Euro Break up

kennyb3

Interested to hear other boardie opinions as to which is more likely:

a) the Germans exiting and going to the DM (mark II)

b) A 2 tier euro with only the larger nations included in the main one

Contemplating my strategy for my savings at present.

Not keen on FX risk but what are the chances of the euro staying together by way of the ECB printing money (with the euro depreciating)?

denialfiend76

Any views? I'd interested 2.

Soulja boy

It would be disastrous and still wouldn't solve all the big problems.

A write down of greeces debt is going to be a knife in the guts of the French and German banks no matter what currency they are in.

It could be beneficial to Ireland to be on the punt as we could regulate our currency and exports and trade would improve.

Diarmuid

Soulja boy wrote: »

It could be beneficial to Ireland to be on the punt as we could regulate our currency and exports and trade would improve.

I wonder.... Think of everything you buy that's not made in Ireland. Now imagine it being, what? 25%-100% more expensive? There's no doubt our currency would drop against the DM/$ and I think a 50% drop is not unimaginable.

kop77

I'm not up to date on all this but a friend of a friend who works in a bank was saying if you have any spare cash to buy sterling. He reckons if we end up going back to the punt the sterling you have would be worth more than the Euro? What ye think.........

ROK ON

kennyb3 wrote: »

Interested to hear other boardie opinions as to which is more likely:

a) the Germans exiting and going to the DM (mark II)

Low level of liklihood IMHO. The currency would invariably strengthen spectacularly. This in turn would put a pretty large dent in export sales. Its not in their interest.

b) A 2 tier euro with only the larger nations included in the main one
More likely over time. IMHO, we (and several other nations) should not be part of the EZ. The reasons are well understood now, but were never touched on in the non existent debate leading up to our membership in the late 1990's. The core of Europe really is Ger, Fra and Benelux.
OUr economic cycle is an anglo saxon one (which is no surprise given who are leading trading partners are). Finland share a cycle with the rest of the Scandis. I am not so sure that Portugal and Greece have an economic cycle worth talking about. They are in very serious do do (ie more serious than us).


Contemplating my strategy for my savings at present.

Not keen on FX risk but what are the chances of the euro staying together by way of the ECB printing money (with the euro depreciating)?

As regards savings strategy - tbh it is very very difficult to judge just what to do re currency exposure at present (just look at how the Yen and Swiss Franc have behaved recently).
FWIW, I am not a huge bull on equities - but you could look at investing very very selectively in a small basket (ie not all of your savings, not even half of your savings) of stocks that have the following characterists (i) global revenue stream, (ii) excellent balance sheet characteristics, (iii) offer incredible value when judged against long term valuation metrics, (iv) have a business that can last the break withstand the crisis and still provide a good return on assets/equity. Stocks with these characterists are likely to hold value over a longer period of time (while albiet experienceing high short term volatility. (If you come across such stocks, please do let me know:D)

ROK ON

kop77 wrote: »

I'm not up to date on all this but a friend of a friend who works in a bank was saying if you have any spare cash to buy sterling. He reckons if we end up going back to the punt the sterling you have would be worth more than the Euro? What ye think.........

A brother of a iriend of mine works in a shop . He reckons sterling is going to tank:rolleyes:.

kennyb3

ROK ON wrote: »

As regards savings strategy - tbh it is very very difficult to judge just what to do re currency exposure at present (just look at how the Yen and Swiss Franc have behaved recently).
FWIW, I am not a huge bull on equities - but you could look at investing very very selectively in a small basket (ie not all of your savings, not even half of your savings) of stocks that have the following characterists (i) global revenue stream, (ii) excellent balance sheet characteristics, (iii) offer incredible value when judged against long term valuation metrics, (iv) have a business that can last the break withstand the crisis and still provide a good return on assets/equity. Stocks with these characterists are likely to hold value over a longer period of time (while albiet experienceing high short term volatility. (If you come across such stocks, please do let me know:D)

Cheers ROK_ON, always appreciate a different opinion, as i believe there are so may unknowns at present which means no 2 people seem to agree what exactly will happen. I think diversification is prob the key. I think i ll be taking a trip to rhineland later in the month to get some funds offshore and hopefully into the new improved EMII. Im more looking for safety than ROI.

