Failing Euro

kapa

I was recently made redundant and got €20k which is sitting in my bank account but I dont know what to do with it. All the experts say to buy gold/silver or australian dollars but nobody says how to do this. This is my only savings and I would crack if I lost it. I m sure a lot of other people are in the same position. Has anyone got any ideas what is best to do with it.

FernandoTorres

All the experts said to buy property a few years ago...my advice is do your own research. Invest some of your time into understanding the asset classes and the markets work before investing all your savings!

kapa

thanks Fernando

OfflerCrocGod

What's wrong with leaving it where it is? Why does anyone given money suddenly need to do something/anything with it?

rubadub

OfflerCrocGod wrote: »

What's wrong with leaving it where it is?

It could be turned into a new irish currency and devalued. So basically now his 20k might buy 2 new cars imported from the US, but maybe only 1 if his euros are converted to a devalued currency which in turn buys him far less US$. If he converts now to a more stable currency now he can still buy 2 new cars, or buy back lots more of the new irish currency.

Jim2007

keithob wrote: »

First and foremost id take it out the bank and i would enquire about opening a swiss bank account and depositing it there.

My opinion is based on the the basis that the wealth class and those that can afford top end financial advice have been doing the above over the past 2 mths on a massive scale..

The media wont advertise this off course .... because it will be scare mongering... !

An Punt Núa!

A couple of months ago the SNB pegged the CHF to the Euro because our economy was taking a bounding as a result of the high exchange rate... Foreign depositors lost about 20% as a result! Things have not improved and in the coming weeks the SNB is expected to begin further market operations to push the CHF down another 10% to 15%. Based on their last report the SNB has over 600b in Euros alone in reserves, so they are well capable of doing this.

Based on a recent SNB report, deposits at Swiss banks have fallen by about CHF80b, not gone up as you suggested!

As in previous occasions, the Swiss banks are unhappy about the high level of foreign deposits, because it is unprofitable for them... Those banks that are members of the Swiss Bankers Assoc.(SBA) are currently considering reimposition of deposit penalties to encourage clients to either invest their money in Swiss investment products or move their deposits elsewhere.

irishh_bob

kapa wrote: »

I was recently made redundant and got €20k which is sitting in my bank account but I dont know what to do with it. All the experts say to buy gold/silver or australian dollars but nobody says how to do this. This is my only savings and I would crack if I lost it. I m sure a lot of other people are in the same position. Has anyone got any ideas what is best to do with it.

diversification is the name of the game , heres what i would do

take out half of it and invest it in gold , ring goldcore in dublin

deposit the remaining 10 k in rabbodirect bank , they are dutch so you dont have to worry about a worthless irish goverment guarentee if the sh1t hits the fan , now i know in a scenario like this , your 10 k in euro would devalue but on the flip side , your gold would skyrocket in punt nua , therefore cancelliing out any loss in your savings

handlemaster

irishh_bob wrote: »

diversification is the name of the game , heres what i would do

take out half of it and invest it in gold , ring goldcore in dublin

deposit the remaining 10 k in rabbodirect bank , they are dutch so you dont have to worry about a worthless irish goverment guarentee if the sh1t hits the fan , now i know in a scenario like this , your 10 k in euro would devalue but on the flip side , your gold would skyrocket in punt nua , therefore cancelliing out any loss in your savings

I think rabbo direct are operating under the Irish Financial regulator... I stand to be corrected. If so it would be that same as depositing money in any other irish financial institution.

woodseb

irishh_bob wrote: »

diversification is the name of the game , heres what i would do

take out half of it and invest it in gold , ring goldcore in dublin

deposit the remaining 10 k in rabbodirect bank , they are dutch so you dont have to worry about a worthless irish goverment guarentee if the sh1t hits the fan , now i know in a scenario like this , your 10 k in euro would devalue but on the flip side , your gold would skyrocket in punt nua , therefore cancelliing out any loss in your savings

and if the **** doesn't hit the fan, Gold could move back towards say $1400 (i don't know where it could go but it's not beyond the realms of possibilty) , giving you a c20% loss on your 10k investment

i'm not giving advice on what to do with your money - both have risks that you should be aware of

o1s1n

How about opening a bank account in a European country with the strongest economy? (Germany maybe?)

