Defaulting, so again, people care about their savings... so answering that savings and default question would at least help people feel like they know what is going on with their savings

but I'm not seeing that being answered.

Dravokivich · 08-09-2010 01:38PM

AlmightyCushion wrote: »

Your money's in Bill's house and Fred's house.

Hey Bill, what are you doing with MY MONEY!

DeVore · 08-09-2010 01:43PM

Slydice, before they were saying "highly unlikely to happen". I used very specific language there as you can see

the phrase "too big to fail" doesnt just apply to banks.

DeV.

Mrmoe · 08-09-2010 01:44PM

Do people not see that such logic and sense are destroying our native tinfoil hat industry. Aughinish Alumina is one of the most importsnt industries here contributing millions to the economy. Imagine if we all stop wearing tinfoil hats all these jobs will go not to mention the knock on effect of losing service jobs such as tin foil hat insurance and tinfoil hat repair.:pac:

irishconvert · 08-09-2010 01:46PM

DeVore wrote: »

Up to 100K in most/all major banks is guaranteed, by the state, indefinitely..

What if the state goes bankrupt? David McWilliams seems to think it will.

Slydice · 08-09-2010 01:48PM

DeVore wrote: »

the phrase "too big to fail" doesnt just apply to banks.

I know, and I presume that is why some discussions I have been reading have been saying that the ECB is now buying Irish bonds from something called the secondary market (as in... I think that means not Ireland or the banks Ireland uses to sell it's bonds)

yet at the same time, our yield is still going up... this is what has me confused

woops, I didn't mean to go off topic for yet another time

Do you know if our savings are safe if Ireland Defaults or Not?

Gummy Panda · 08-09-2010 01:49PM

Slydice wrote: »

I know, and I presume that is why some discussions I have been reading have been saying that the ECB is now buying Irish bonds from something called the secondary market (as in... I think that means not Ireland or the banks Ireland uses to sell it's bonds)

yet at the same time, our yield is still going up... this is what has me confused

woops, I didn't mean to go off topic for yet another time

Do you know if our savings are safe if Ireland Defaults or Not?

Our yields went down as soon as people thought the ECB were buying bonds. They dropped .15

DeVore · 08-09-2010 01:50PM

Slyd, I have tried to answer that question one page back... but you are asking a hypothetical on hypothetical question. I'm also not qualified to answer it any better then to say "nah, I doubt there would be that sort of fall out".

What this thread is about (and we've drifted off topic) is that someone "social arsonists" find it amusing to start threads like as described in my first post.

All I'm doing here is pointing out that there are strong guarantees in place and there are clear facts people are wilfully ignoring in their histrionics.

DeV.

Slydice · 08-09-2010 01:57PM

I get ya. It's just fairly scarey in how it's operating.

We're relying on a guarantee from a bunch of lads who got us here in the first place.

We know the guarantee is a lie because Ireland can't afford to pay it off if the **** hits the fan

The same lines are being used now as before... highly unlikely, soft landing, turned a corner, stop talking us down and go commit suicide, highly unlike to happen etc...

when in fact

Nobody seems to have a ****ing clue what's going on or what will happen.

The last people who listened to that have seen a bunch of Irish drift into negative equity and unemployment.

I myself have (small) savings (as you might have guessed) and would like a clue this time.

R0ot · 08-09-2010 02:08PM

DeV strikes your banking hysteria posting wrecking for "lol pwnd" damage!

:pac:

MrDarcy · 08-09-2010 02:14PM

Slydice wrote: »

hasn't everything that has happened in the last 3 years been like that?

this new set of banking discussion is revolving around Ireland possibly defaulting from what I can tell.

people want to know their savings are safe and with the banking collapses... the government stepped in with the guarantee and so people knew their savings were safe

but now, it's about Ireland Inc Defaulting, so again, people care about their savings... so answering that savings and default question would at least help people feel like they know what is going on with their savings

but I'm not seeing that being answered.

The natural question to ask if someone offers you a guarantee, is: "what are you guaranteeing me with???"

OK, the state are "guaranteeing" depositors and bondholders. But with what??? With cash 300 billlion Euro of cash??? Nope. With 300 billion Euro of borrowed money??? Nope. This is what the markets are seeing, it's all very well to say, "relax it's guaranteed, we are guaranteeing all these depositors and bondholders", when the reality is that guarantee's have to be credibly backed up, or they fail to be a guarantee. It's like a homeless man going guarantor on a mortgage for you.

It really is a throwback to the Celtic Tger when we can walk around with our big swinging dicks shouting about our big guarantee, when in reality if it was ever to be called in, it wouldn't be a guarantee, it would be an embarrassing joke.

Banned Account · 08-09-2010 02:41PM

Slydice wrote: »

I get ya. It's just fairly scarey in how it's operating.

