Protecting Savings

tails_naf

I just want to say upfront this it a totally serious question, though perhaps it might seem I'm being a chicken little here. Morgan Kelly's article and track record of being right scared the bejesus out of me.

My father has his life savings in various accounts in BOI and AIB, etc. Its not huge money, but is a nestegg.

My question is should he move this out of Ireland, into foreign banks?
For example, if we are kicked out of the the EU, or the Euro, then with our own interest rates and inflation, money will soon be worthless, as happend in Argentina and countless other countries - or if AIB and BOI really do go bust with the mortgage defaulters, if push comes to shove the bank guarantee for deposits will mean nothing, sure it's guaranteed with our own money (i.e. taxpayers).

The more I think of it, the more the guarantee was some cod - all deposits are 'safe', only because future taxes will be used to pay them out if the banks can't - nice one - my future taxes will fund my bank deposits. The only people who it worked out for is the people who had money in Irish banks who aren't paying tax here. Nice one lads.

Anyway - long story short - if the above comes to pass, AIB/BOI go bust, mortgage defaulting, out of the Euro, would it have been prudent to have moved any savings we have out now, rather than wait?

ashleey

If you think the ecb will allow aib and boi to go bust then buy gold and a shotgun to defend it

ART6

It bothers me too, because I can imagine a scenario where the EU decide to make an example of Ireland, either by kicking us out of the Euro (is there a mechanism for doing that?) or by suspending us from the EU. In either case a native Irish currency would be almost worthless I would imagine. Let's face it, Ireland is too small to have any significance for the EU ruling elite. Therefore I am going to shift some of my savings into Sterling and some into Rabobank rather than leaving it all in an AIB deposit account.

seamus

There are no mechanisms for removing a country from the Union. There are equally no mechanisms for kicking us out of the Euro.

ashleey says it best - if you're actually concerned that BOI and AIB will be allowed go to the wall by the massive international institutions they owe money to, then you might as well consider all banks to be worthless and buy bars of gold.

If AIB and BOI go to the wall, your savings will be the least of your worries.

tails_naf

seamus wrote: »

There are no mechanisms for removing a country from the Union. There are equally no mechanisms for kicking us out of the Euro.

Good to know..though I'm sure they must be coooking one up given what happens in Greece and now with us..

seamus wrote: »

ashleey says it best - if you're actually concerned that BOI and AIB will be allowed go to the wall by the massive international institutions they owe money to, then you might as well consider all banks to be worthless and buy bars of gold.

If this is the case, then why was Anglo allowed to go bust? Sure the big boys didn't loose out due to our fantastic guarantee, but we can't back up all these banks, there is not the money in the state to cover the repayments if we do have to. Buying the shotgun might be a good idea, sadly, but surely keeping money in euro, but outside of Ireland should be fine?

seamus wrote: »

If AIB and BOI go to the wall, your savings will be the least of your worries.

Can you expand on that - what do you think would happen in this case - as Mr Kelley seems to think it's a foregone conclusion that they will go.

ART6

seamus wrote: »

There are no mechanisms for removing a country from the Union. There are equally no mechanisms for kicking us out of the Euro.

ashleey says it best - if you're actually concerned that BOI and AIB will be allowed go to the wall by the massive international institutions they owe money to, then you might as well consider all banks to be worthless and buy bars of gold.

If AIB and BOI go to the wall, your savings will be the least of your worries.

Thanks. Being fully occupied at the moment in trying to earn a living and pay my taxes I can only go on what I read in the media. There I keep seeing horror projections by various professors of economics that make me wonder if any Irish bank, or even the Irish economy, stands any chance of survival. I wonder if the crunch time will come if the government loses the budget vote in December -- apparently the bond markets are now looking for 8% on Irish bonds. A change of government might send the markets crazy and make bond interest unaffordable.

If that happens then it's ECB of IMF, and I don't like to think what will happen then. Where can I buy bars of gold of sufficient size to be hidden under a mattress?

digme

tails_naf wrote: »

I just want to say upfront this it a totally serious question, though perhaps it might seem I'm being a chicken little here. Morgan Kelly's article and track record of being right scared the bejesus out of me.