You'll still have your money in Euro...but if the whole thing does collapse, at least it'll be converted 1:1 to a currency which is worth something. Rather than the Punt.

I'm sure there are lots of holes in the above, but it seems better than losing money in exchange fees?

Jim2007

woodseb wrote: »

and if the **** doesn't hit the fan, Gold could move back towards say $1400 (i don't know where it could go but it's not beyond the realms of possibilty) , giving you a c20% loss on your 10k investment

Or if the SNB decides to use some of it's gold reserves to continue or force the CHF down against the Euro... last reported figures were CHF200b at 2005 prices and no report sales since then... since the CHF is no longer backed by gold it is a fair bet that some of it will hit the markets in the coming months as the SNB continues it's market operations

Gurgle

kapa wrote: »

All the experts say to buy gold/silver or australian dollars but nobody says how to do this.

All the experts bought gold, silver etc around 2 to 3 years ago.
http://www.goldprice.org/spot-gold.html
Now it seems to have topped out, so they're ready to cash in and sell their holdings. To You.

Same thing the experts did with the property boom.

Profits are made by buying cheap and selling dear, but you need someone to sell to.

The Irish Riddler

kapa wrote: »

All the experts say to buy gold/silver or australian dollars but nobody says how to do this.

What experts are saying to buy Australian dollars and what is their reason behind this advice?

cena

keithob wrote: »

First and foremost id take it out the bank and i would enquire about opening a swiss bank account and depositing it there.

My opinion is based on the the basis that the wealth class and those that can afford top end financial advice have been doing the above over the past 2 mths on a massive scale..

The media wont advertise this off course .... because it will be scare mongering... !

An Punt Núa!

How do you go about opening one of them

saywhatyousee

Stay away from the AUS $ ITS massively overvalued at the minute i got burned with it so many times in the past.

The Irish Riddler

keithob wrote: »

First and foremost id take it out the bank and i would enquire about opening a swiss bank account and depositing it there.

My opinion is based on the the basis that the wealth class and those that can afford top end financial advice have been doing the above over the past 2 mths on a massive scale..

The media wont advertise this off course .... because it will be scare mongering... !

An Punt Núa!

Have you been following the fluctuations in the Swiss franc? Hardly a safe haven.

justforgroups

rubadub wrote: »

It could be turned into a new irish currency and devalued. So basically now his 20k might buy 2 new cars imported from the US, but maybe only 1 if his euros are converted to a devalued currency which in turn buys him far less US$. If he converts now to a more stable currency now he can still buy 2 new cars, or buy back lots more of the new irish currency.

Hopefully everyone can now see that this has turned out to be complete rubbish so best just to stick it into an EBS Family Saving account earning 4% - you'll be getting about €800 a year.

The Irish Riddler

Its always going to be 'rubbish' until the day it isn't and then it will be too late to do anything about it.

books4sale

The Euro won't fail, just a bunch of scarmongering propaganda.

The number of threads on this alone speaks volumes for the kind desperation that the anti-Euro brigade are feeling right now.

The stepping stones to a recovery are being built. We are on the way back.

SyntonFenix

Fitch says that following last week's EU summit, it "has concluded that a 'comprehensive solution' to the Eurozone crisis is technically and politically beyond reach."

http://www.youtube.com/watch?v=9C_NooAbvAs

handlemaster

books4sale wrote: »

The Euro won't fail, just a bunch of scarmongering propaganda.

The number of threads on this alone speaks volumes for the kind desperation that the anti-Euro brigade are feeling right now.

The stepping stones to a recovery are being built. We are on the way back.

Care to back this up

books4sale

handlemaster wrote: »

Care to back this up

Positive mental attitude and investing go hand in hand.

coolbeans

books4sale wrote: »

Positive mental attitude and investing go hand in hand.