We're relying on a guarantee from a bunch of lads who got us here in the first place.

We know the guarantee is a lie because Ireland can't afford to pay it off if the **** hits the fan

The same lines are being used now as before... highly unlikely, soft landing, turned a corner, stop talking us down and go commit suicide, highly unlike to happen etc...

when in fact

Nobody seems to have a ****ing clue what's going on or what will happen.

The last people who listened to that have seen a bunch of Irish drift into negative equity and unemployment.

I myself have (small) savings (as you might have guessed) and would like a clue this time.

If all the banks fail and the Irish Government goes bankrupt and cannot cover the deposit guarantee then your money will be gone if you have not withdrawn it.

If that happens you will also be homeless, have no electricity and be starving very soon afterwards. If you are not gang raped by roving delinquent skanger gangs you will die of disease or malnutrition.

So there you have it.

Hope you're happy you pushed me to it now.

R P McMurphy · 08-09-2010 03:00PM

As I see it the difficulty down the line for Ireland could be an attack on the corporate tax rate. If we go into a Greek bailout situation, we will be expected to offer up some things in return. Austerity measures being one but more importantly for the big EU powerhouses could be their pet hate.

I don't think we would be allowed to default, not out of any love for us but the fact that european (mainly German) banks are owed billions by their rogue counterparts in Ireland. They lent recklessly to reckless banks and therefore if we default they are in big trouble as well

Blowfish · 08-09-2010 03:25PM

I'm no economist, but I don't see what the whole fuss is about the Irish deposit guarantee is. It seems pretty irrelevant considering deposits of up to 100k are guaranteed by the EU.

DeVore · 08-09-2010 03:27PM

Were guaranteed by the trillion euros Merkel has made available to governments. That was a clever move by a politician that has done more for us than any of her Irish counterparts. I said it would quell investor speculation and it did.

DeV.

bnt · 08-09-2010 03:39PM

If you want the exact details on the govt. bank guarantee scheme, get the PDF document on this page. It includes the following:

Under the Scheme, the Minister for Finance guarantees under the laws of Ireland certain types of liabilities (“covered liabilities”) of certain participating named institutions (“covered institutions”) for the period 30 September 2008 to 29 September 2010 inclusive. A list of covered institutions as at the date of these FAQs is set out under Q 11 below.
If a covered institution defaults in respect of a covered liability, the Minister of Finance will pay to the creditor, on demand, an amount equal to the unpaid covered liabilities.
...
What is a “covered liability”?
Covered liabilities are listed in the Scheme as:
(a) all retail and corporate deposits (to the extent not covered by existing deposit protection schemes in Ireland or any other jurisdiction);
...
What is a “deposit” for the purposes of the Scheme?
For the purposes of the Scheme, a deposit includes any credit balance with a covered institution that results from funds left in any account or normal banking transactions and which the credit institution is obliged to repay, and any debt evidenced by a certificate issued by a credit institution, and includes money in share accounts with building societies.
Therefore, cash deposits (fixed rate and tracker) and certificates of deposit are both covered by the guarantee.
...

The document says that the current scheme expires at the end of this month, but that's out of date: it's been extended to the end of the year. Note also:

The Minister reiterated that this announcement does not affect retail deposits of up to €100,000 as these deposits continue to be guaranteed under the ordinary Deposit Guarantee Scheme and that Scheme is not time limited.

So there's no reason for a bank run. Deposit Guarantees schemes have been set up specifically to prevent this. There was a partial bank run in Greece earlier this year: not out of fear that the banks would fail, but that Greece might be kicked out of the Eurozone, they'd go back to the Drachma, and their deposits would be decimated by inflation. So lots of Euros left Greece for Italy etc. :eek:

Blowfish · 08-09-2010 03:40PM

As a side note though, personally I'll be moving my savings away from Irish banks, guarantee or no guarantee. I'd rather give a solvent bank the use of my money rather than one which has proven to be, quite frankly, incompetent.

SeaFields · 08-09-2010 03:40PM

Matt Cooper show now is dedicated to the developments on Anglo today. He has some good analysts on at the mo - shane ross, brian lucey. Prob get a better idea on Irish banking from this show than anywhere else.**

** excluding this thread of course :cool:

dr.bollocko · 08-09-2010 04:03PM

Stickied. Lets try and combat misinformation for a changewhile.

R0ot · 08-09-2010 04:05PM

dr.bollocko wrote: »

Stickied. Lets try and combat misinformation for a changewhile.

This is not in the spirit of AH,

TO FEEDBACK! :pac:

AckwelFoley · 08-09-2010 04:26PM

Yes, this thread is not welcomed in AH.

It contravenes the bull**** and rabble rabble code of pitchforkyness

Its clear, tom must have taken a bribe from the government.

Banking scare threads and the truth.

Comments