My father has his life savings in various accounts in BOI and AIB, etc. Its not huge money, but is a nestegg.

My question is should he move this out of Ireland, into foreign banks?
For example, if we are kicked out of the the EU, or the Euro, then with our own interest rates and inflation, money will soon be worthless, as happend in Argentina and countless other countries - or if AIB and BOI really do go bust with the mortgage defaulters, if push comes to shove the bank guarantee for deposits will mean nothing, sure it's guaranteed with our own money (i.e. taxpayers).

The more I think of it, the more the guarantee was some cod - all deposits are 'safe', only because future taxes will be used to pay them out if the banks can't - nice one - my future taxes will fund my bank deposits. The only people who it worked out for is the people who had money in Irish banks who aren't paying tax here. Nice one lads.

Anyway - long story short - if the above comes to pass, AIB/BOI go bust, mortgage defaulting, out of the Euro, would it have been prudent to have moved any savings we have out now, rather than wait?

If you want your fathers savings to hold their purchasing power id move them into gold.
Why he has the money in the bank after what happened is highly idiotic.

oflahero

It's a bit late to think of coming to the gold party lads.

When Mr T is on the telly plugging buying gold then do you really think that's your best option?

Sure, gold profits from uncertain times, but from the point of view of protecting your old dear's savings, the next problem you'll be facing is when to take it out of gold again.

digme

oflahero wrote: »

It's a bit late to think of coming to the gold party lads.

When Mr T is on the telly plugging buying gold then do you really think that's your best option?

Sure, gold profits from uncertain times, but from the point of view of protecting your old dear's savings, the next problem you'll be facing is when to take it out of gold again.

He's not going to invest in gold to make money,he's holding it not to lose purchasing power.

tails_naf

Surely the whole gold thing is a 'world collapse' scenario - keeping money in euro would be ok, would it not?

IF Ireland does seperate from the Euro, the exchange rate of new Punts to Euro will adjust, and the Euro buying power will not be affected if Ireland sinks of swims... so is this gold talk really relevant, wouldn't keeping money in Euro, outside of ireland do?

John_Mc

seamus wrote: »

If AIB and BOI go to the wall, your savings will be the least of your worries.

What could be worse than losing all of your savings? Besides negative equity and pensions being completely decimated of course

stimpson

oflahero wrote: »

It's a bit late to think of coming to the gold party lads.

When Mr T is on the telly plugging buying gold then do you really think that's your best option?

Sure, gold profits from uncertain times, but from the point of view of protecting your old dear's savings, the next problem you'll be facing is when to take it out of gold again.

Mr T is plugging SELLING scrap gold.

Years ago I was told that gold was a bubble. Back at the lofty price of $600.

As long as they keep printing dollars and there is negative interest rates Gold is going to rise.

oflahero

digme wrote: »

He's not going to invest in gold to make money,he's holding it not to lose purchasing power.

That's my point. If you consider that gold might be punching above its weight at the moment thanks to current instability, then buying in now means that when the markets calm down, so does gold - and a guaranteed drop in said purchasing power.

That said, the goldbugs are loving it at the moment...

digme

tails_naf wrote: »

Surely the whole gold thing is a 'world collapse' scenario - keeping money in euro would be ok, would it not?

IF Ireland does seperate from the Euro, the exchange rate of new Punts to Euro will adjust, and the Euro buying power will not be affected if Ireland sinks of swims... so is this gold talk really relevant, wouldn't keeping money in Euro, outside of ireland do?

What do you think has happened already? The biggest hiest in the history of the wolrd has happened and you want to give the banks a LOAN OF YOUR MONEY.
People need to stop watching x factor and wake the fck up.

seamus

tails_naf wrote: »

Can you expand on that - what do you think would happen in this case - as Mr Kelley seems to think it's a foregone conclusion that they will go.

Honestly have no idea. When you consider that BOI and AIB's loans are underpinned by other foreign banks and massive lenders, there's the obvious cascade effect to BOI and AIB defaulting on their loans.

