If the Euro goes, What happens my Euro in the bank?

drunkmonkey

Simple questions, if the euro goes belly up what happens all my euro in the bank. Will I just be cleaned out financially as I presume the euro's I now have will be worthless.

irishh_bob

drunkmonkey wrote: »

Simple questions, if the euro goes belly up what happens all my euro in the bank. Will I just be cleaned out financially as I presume the euro's I now have will be worthless.

if you have ten grand in euro today and the euro dies at six this evening , your ten grand will still be there tommorrow only it will become ten thousand punt , of course the punt will be worth considerabley less than the euro , by how much is hard to say but it could be as little as half although around a third less is more likely , this isnt zimbabwe

View

drunkmonkey wrote: »

Simple questions, if the euro goes belly up what happens all my euro in the bank. Will I just be cleaned out financially as I presume the euro's I now have will be worthless.

The bank will probably go as well so you won't have any money in it to worry about.

bbam

irishh_bob wrote: »

if you have ten grand in euro today and the euro dies at six this evening , your ten grand will still be there tommorrow only it will become ten thousand punt , of course the punt will be worth considerabley less than the euro , by how much is hard to say but it could be as little as half although around a third less is more likely , this isnt zimbabwe

The thing is will commodities reduce overnight too??
I doubt petrol/diesel will fall to half or a third overnight..

If the value of your holdings AND the price of goods fell equally then there would be little net difference... If only your cash holdings fell to one third this would be a devastating blow

sharper

bbam wrote: »

The thing is will commodities reduce overnight too??
I doubt petrol/diesel will fall to half or a third overnight..

We import oil so if the value of our currency falls the price of imports like oil increases.

Worth keeping in mind when you hear the "Just switch to our own currency and devalue away our debt" stuff.

VW 1

bbam wrote: »

The thing is will commodities reduce overnight too??
I doubt petrol/diesel will fall to half or a third overnight..

If the value of your holdings AND the price of goods fell equally then there would be little net difference... If only your cash holdings fell to one third this would be a devastating blow

No commodities wouldnt reduce overnight, they would remain the same as they had before. As these are priced on a global scale, things like petrol/diesel will hold their value in USD and as a result they will be 3 times more expensive if for example the euro/punt was worth a third of what it was yesterday comparable to the dollar.

andrew

Your euro would be converted into Punt. The punt would devalue. The price of imports would rise, the price of Irish goods wouldn't change much, in so far as imports aren't a factor. But the probability that Ireland will leave the euro is very small, even with all that's been happening. At this lecture, not one of the people mentioned leaving the euro as something that's even remotely likely.

Panrich

What happens to our debts in this situation? If I owe an irish bank €100,000 and they have 10,000 similar mortgages that they are using short term borrowing to fund, then someone owes someone else (ECB) €1BN euro. If my debt is transferred to the punt, who takes the loss on the devaluation of the debt?

andrew

Panrich wrote: »

What happens to our debts in this situation? If I owe an irish bank €100,000 and they have 10,000 similar mortgages that they are using short term borrowing to fund, then someone owes someone else (ECB) €1BN euro. If my debt is transferred to the punt, who takes the loss on the devaluation of the debt?

As I understand it, loans to Irish banks would become denominated in punts, as the bank's assets would become euro denominated. If the bank is funding it's operations using loans which are in euros, then the bank has to pay back these loans in euro, which obviously becomes a problem.

sharper

Panrich wrote: »

What happens to our debts in this situation? If I owe an irish bank €100,000 and they have 10,000 similar mortgages that they are using short term borrowing to fund, then someone owes someone else (ECB) €1BN euro. If my debt is transferred to the punt, who takes the loss on the devaluation of the debt?

The debt is all in Euros so we're left with two options:

1. Repay Euro debt in a new devalued currency which will be punishingly difficult

2. Arbitrarily convert the Euro debt to Punt debt. This would seen as a default by pretty much everyone. We may as well just declare we're only repaying 40% of our debts and not bother with the fuss of changing currency.

Switching currency simply isn't a solution to our problems. Some people like to think an extremely complex problem like the one we're facing has a nice easy solution which the people in power are ignoring.

Teclo

irishh_bob wrote: »

if you have ten grand in euro today and the euro dies at six this evening , your ten grand will still be there tommorrow only it will become ten thousand punt , of course the punt will be worth considerabley less than the euro , by how much is hard to say but it could be as little as half although around a third less is more likely , this isnt zimbabwe

So if I was smart enough to withdraw everything before we left I could move to France and stay loaded with my Euro?

Permabear

This post has been deleted.

dario28

Teclo wrote: »

So if I was smart enough to withdraw everything before we left I could move to France and stay loaded with my Euro?

I was thinking that -

Say you have 100,000 and you withdraw it keep it in a safe at home , Wake up next day and euro is gone , could you potentially fly to the country with the best rate and cash in your old Euro then buy back irish punts

EoghanConway

Permabear wrote: »

This post had been deleted.

Not my bank. You can however drive up north and open a sterling account at any branch of Ulster bank (and possibly others).