When you look at the fundamentals of the current situation there seems to be very little tangible to support what you’re saying. You say it’s all scaremongering but you seem to be guided exclusively by your own optimism. I hope the eurozone does not restructure or collapse entirely but to dismiss the possibility based on the rationale outlined is hopeful to say the least.

soddy1979

books4sale wrote: »

Positive mental attitude and investing go hand in hand.

Keep your emotions out of investing. Optimism (and pessimism alike) cloud investment decisions. Invest based on facts. If the facts change, reassess your position.

Jim2007

SyntonFenix wrote: »

Fitch says that following last week's EU summit, it "has concluded that a 'comprehensive solution' to the Eurozone crisis is technically and politically beyond reach."

At this point in time the rating agencies have lost all credibility - their opinions are no better or no worse than any other of the talking heads. On top of that you have to remember that they are paid for their ratings and right now many of their customers are betting against the Euro.....

We are only at the beginning of negotiations and there is no way of tell how these talks will turn out - so from my point of view their comments are pure speculation at this point.

I should think at this stage the most obvious outcome is the one no talked about - the do nothing option!

liammur

Jim2007 wrote: »

A couple of months ago the SNB pegged the CHF to the Euro because our economy was taking a bounding as a result of the high exchange rate... Foreign depositors lost about 20% as a result! Things have not improved and in the coming weeks the SNB is expected to begin further market operations to push the CHF down another 10% to 15%. Based on their last report the SNB has over 600b in Euros alone in reserves, so they are well capable of doing this.

Based on a recent SNB report, deposits at Swiss banks have fallen by about CHF80b, not gone up as you suggested!

As in previous occasions, the Swiss banks are unhappy about the high level of foreign deposits, because it is unprofitable for them... Those banks that are members of the Swiss Bankers Assoc.(SBA) are currently considering reimposition of deposit penalties to encourage clients to either invest their money in Swiss investment products or move their deposits elsewhere.

I remember doing FX transactions 5 years or thereabouts and the swiss franc was a lot weaker back then. A €1 to CHF 1.6. They have huge exposure to the € banks, things could get nasty.

Putting some money to £ is ok imo, some QE and it may lose a few %, but I can't have enough £ anyway.

Jim2007

liammur wrote: »

They have huge exposure to the € banks, things could get nasty.

Exactly who has the exposure to the exposure and what is the source of your data?

hmmm

According to the International Monetary Fund (IMF), about two thirds of the debt of Greece is held by foreign creditors – an above average value. European Banks are particularly involved. According to data from the Bank for International Settlements, Swiss institutions, at around 68 billion francs, rank as one of the largest donors. Only the French banks, with 80 billion francs [of exposure] have stashed a bit more money in Greece.

But in relation to GDP, the risk to Switzerland, according to FTD, is the highest by far: According to Morgan Stanley economists [Swiss] commitment in Greece comes to almost twelve percent of Swiss GDP. France follows as the largest country in the eurozone at 2.5 percent.

SyntonFenix

https://www.youtube.com/watch?v=Aly10d8VBZ0

fodda

Common sense and all true.

stackerman

Indeed, but don't forget that they have their own agenda and problems. which is why they would not agree to the deal. Shame he can't use the same logic when looking closer to home :rolleyes:

The UK debt to GDP of the financial sector ALONE is 60%

Jim2007

A lot of nonsense!!!

At the end of the day a currency is a means of facilitating the exchange of goods and services and to blame everything on it's existence, simply wrong! If they were some how able to unbundle the Euro tomorrow it would not make a blind bit of difference because the underlying economies would still be in the same state as they are now!

As for this idea of being able to devalue a currency and trade your way out of trouble, there are only two problems with it, first it could only work if your trading partners were not in a recession as well and second given the chance every country will do the same, so we would be back to square one or even worse some kind of downwards spiraling devaluation war.

We regularly here this kind of stuff being spouted by talking heads, but both the US and the UK have this option and still have a major recession on their hands... if it was that simple how come they have not sorted it out by now???

As for the UK veto... a great bit of politicking on DC's part - it achieved nothing because the UK still has to comply with the so called "Six Pack" that came into force just before Christmas! Take a good look it it and you'll see that it goes a long way to what he claimed he had avoided....