When Iceland's banks collapsed, between them they owed about €80bn (afair). The collapse of these banks and the subsequent default on this debt was felt badly by banks outside Iceland. AIB's loan book alone is about €120bn.

Tbh, there are all sorts of other problems here. A national default would effectively make Ireland's euro worthless - our cheques would be no good, in other words. I don't know what implications that has for the rest of the euro - it's a common currency so Ireland's euro can't be worth less than Germany's. It would appear in that case that the ECB would have to write all of our cheques for us in order to maintain the value of the euro, in which case they would need to near-total control over our fiscal policy because they're the ones writing the cheques.

What could be worse than losing all of your savings? Besides negative equity and pensions being completely decimated of course

Economic collapse, 30% unemployment, food queues, wheelbarrows full of euros...
Worse case scenario of course.

oflahero

stimpson wrote: »

Mr T is plugging SELLING scrap gold.

Fair enough, but still sounds bubblicious to me.

I hear you on the QE2 point - if it truly does turn out to be the West's policy to do a Zimbabwe and hyperinflate their debts away, then I'll be wishing I'd joined in with cash4gold and Glenn Beck...

digme

oflahero wrote: »

That's my point. If you consider that gold might be punching above its weight at the moment thanks to current instability, then buying in now means that when the markets calm down, so does gold - and a guaranteed drop in said purchasing power.

That said, the goldbugs are loving it at the moment...

You said an interesting word there,current, as long as that current is flowing and they're printing, gold is going up in PRICE, the value is not really changing,not in a way that matters.

digme

oflahero wrote: »

Fair enough, but still sounds bubblicious to me.

I hear you on the QE2 point - if it truly does turn out to be the West's policy to do a Zimbabwe and hyperinflate their debts away, then I'll be wishing I'd joined in with cash4gold and Glenn Beck...

cash4gold is for stupid people, they give you back paper for half the value of your gold, what you need to do is buy gold not sell it.

oflahero

digme wrote: »

cash4gold is for stupid people, they give you back paper for half the value of your gold, what you need to do is buy gold not sell it.

exactly, that's why I'd be wishing I'd got there first and set up their business...

digme

silver is up 68% since jan, you lads need to stop with your 3% interest rates you get from the crooks you call banks.

davej

It is pretty unlikely that we will be kicked out of the Euro or even be "allowed" to leave it voluntarily. Think about what would happen in the other at risk countries if this happened here. Bank runs all over Europe. That is not to say there aren't severe repercussions in the pipeline for us..

davej

stimpson

oflahero wrote: »

I hear you on the QE2 point - if it truly does turn out to be the West's policy to do a Zimbabwe and hyperinflate their debts away, then I'll be wishing I'd joined in with cash4gold and Glenn Beck...

QE2 is just the icing on the cake. Negative real interest rates is whats driving the gold price.

P. Breathnach

Gold is now being hyped in the same way that property was being hyped just a small number of years ago. You don't buy in to a bubble market after most of the inflation has already happened.

Cash under the mattress is less bumpy -- but that's one of the places that burglars check.

Count Dooku

seamus wrote: »

There are no mechanisms for removing a country from the Union. There are equally no mechanisms for kicking us out of the Euro.

Our elite will do it for us

silverharp

P. Breathnach wrote: »

Gold is now being hyped in the same way that property was being hyped just a small number of years ago. You don't buy in to a bubble market after most of the inflation has already happened.

Cash under the mattress is less bumpy -- but that's one of the places that burglars check.

gold is actually a better deflation hedge , from 02 to 08 oil or copper or any other commodity would have been a better position to have. If you divide a commodity index against gold, it only started rising in 08

digme

P. Breathnach wrote: »

Gold is now being hyped in the same way that property was being hyped just a small number of years ago. You don't buy in to a bubble market after most of the inflation has already happened.

Cash under the mattress is less bumpy -- but that's one of the places that burglars check.

Lets print more gold, oh dam i forgot we can't

stimpson

P. Breathnach wrote: »

Gold is now being hyped in the same way that property was being hyped just a small number of years ago. You don't buy in to a bubble market after most of the inflation has already happened.