Slozer

The Euro is not likely to go belly up, for this to happen it would take Germany and maybe 1 or 2 other Euro countries to declare that they are leaving the Euro.

A more likely scenario is that the indebted countries would leave or be forced out of the Euro bit by bit.

If this happens in our case we would probably end up pegging our new currency to a more stable one eg. sterling

Since our government has guaranteed bank deposits your money would be safe however it will certainily be devalued no matter what happens.

who_ru

Spanish bonds rates have risen today to nearly 7%. None of the measures taken by European leaders have managed to prevent the price of servicing debt by European countries soaring.

Italy has 300 billion euro of debt rolling over next year, yes 300 billion, in other words it must find this amount domestically to repay its debts or borrowing more. neither is possible, just as we cannot ever be expected to repay our national debt. there is too much debt all across europe.

The ECB doesn't have enough money available to bail out Spain or Italy, either together or individually.

so the only option left is for the ECB to print money, lots of it, maybe a trillion euros to try and stave off the inevitable, (i.e.) the end of the Euro as a currency shared by 17 eurozone countries. it's finished now in all but name.

If the ECB does print money, and it probably will, then our problem will be inflation eroding our savings & purchasing power. this will result in the costs of goods and services skyrocketing i'm afraid.

but the euro is toast, there's no doubt. France will be next in the firing line as French banks are horribly exposed to Greek & Italian debt, debt which neither Greece or italy can possibly hope to repay.

inflation is on the way i'm sorry to say.

kennyb3

How can you say printing money is the only option? There are other scenario's. In the same arguement you say a 17 country euro is toast.

If there is a core euro (or two tier euro), the markets would be likely to lend to Spain and Italy at much lower rates. A closer smaller fiscal union with strict budgetary policies could appease the markets.

I also still forsee a scenario whereby Germany protect themselves and return to the DM (and yes i know the downsides re their exports).

kennyb3

Anyway i've been doing a lot of thinking about some scenario's. I've protected myself as how i see fit anyway so these aren't about me. The below possibilities are hypothectical but i'd welcome some comments:

1. Some people i know have got into NOK and SEK - seen as safe havens -to protect themselves from any euro fall. Obviously there is FX risk.

Is this not seriously risky? To me there are 3 outcomes (simplfying a bit) to this crisis:

a) Money printing - obviously the NOK and SEK will gain on the euro so they are better of - ok

b) The euro comes through and is stronger as a result (be it via a fiscal union or whatever) - The euro strenghtens against the NOK/SEK and they lose out when they change back

c) The Germans adopt the DM and everyone reverts to their own currency - agin id expect them to win.

So they are basically backing the euro to fail/weaken via scenario's 1&3?


2. Why would someone chose the SEK over the NOK? Norway is gas/oil rich and has a massive 500b dollar reserve fund. what is the attraction of sweeden? I don't know alot about it.

3. If everyone reverts back to their own currency what happens the ECB? (it was only established in 1998). It is holding loads of PIGS bonds which never get repaid? If each government prints its own money where does it leave the ECB?

Thoughts/comments appreciated

Wibbs

who_ru wrote: »

France will be next in the firing line...

Well there percentage went up this morning in the bond auctions. Not by much, if I heard the news right, but when France is in some sort of line it's not good, though I predict Portugal is the next one, rather than France.

kennyb3

Wibbs wrote: »

Well there percentage went up this morning in the bond auctions. Not by much, if I heard the news right, but when France is in some sort of line it's not good, though I predict Portugal is the next one, rather than France.

Now borrowing at twice the cost of Germany. The bond markets will continue to attack until something definitive is done.

who_ru

kennyb3 wrote: »

How can you say printing money is the only option?

to date what has worked that has stopped rates demanded by markets rising?

answer - nothing. get rid of Berlusconi, put in place an autocratic unelected govt in Italy and what happened? Italian rates continue their upward trend. Same in Greece, all of this is only rearranging the deck chairs, the problem is there is too much debt in the Eurozone and the markets and everyone knows it.

a treaty change will not alter a single thing, so printing money is realistically the only option left, which will only make matters worse.

The euro is kaputt.

antoobrien

who_ru wrote: »

to date what has worked that has stopped rates demanded by markets rising?

answer - nothing. get rid of Berlusconi, put in place an autocratic unelected govt in Italy and what happened? Italian rates continue their upward trend. Same in Greece, all of this is only rearranging the deck chairs, the problem is there is too much debt in the Eurozone and the markets and everyone knows it.

a treaty change will not alter a single thing, so printing money is realistically the only option left, which will only make matters worse.

The euro is kaputt.

I've been wondering what the endgame was ever since the markets switch to Portugal immediately after getting us into the IMF. I couldn't figure out if it was the breakup of the Euro or the Federal Republic of European States.