There is one group that would benefit big time from a break up right now and that is the dealers/fund managers in the "City" who have bet against the Euro... so it should not come as any surprise to find a member of the Conservative Party on TV talking this up, given their supposed close links to the "City"

fodda

Jim2007 wrote: »

A lot of nonsense!!!

fodda

keving wrote: »

Indeed, but don't forget that they have their own agenda and problems. which is why they would not agree to the deal. Shame he can't use the same logic when looking closer to home :rolleyes:

The UK debt to GDP of the financial sector ALONE is 60%

I know but everybody has problems and the people know that and still want out.......and that is and should be what it is all about and they should have their say.

Trouble is as the EU's second largest contributor, if they did leave the others wont be happy.

Jim2007

fodda wrote: »

I know but everybody has problems and the people know that and still want out.......and that is and should be what it is all about and they should have their say.

It always amuses me to think that a people who do some much shouting about sovereignty and self determination, lack the most basic tool of democracy - a written constitution to control their parliament

fodda wrote: »

Trouble is as the EU's second largest contributor, if they did leave the others wont be happy.

Yes but in net terms it's about €5 - €6 billion, which is peanuts in comparison to the other figures being discussed...

OfflerCrocGod

The € is actually a deflationary instrument - it's the modern day equivalent of the gold standard. There is a balance of payments crisis in eurozone and the Germans are forcing deficit countries to adjust their BoP while they are not changing their stance. In other words all the adjustment is being forced on the debtor and the creditor is getting away with no adjustments.

Without exchange rate flexibility the only tools available for debtors countries is internal deflation via prolonged slumps and high unemployment.

The reason the US and UK are not in the same situation as the eurozone is due to the fact that they are truly sovereign with regards their currencies, you can't print €/gold but you can print $/£ if you are the US/UK.

For investors the concern is not so much a return on capital as return of capital, they have seen Greek bonds being haircut so they would rather park money in the UK/US as they are safer/saner environments for large amounts of savings.

Jim2007

OfflerCrocGod wrote: »

The reason the US and UK are not in the same situation as the eurozone is due to the fact that they are truly sovereign with regards their currencies, you can't print €/gold but you can print $/£ if you are the US/UK.

They are in the recession the same as everyone else and they are no more able to get out of than anyone else no matter what kind of economic analysis you care to spread over it!!!

OfflerCrocGod

Jim2007 wrote: »

They are in the recession the same as everyone else and they are no more able to get out of than anyone else no matter what kind of economic analysis you care to spread over it!!!

They are not enduring a sovereign debt crisis due to being locked in a modern day gold standard.

This difference results in this. US would be next to UK.

OfflerCrocGod

Jim2007 wrote: »

They are in the recession the same as everyone else and they are no more able to get out of than anyone else no matter what kind of economic analysis you care to spread over it!!!

Also the US isn't in recession and the UK is basically stagnant which is better then our declines.

The solution to the problems in the eurozone are known and have been around for years it's just Germany refuses to accept them.

Jim2007

OfflerCrocGod wrote: »

Also the US isn't in recession and the UK is basically stagnant which is better then our declines.

The solution to the problems in the eurozone are known and have been around for years it's just Germany refuses to accept them.

OfflerCrocGod wrote: »

They are not enduring a sovereign debt crisis due to being locked in a modern day gold standard.

This difference results in this. US would be next to UK.

The gold standard stuff has been rehashed in one form or another for decades and it's failure and decline well documented and I have no intention in adding to it....

OfflerCrocGod

Jim2007 wrote: »

The gold standard stuff has been rehashed in one form or another for decades and it's failure and decline well documented and I have no intention in adding to it....

In truth, the gold standard is already a barbarous relic. (1924) - John Maynard Keynes

I agree it's a failure, and that is why I think that the € could well fail unless Germany stops crucifying people on a Cross of €.

Something must happen because the € as it stands just doesn't work. A people should not be slaves to their currency, they should be it's master.

I hope it's not some fudge with the ECB just nodding through massive long term ELAs and expecting countries to suffer years of deflation. Germany's economic model is simply not scalable. Will we export cars to Mars?

shangri la

How is leaving the euro and devaluing the new currency good for us?