Cash under the mattress is less bumpy -- but that's one of the places that burglars check.

Like I said, I was hearing that about gold a couple of years ago when the yellow metal was less than half it's current price.

How do you know most of the inflation has happened? Unless you know something I don't and can point so some fundamentals that support bearish sentiment, it's just an opinion.

seamus

digme wrote: »

Lets print more gold, oh dam i forgot we can't

Oh....where have I heard a similar hackneyed phrase before. Wasn't it something like, "They're not making any more land"....?

Gold, like land, has a value underpinned by people's desire to buy it.

If it gets too expensive to purchase for day-to-day applications, people will switch to cheaper alternatives and your money is boned.

It's a commodity like any other, and if nobody wants it, it's worthless.

Graph

The red line is the one you want. Look at 1980 - height of recession. Over the next five years, the price collapsed and it lost 75% of its value.

Don't fool yourself into thinking that gold cannot lose. It can and it has.

stimpson

seamus wrote: »

The red line is the one you want. Look at 1980 - height of recession. Over the next five years, the price collapsed and it lost 75% of its value.

Don't fool yourself into thinking that gold cannot lose. It can and it has.

Do you know how fast the money supply was increasing in the 80's compared to today?

Over the long term, gold will hold it's purchasing power. Granted there will be peaks and troughs, but at the rate the Fed is currently printing money, it's price in dollars will continue to rise.

Here's a great chart to illustrate how well Gold tracks inflation:

seamus

stimpson wrote: »

Do you know how fast the money supply was increasing in the 80's compared to today?

Over the long term, gold will hold it's purchasing power. Granted there will be peaks and troughs, but at the rate the Fed is currently printing money, it's price in dollars will continue to rise.

Here's a great chart to illustrate how well Gold tracks inflation:

There are always excuses, there are always, "This is not like the last time".

Your graph actually illustrates quite how easy it is to lull yourself into believing that gold "tracks inflation" on the basis that you can match its price now against a similar increase in the price of chocolate. The relative increases have converged at this one point, but if you pull out the same graph in 2000, it would have been meaningless because the cost of chocolate bars was up and the cost of gold had been down for quite some time. Likewise in 1979 I'm sure the graph would have had equal merit...until the price of gold skyrocketd and then collapsed a few months later.

Prices of commodities generally regress towards inflation, so over a long-term of sample points you can show that almost anything tracks inflation, even if it's suffered spectacular ups and down in that period. There was a good article posted on the Accomodation forum a few months back which tracked the price of a property in Amsterdam over 300 years. Despite booms and bust and ups and downs, the inflated-adjusted price of the property had not changed at all in 300 years.

I'm not making any predictions here, I'm not even necessarily saying that gold is currently overpriced. But it's folly to look at it rising and claim that "this is a safe bet, stick your money in there", because both your graph and my graph show that in fact it's not.
You may as well put your money in chocolate bars.

ghosttown

Back on topic which is 'protecting savings'.......

Same as OP has father with AIB / BOI money, my mother in her 80's has life savings in matured EBS 'sure-certs' (sic ?), which they advised her to reinvest in same.
She also has current account there, and some monies in local credit union.

Finally, she has a few older matured savings certs from the post office.

Of the above, are there any she should be concerned about ? Should she consider getting a sterling account and moving some over ?

stimpson

seamus wrote: »

Prices of commodities generally regress towards inflation, so over a long-term of sample points you can show that almost anything tracks inflation, even if it's suffered spectacular ups and down in that period.

That is exactly my point. Now you can't store thousands of euro worth of cotton or sugar or oil in a safe, but you can do it with gold.

As Milton Friedman said:

Inflation is always and everywhere a monetary phenomenon.

The more dollars printed, the higher the prices of commodities priced in those dollars. Be it cotton, oil, sugar or gold.

With this in mind, what do you think is going to happen considering the .6 Trillion dollars printed last week?

maninasia

Gold is probably a good bet to protect it for the time being, due to the extraordinary nature of current times. Asian currencies and stocks are also a good bet.