It's looking more and more like the former.

kennyb3

who_ru wrote: »

to date what has worked that has stopped rates demanded by markets rising?

answer - nothing. get rid of Berlusconi, put in place an autocratic unelected govt in Italy and what happened? Italian rates continue their upward trend. Same in Greece, all of this is only rearranging the deck chairs, the problem is there is too much debt in the Eurozone and the markets and everyone knows it.

a treaty change will not alter a single thing, so printing money is realistically the only option left, which will only make matters worse.

The euro is kaputt.

Says who - you or the markets? How can you be sure that will satisfy things? It's a guess. Thowing good money after bad isn't necessary the solution.

The German public will not necessarily go for eroding their savings and wealth via inflation. The CD party would not be re-elected in Germany for quite some time (much like FF here). This is a political as well as economic issue.They also fear hyper inflation and dont see why other countries cant live within their means. How will thowing money at the situation encourage countries to be prudent and for europe not to end up in this mess in 5/10 years time again? The Germans want a degree of control.

Germany may well gamble that a strong DM making their exports less competitive may be the lesser of the evils.

However more likely is that they push for a core (themselves, France, Benelux and perhaps a few others) fiscal union with strict budgetary policies. If they can get this the markets will stabilise.

If they wanted to print money they would have long ago - nothing is being done, they are sitting on their hands and talking because they are effectively waiting until the pressure becomes insurmountable and they are begged to step in.

Read between the lines - when you see them voting on allowing countries be brought before the court of justice, the Dutch PM saying countries should be kicked out etc etc.

Doing nothing is exactly the plan - why sort it out now, when you can make others sweat and you get to the point where they ll do anything to solve it. Merkel was putting pressure on Enda yesterday about passing Lisbon III.

Wibbs

who_ru wrote: »

a treaty change will not alter a single thing,

Maybe not economically in the short term, but it brings us closer to a more federalised Europe. So far we've got two countries being governed by the technocrats/bankers/economists as an "emergency measure"*(to deal with technocrats/bankers/economists). Will this pattern happen in Spain next, when their cost of borrowing reaches the critical level? Ditto for Portugal? Too often in history temporary emergency measures become permanent ones. The tinfoil hatters must be having a field day. TBH kinda I'm looking in the kitchen press myself of late...







*though we're having our strings pulled we at least avoided that so far.

who_ru

what do you think are the chances of passing any treaty in this country that seeks to transfer more powers to a federalised europe being controlled by Germany/Technocrats ?

Slozer

Is printing money not the solution to the debt problem?

Print money
Prices go up
People strike/demand for more wages
The debt on mortgages etc becomes less burdensome.

VW 1

Slozer wrote: »

Is printing money not the solution to the debt problem?

Print money
Prices go up
People strike/demand for more wages
The debt on mortgages etc becomes less burdensome.

For years the ECB's number one mantra was to keep inflation low. Universally higher prices from large inflation levels due to printing a trillion euro are not ever going to help the situation we are in.

A rising tide lifts all ships, costs will increase all round the board for production and manufacturing, so people striking or demanding higher wages will have zero affect, people will be made redundant/laid off and businesses will go under again due to lower profit margins and higher costs.

sharper

Slozer wrote: »

Is printing money not the solution to the debt problem?

The current debt problem was caused by attempts to inflate our way out of previous bubbles. Remember the tech bubble that burst in 2000?

The crisis we're in now illustrates the problem: Prices don't rise uniformly or equally. It gets transferred into specific markets by those with the power to do so see the problems on the commodity markets in the last couple of years as newly printed cash was used by financial institutions and investors to corner markets.

Another problem with the "price rise" situation is population demographics. People with fixed pensions gets wiped out. Your fund value becomes "worth" less and less.

Finally and worst of all it prevents the economy from restructuring itself. Would we be targeting social welfare fraud if we weren't short on money? Would we be reforming public sector perks like "cheque time"? The answer is no, they'd remain.

kennyb3

who_ru wrote: »

what do you think are the chances of passing any treaty in this country that seeks to transfer more powers to a federalised europe being controlled by Germany/Technocrats ?

None at present. But wait and see - we either wont matter or be given a choice. The rules can be redefined - see the stability and growth pact for example which went out the window as necessary.

kennyb3

sharper wrote: »

Another problem with the "price rise" situation is population demographics. People with fixed pensions gets wiped out. Your fund value becomes "worth" less and less.

Exactly Germans save 1 in 3 euro on average, why would they want this eroded!

sharper wrote: »

Finally and worst of all it prevents the economy from restructuring itself. Would we be targeting social welfare fraud if we weren't short on money? Would we be reforming public sector perks like "cheque time"? The answer is no, they'd remain.

Exactly again if Germany or the ECB intervenes too soon no changes are implemented and we continue down the same path. This way they can squeeze other countries although obviously its a risky game with their own banks heavy exposure

amacca

who_ru wrote: »

what do you think are the chances of passing any treaty in this country that seeks to transfer more powers to a federalised europe being controlled by Germany/Technocrats ?

hopefully zero....

but my naivete and faith in humanity has led to disappointment unfortunately.....................its quite frightening how the sheeple have been manipulated in the past....and in general the two best motivating tools they have at their disposal are greed and fear in that order.