OfflerCrocGod

shangri la wrote: »

How is leaving the euro and devaluing the new currency good for us?

Who knows what the actual level of any new punt currency would be at but I would not be too surprised if the punt would gradually become stronger then the € due to our outsized export sector and eventual positive BoP.

I don't think leaving the € is currently a good idea, I hope that eventually a proper solution will be found to the current mess which won't involve pro-cyclical austerity in member countries. Maybe Greece being kicked out/defaulting will bring the situation to a head? Either which way I can only imagine a € break up under extreme circumstances and I hope it does not happen.

The coming year will bring clarity.

OfflerCrocGod

shangri la wrote: »

How is leaving the euro and devaluing the new currency good for us?

As for how it may help us there is a known principal to deal with the onerous debt Ireland has taken upon itself. Which would allow it to repay the debts in full with it's own sovereign currency, the Irish state would return to it's normal role as a currency issuer as opposed to it's current role as currency user.

Hence the strength of the UK/US position compared to a eurozone member.

hmmm

shangri la wrote: »

How is leaving the euro and devaluing the new currency good for us?

Because some people think it is a magic bullet, painless solution to our problems. Funnily enough, these are often the same people who were telling us all to buy property a few years ago, which would lead to us all becoming effortlessly rich.

fodda

hmmm wrote: »

Because some people think it is a magic bullet, painless solution to our problems. Funnily enough, these are often the same people who were telling us all to buy property a few years ago, which would lead to us all becoming effortlessly rich.

That's a bit of an exact statement........Got any proof/links of these people telling us this and links to their property economic advice?

fodda

shangri la wrote: »

How is leaving the euro and devaluing the new currency good for us?

Ireland after a lot of initial upheaval would start to grow as their products would be far cheaper than other rivals because the new currency would be worth a lot less than others. Also businesses would be finding Ireland attractive to invest in because of cheap labour costs and low tax rates for investment.

Downside is Ireland is starting from scratch as it doesnt have a manufacturing economy or a skilled workforce. Staying as they are Ireland is just going to sit in the middle of a cess pool waiting for events to swing back in to Europes favour and maybe this may be passed down the line to Ireland if it suits their situation.

There isnt an easy way but leaving looks more attractive than staying, but events beyond Irelands control may produce the same situation anyway.

As regards debt i dont think this will ever be repaid by any country, it just needs a complete new system as most of these countries economies can only run by huge government borrowing. Stopping this would need huge tax rises or/and mass huge forced public wage cuts and redundances so govenments can only spend what they take in in revenue.

OfflerCrocGod

For Ireland to unilaterally leave the € would be a serious mistake. It's better to be cautious and wait to see how the situation in the rest of the €-zone settles. If Ireland get's to the point that it feels forced to leave other, relatively weaker, countries would have left before it.

Better not to be remembered as the country that caused a global depression, let someone else do that and afterwards if needs be we leave with a general unraveling of the €.

The debt of a country is never repayed, it is either inflated or grown out of, usually a combination of the two. A country is not like a household or a company.

shangri la

Looking for more experienced advice...

My way of looking at this is Ireland have borrowed E63bn to recapitalise the banks from the IMF and European agencies. If we leave the Euro we will still owe E63bn and due to a devalued currency we will find it more difficult/impossible to meet the repayments > we default > the ATMs empty > the skilled workforce emigrate due to higher wages abroad > we dont have the workforce to attract FDI > all irish banks fold > Ireland goes down the ****ter and is left with an elderly and unskilled population ( feck all tax base).

Is this train of thought correct?

OfflerCrocGod

Not necessarily - as I said leaving the euro unilaterally is bad idea but if we did defaulting on debt isn't required. The debt is usually denominated in the country's currency, so our bonds would convert to our new currency. We wouldn't pay in € we'd pay in Irish £, now that may plummet for a while but that's no skin of our nose.

The IMF component of the loan may be in $ but that may well be manageable.

Basically that's what Lex Monatea means, we can change our currency and it's not a default.