P. Breathnach

stimpson wrote: »

... Here's a great chart to illustrate how well Gold tracks inflation:

So we should put our money into chocolate bars (best not to stash them under the mattress). Chocolate has the advantage that if all else fails, at least you can eat it.

seamus

stimpson wrote: »

That is exactly my point. Now you can't store thousands of euro worth of cotton or sugar or oil in a safe, but you can do it with gold.

OK, but to look at the OP's situation, he's looking for something that's safe over the short-medium term.

By the same above point, you can "store" your money in land and you'll be fine....over the long term. But I would be especially wary of storing your money in commodities, when the price of that commodity is undergoing massive changes, upwards or downwards, because that will always be short-lived blip before it regress to the mean.

Now, obviously a person could do their research/sums to identify when a commodity is coming out of a dip (as opposed to peaking), but if you're looking for a safer commodity over the short to medium term, you want something which has shown little real change in recent times.

digme

P. Breathnach wrote: »

So we should put our money into chocolate bars (best not to stash them under the mattress). Chocolate has the advantage that if all else fails, at least you can eat it.

It's wise to have a diverse portfolio.

stimpson

seamus wrote: »

By the same above point, you can "store" your money in land and you'll be fine....over the long term. But I would be especially wary of storing your money in commodities, when the price of that commodity is undergoing massive changes, upwards or downwards, because that will always be short-lived blip before it regress to the mean.

Timing is everything, and I personally wouldn't buy at the moment as there is likely to be a dip in the no too distant future, but you have no guarantees that prices will drop to below their current level.

As for property, that is simple supply and demand. If you think gold is in over supply you really should do your research.

Now, obviously a person could do their research/sums to identify when a commodity is coming out of a dip (as opposed to peaking), but if you're looking for a safer commodity over the short to medium term, you want something which has shown little real change in recent times.

Like what? Bonds? Stock market? Post Office?

Psychedelic

What about the credit unions, are they safe? Or just safer than BOI and AIB? Over the last 5 years I have managed to save over €10k in a BOI account. Would it be safer to move this money to my credit union account? I'm not interested in trying to make more money through investments or anything, just want to protect my savings.

I have been very careful not to blow all my wages on crap I don't need and I have no debts, so if the shit really hits the fan next year I would hope that at least my savings would be secure.

jank

seamus wrote: »

Oh....where have I heard a similar hackneyed phrase before. Wasn't it something like, "They're not making any more land"....?

Gold, like land, has a value underpinned by people's desire to buy it.

If it gets too expensive to purchase for day-to-day applications, people will switch to cheaper alternatives and your money is boned.

It's a commodity like any other, and if nobody wants it, it's worthless.

Graph

The red line is the one you want. Look at 1980 - height of recession. Over the next five years, the price collapsed and it lost 75% of its value.

Don't fool yourself into thinking that gold cannot lose. It can and it has.

Sorry but it is not a commodity, it is a currency hence why people sell notes and buy it in uncertain times. Of course there will be peaks and troughs but gold over years and years will hold its value.

Did I read somewhere that gold has the same value today as in roman times?

newman10

Psychedelic wrote: »

What about the credit unions, are they safe? Or just safer than BOI and AIB? Over the last 5 years I have managed to save over €10k in a BOI account. Would it be safer to move this money to my credit union account? I'm not interested in trying to make more money through investments or anything, just want to protect my savings.

My question would be if the Govt defaults on it s Debt how good is the Bank Guarantee and at what Bond Rate (eg 8.75-9.10%) should we become concerned about Bank Deposits

irishh_bob

its a tough one , does one withdraw thier savings and protect thier own interests yet at the same time , contribute to the destabalisation of the banks , i mean if everyone withdraws their savings ,will we have a functioning economy of any kind

Donal Og O Baelach

Well OP, I hope things are a lot clearer for you now.

digme

irishh_bob wrote: »

its a tough one , does one withdraw thier savings and protect thier own interests yet at the same time , contribute to the destabalisation of the banks , i mean if everyone withdraws their savings ,will we have a functioning economy of any kind

Your enabling the banks to destabilize our country if you loan them your money.