BrianD3

kennyb3 wrote: »

Cheers ROK_ON, always appreciate a different opinion, as i believe there are so may unknowns at present which means no 2 people seem to agree what exactly will happen. I think diversification is prob the key. I think i ll be taking a trip to rhineland later in the month to get some funds offshore and hopefully into the new improved EMII. Im more looking for safety than ROI.

If you read today's papers they are full of doom and gloom about the euro. The usual suspects - McWilliams, Kerby etc. As usual, Kerby is advising people to diversify into gold. On this occasion, her angle is that buying gold protects against a DIRT increase in the budget as well as protecting against a euro collapse.

The headline in today's Sunday Times is:

Metals shine as a way of avoiding Noonan's tax grab

With Noonan being described as "voracious" in the article. Pretty sensationalist language in my view.

On this DIRT issue - Kerby fails to mention that many State Savings products are exempt from DIRT or that PTSB have interest first deposit accounts which will not be affected by a DIRT increase if opened before Budget 2012. Her not mentioning these options is not surprising though given that she regularly slates State Savings products, Irish banks and the euro .

Now personally I have a vested interest in the euro remaining intact.

But I'm not shouting my views to thousands of people using a newspaper. What are these influencial people's vested interests?

I have a bit of a problem with the constant "diversify" advice. If these individuals are confident enough about the future to write about euro collapse in the papers knowing full well that this will cause people to worry and panic then why don't they put their heads above the parapet and advise people to put all of their wealth into something else.

They won't do this as they can't predict the future and if they're wrong their career is ruined. But if they're wrong with their somewhat vague but gloomy and panic causing comments about the euro, they'll find some way to fudge out of it.

"I never said that the euro would collapse just that it might"
etc.

kennyb3

The more it hits mainstream media the more it becomes a self fulfilling prophecy, so i fully expect a run on some countries banks. when you have eddie hobbs on tv3 in the morning saying get out - it makes me realise that the month i ve spent diley-dallying about what exactly to do may be my undoing.

Sonnenblumen

kennyb3 wrote: »

The more it hits mainstream media the more it becomes a self fulfilling prophecy, so i fully expect a run on some countries banks. when you have eddie hobbs on tv3 in the morning saying get out - it makes me realise that the month i ve spent diley-dallying about what exactly to do may be my undoing.

Well if you're influenced by what Eddie Hobbs says well you're cause is hopeless.:o

Sonnenblumen

ROK ON wrote: »

As regards savings strategy - tbh it is very very difficult to judge just what to do re currency exposure at present (just look at how the Yen and Swiss Franc have behaved recently).
FWIW, I am not a huge bull on equities - but you could look at investing very very selectively in a small basket (ie not all of your savings, not even half of your savings) of stocks that have the following characterists (i) global revenue stream, (ii) excellent balance sheet characteristics, (iii) offer incredible value when judged against long term valuation metrics, (iv) have a business that can last the break withstand the crisis and still provide a good return on assets/equity. Stocks with these characterists are likely to hold value over a longer period of time (while albiet experienceing high short term volatility. (If you come across such stocks, please do let me know:D)

May I suggest you read the FT weekend, it contains much useful info and analysis on major companies from several sectors. An excellent starting point from which to begin your research to identify which companies best satisfy your criteria.

Failing that, you could try waiting at the corner for a bus.

kennyb3

Sonnenblumen wrote: »

Well if you're influenced by what Eddie Hobbs says well you're cause is hopeless.:o

Didn't say i was. but the man in the street will be which is my point.

snowstreams

Do you not have to pay VAT when you purchase precious metals? Does the metal have to be made into something like jewellery before you have to pay VAT?

cbyrne11

Hey,

I have a quick question I have an offshore account in euro in the isle of mann, I've had it a while now because thought we would be kicked out of the euro and that the Punt Nua would depreciate, but not sure what to with it given that it's more likely for a total breakup of the euro.

Asssume since it is in the Isle of mann that it would be demoninated in sterling if the Euro breaks up but at what point would this happen, could the euro have depreciated against the steriling to the point that it's worthless, any recommendation about this?

The Outside Agency

Why on earth do people believe the euro will collapse?

