So where has the money gone??

Shangoes

Probably a stupid question but this is annoying me..

Irish banks borrowed somewhere in the region of €400 bn from European banks. This money was lent to fund property speculation, consumption of goods etc etc. and yes some of this money may have leaked out on foreign property, BMWs etc.. but what I can't figure out is shouldn't a large amount still be deposited in Irish banks somewhere?

Like for example, a bank borrows money from the markets to lend. Mr. A borrows €10 million from the bank to buy a site. Mr. A then gives Mr.B the €10million to secure the site.. Mr.B in turn deposits this €10m back into the bank. So the money doesn't really disappear, is it not just a case of having been moved to a different account!?

bhovaspack

This question has been asked a couple of times over the past fortnight and I think, by general consensus, the below was considered to be the most useful explanation:

http://www.boards.ie/vbulletin/showpost.php?p=68962309&postcount=7

Blatter

1)Money is more than just cash, and quantity of money can rise and fall.

2)Houses and shares are not money, but assets whose values vary with market forces.

Basically, alot of money was pumped into ''shares'' (ie. the property market) and the value of these ''shares'' fell dramatically, and this has lead to a dramatic decline in wealth.

Shangoes

bhovaspack wrote: »

This question has been asked a couple of times over the past fortnight and I think, by general consensus, the below was considered to be the most useful explanation:

http://www.boards.ie/vbulletin/showpost.php?p=68962309&postcount=7

Cheers bhovaspack.. that link really clears it up!

X files

So we were all just living in a south sea bubble over spending somebodies else money and now it has dryed up and the roller coaster has changed direction.
How do we get some stability back?
Are there small things we can all do to stabilise things?
The worrying things is my pals in public service jobs say the silly and wastefull spending is still going on and with very lax controls.

Kiki10

Shangoes wrote: »

Probably a stupid question but this is annoying me..

Irish banks borrowed somewhere in the region of €400 bn from European banks. This money was lent to fund property speculation, consumption of goods etc etc. and yes some of this money may have leaked out on foreign property, BMWs etc.. but what I can't figure out is shouldn't a large amount still be deposited in Irish banks somewhere?

Like for example, a bank borrows money from the markets to lend. Mr. A borrows €10 million from the bank to buy a site. Mr. A then gives Mr.B the €10million to secure the site.. Mr.B in turn deposits this €10m back into the bank. So the money doesn't really disappear, is it not just a case of having been moved to a different account!?

10 billion in deposits left the country from one bank alone this year

Kiki10

X files wrote: »

So we were all just living in a south sea bubble over spending somebodies else money and now it has dryed up and the roller coaster has changed direction.
How do we get some stability back?
Are there small things we can all do to stabilise things?
The worrying things is my pals in public service jobs say the silly and wastefull spending is still going on and with very lax controls.

your friends are on the ball. the gov plan on bringing us back to 2006 wealth levels but if they do that they will have to sack all the civil servants they hired since then, a lot of P45s for people who think there in a job for life??

Bob_Latchford

There is a few bob left but its on its way to the bondholders as we speak

Shangoes

Kiki10 wrote: »

10 billion in deposits left the country from one bank alone this year

Thats this year.. isn't that the amount the Government are putting back in? So if depositors left their money where it was there'd be no need for the bailout then?

Bob_Latchford

Shangoes wrote: »

Thats this year.. isn't that the amount the Government are putting back in? So if depositors left their money where it was there'd be no need for the bailout then?

The banks need minmum funding levels to remain open I think. Basically the banks are hollowed shells covering a debt hole.

The debt hole is where the problem is but as deposits leave they need to be replaced to cover the hole.

pakalasa

Where has all the money gone?

The same place the dark goes when you turn on the lights!:D