ART6

irishh_bob wrote: »

its a tough one , does one withdraw thier savings and protect thier own interests yet at the same time , contribute to the destabalisation of the banks , i mean if everyone withdraws their savings ,will we have a functioning economy of any kind

That's a point that's been bugging me. I have savings on deposit in AIB, and am seriously considering moving them out of the Eurozone and particularly out of the AIB, but if a lot of people start to do that we could have a run on the bank situation (mine bit won't make any difference mind!). It seems to me that the trick is in deciding when to do it before everyone else does, and given enough bad news it could occur at any time without any warning.

Given the state of our economy, what I wonder could our government do about it? They are already flat bust.

Mad Benny

ART6 wrote: »

I have savings on deposit in AIB, and am seriously considering moving them out of the Eurozone

How would you go about this? Say you have €20,000 to put on deposit.

Can Joe public fly over to Switzerland and open a bank account with 20k? Going up north is an obvious one but Sterling is not a safe bet either as the British are engaging in quantitative easing like the US.

The Valley

by the time we face up to the huge problems the banks are in our accounts will be frozen overnight, a limit on withdrawls will be in plave to stabilize the banks and stop a run on each institution.

It is not a straightforward option to just open an overseas account and hope this protects your deposit, there are loads of thread on this..

To protect your savings the decison boils down to this.

1) Do I trust the current govenment to protect me
2) Will my action by removing my deposits in fact add to the problem and if so am I being unpatrotic

Gold / land for me is not an option......

For me Cash is king.

Do I chance the burglars or the bankers

irishh_bob

Mad Benny wrote: »

How would you go about this? Say you have €20,000 to put on deposit.

Can Joe public fly over to Switzerland and open a bank account with 20k? Going up north is an obvious one but Sterling is not a safe bet either as the British are engaging in quantitative easing like the US.

thier may be ways round it for people in the know but should you head up to newry tomorrow and walk into a barclays bank or even ulster bank branch and ask to open an account , expect a short sharp rebuff , you have to be a uk resident to open an account

as regards opening an account in swiss francs , HSBC offshore account is an option , someone provided a link to thier site on another thread and thier was a virus of some sort in it btw

gizmo555

Without going to the trouble of opening offshore accounts, you could deposit money with:

• Rabobank (Dutch parent, AAA rated, Dutch guarantee scheme covering, I think, €50k or €100k for a joint account);
• Northern Rock (wholly owned by the UK government with a 100% unlimited UK state guarantee on deposits);
• National Irish Bank (subsidiary of Danske Bank with the Danish deposit guarantee of €100k as of 01/10/2010).

Fags are Evil

gizmo555 wrote: »

Without going to the trouble of opening offshore accounts, you could deposit money with:

• Rabobank (Dutch parent, AAA rated, Dutch guarantee scheme covering, I think, €50k or €100k for a joint account);
• Northern Rock (wholly owned by the UK government with a 100% unlimited UK state guarantee on deposits);
• National Irish Bank (subsidiary of Danske Bank with the Danish deposit guarantee of €100k as of 01/10/2010).

What about Ulster Bank? Are they not a British institution?

Chris_5339762

AFAIK Ulster Bank (in Ulster, not down here) are a special case in a sense and you can open accounts with them if you are UK or ROI resident.

ardmacha

thier may be ways round it for people in the know but should you head up to newry tomorrow and walk into a barclays bank or even ulster bank branch and ask to open an account , expect a short sharp rebuff , you have to be a uk resident to open an account

There isn't a Barclays Bank branch in Newry. But, I expect the Ulster Bank would be happy to help you. Among other things they helpfully point out that a ROI driving licence can be used as proof of address
http://www.ulsterbank.co.uk/ni/personal/daily-banking/current-accounts/useful-information/identity-proof.ashx

AFAIK Ulster Bank (in Ulster, not down here) are a special case in a sense and you can open accounts with them if you are UK or ROI resident.

Any bank in Newry will open an account for you, but you may wish to avoid Bank of Ireland and First Trust if you are trying to flee the Irish banks.

NIB will introduce you to the Northern Bank and they have good arrangements for transferring money to and fro.