Just a lot of fear mongering folks, nothing new.

I don't doubt it will lose some value but disappear altogether? seems very unlikely..

thebaz

I'm no economist , but out of curiosity , if the euro collasped suddenly what would happen to savings - for instance if you had 10,000 in a bank would it be pretty much valueless - hush but does suddenly property look a more solid investment than thousands in a supposed safe bank ?

Outkast_IRE

The core countrys wont let it collapse , but the possiblity of a country being forced out , i could see that happening.

Along with the core countrys aka france germany , taking a massive role in telling other countries what direction to go economically.

cbyrne11

nivekd wrote: »

Why on earth do people believe the euro will collapse?

Just a lot of fear mongering folks, nothing new.

I don't doubt it will lose some value but disappear altogether? seems very unlikely..

No one is saying that it definately will happen, but there is a possibility of it happening, or of france Germany, Netherlans etc. going ahead with the euro and effectively kicking Ireland Greece, Spain, Italy Portugal out of the euro.

So to shield themselves from this possibility some people are making plans with their savings, to cover themselves from this risk! Wouldn't call it stare mongering just being cautious!

thebaz

cbyrne11 wrote: »

So to shield themselves from this possibility some people are making plans with their savings, to cover themselves from this risk! Wouldn't call it stare mongering just being cautious!

does anyone know what would happen to savings in euros in an irish bank , if we were kicked out of a stonger euro group or if the euro totally collapsed suddenly ? for that matter if the euro collapsed would savings in euros throughout Europe be worthless ?

Slozer

nivekd wrote: »

Why on earth do people believe the euro will collapse?

Just a lot of fear mongering folks, nothing new.

I don't doubt it will lose some value but disappear altogether? seems very unlikely..

I don't believe it will collapse but over time, like all fiat currencies it certainly will die.

thebaz

thebaz wrote: »

does anyone know what would happen to savings in euros in an irish bank , if we were kicked out of a stonger euro group or if the euro totally collapsed suddenly ? for that matter if the euro collapsed would savings in euros throughout Europe be worthless ?

I suppose the silence means no one knows what would happen - hence the fear of a euro collapse - the economy in europe would simple go in to freefall i suspect

cbyrne11

thebaz wrote: »

I suppose the silence means no one knows what would happen - hence the fear of a euro collapse - the economy in europe would simple go in to freefall i suspect

Don't think it will be a freefall situation, I think that the euro will survive for the countries that it's working for, ie not the small peripheral nations. Question is how to insure your savings against this, personally I wouldn't leave them in an Irish account in the case of Ireland leaving the euro the punt would almost certainly devalue against the euro.

There is an option of opening a euro savings in deutche bank if your willing to travel to Germany that would probable be the safest option as they'll transfer to DM if the euro breaks up which will appreciate quickly against the punt.

SyntonFenix

http://www.youtube.com/watch?v=h-Ca4_EzJSc&feature=related

kennyb3

cbyrne11 wrote: »

There is an option of opening a euro savings in deutche bank if your willing to travel to Germany that would probable be the safest option as they'll transfer to DM if the euro breaks up which will appreciate quickly against the punt.

DB are leveraged to the hilt - their share price has been falling rapidly of late.

They could be the german governments big problem.

cbyrne11

kennyb3 wrote: »

DB are leveraged to the hilt - their share price has been falling rapidly of late.

They could be the german governments big problem.

Wasn't aware of that!

I still haven't got an answer to my original question if the euro were to break up, what would happen to saving in an offshore account demoninated in euro!

ie I have money in nationwide international in the isle of mann, would that be converted into sterling or punt? And how would sterling fare in that scenario?

kennyb3

cbyrne11 wrote: »

Wasn't aware of that!

I still haven't got an answer to my original question if the euro were to break up, what would happen to saving in an offshore account demoninated in euro!

ie I have money in nationwide international in the isle of mann, would that be converted into sterling or punt? And how would sterling fare in that scenario?

It's an unknown basically. Governements could work with foreign banks to identify irish passport holders, they could introduce a tax for when you re-introduce the money into ireland. There are too many unknowns though to properly predict. but if you look up 'capital controls' and do enough digging you can get a few ideas.

kennyb3

cbyrne11 wrote: »

Wasn't aware of that!

For your info

http://pragcap.com/dexias-demise-is-only-the-start

craggles

Right, what about opening an account in a currency other than euro/sterling?


I think the major criteria required for such a currency are:

-It has to be relatively stable (no mad african currencies)
-It has to be isolated from the eurozone, i.e. the currency we select should be relatively unaffected by a massive collapse of the euro, or at least less affected than most other currencies.

I believe this rules out any countries with major trade links to the EU.

I propose the Mongolian togrog. Its inflation is not ideal but I would speculate that it should be minimally affected by a major euro crash and as such should be at least considered/further explored.

Thoughts?

colingmurphy

Hi there

Have two questions that have been bugging me for a while. They´re a bit doomsday and while I tend towards optimism myself, I´d welcome some clarity on this.

Q1: If, god forbid, the Irish authorities introduced capital controls, i.e. prevented people from withdrawing funds from their accounts, could they apply this to foreign owned banks under Irish jurisdiction - i.e. Rabobank, Ulsterbank etc. ?

One would imagine that the parent of Ulster (RBS which is in turn owned by Her Majestys Govt) wouldn´t be best pleased if their customers were being prevented from accessing their accounts.

Q2: If Ireland exited the euro and existing domestic euro accounts were forcibly converted into punts, would foreign currency accounts within Ireland (i.e. a GBP or USD account with AIB) be safe from this?

Cheers.

books4sale

How come no one answered ColingMurphy questions, I think they are quite legtimate, right?

Sorry, I don't have the answers maybe someone else can help.

stackerman

kop77 wrote: »

I'm not up to date on all this but a friend of a friend who works in a bank was saying if you have any spare cash to buy sterling. He reckons if we end up going back to the punt the sterling you have would be worth more than the Euro? What ye think.........

Sorry, but Sterling is done too, check out their debt to GDP.
Plenty of different figures around for same, and NONE look good :eek:

stackerman

colingmurphy wrote: »

Q1: If, god forbid, the Irish authorities introduced capital controls, i.e. prevented people from withdrawing funds from their accounts, could they apply this to foreign owned banks under Irish jurisdiction - i.e. Rabobank, Ulsterbank etc. ?

One would imagine that the parent of Ulster (RBS which is in turn owned by Her Majestys Govt) wouldn´t be best pleased if their customers were being prevented from accessing their accounts.

Q2: If Ireland exited the euro and existing domestic euro accounts were forcibly converted into punts, would foreign currency accounts within Ireland (i.e. a GBP or USD account with AIB) be safe from this?
Cheers.

There are already controls, if you happen to have any savings over 3k, try to go in and withdraw same. You'll not get it ! You'll get all sorts of shi&e, but in the end you will only get so much out at a time, depending on the bank in question.
Now imagine trying to get your money out if there was a run, even without any gov intervention :rolleyes:

SyntonFenix

keving wrote: »

There are already controls, if you happen to have any savings over 3k, try to go in and withdraw same. You'll not get it ! You'll get all sorts of shi&e, but in the end you will only get so much out at a time, depending on the bank in question.
Now imagine trying to get your money out if there was a run, even without any gov intervention :rolleyes:

Basically, have enough cash that is needed in the bank to get by. Everything else invested and diversified.

Paranoid or prepared?

stackerman

SyntonFenix wrote: »

Basically, have enough cash that is needed in the bank to get by. Everything else invested and diversified.

Paranoid or prepared?

Better to be paranoid AND prepared, the alternative is . . .

hmmm

colingmurphy wrote: »

Q1: If, god forbid, the Irish authorities introduced capital controls, i.e. prevented people from withdrawing funds from their accounts, could they apply this to foreign owned banks under Irish jurisdiction - i.e. Rabobank, Ulsterbank etc. ?

Yes.

Q2: If Ireland exited the euro and existing domestic euro accounts were forcibly converted into punts, would foreign currency accounts within Ireland (i.e. a GBP or USD account with AIB) be safe from this?

Probably.

SyntonFenix

hmmm wrote: »

Yes.

Probably.

It would be extremely helpful to back up some of your responses. You wouldn't get many marks for that in an Economics exam in the Leaving Cert.