Protecting Savings

tails_naf · 09-11-2010 12:29PM #1

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 · 09-11-2010 12:47PM

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

ART6 · 09-11-2010 12:54PM

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 · 09-11-2010 01:05PM

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 · 09-11-2010 01:12PM

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 · 09-11-2010 01:13PM

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 · 09-11-2010 01:17PM

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 · 09-11-2010 01:26PM

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 · 09-11-2010 01:29PM

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 · 09-11-2010 01:32PM

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 · 09-11-2010 01:32PM

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 · 09-11-2010 01:33PM

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 · 09-11-2010 01:36PM

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 · 09-11-2010 01:38PM

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 · 09-11-2010 01:39PM

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 · 09-11-2010 01:41PM

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 · 09-11-2010 01:42PM

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 · 09-11-2010 01:43PM

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 · 09-11-2010 01:44PM

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 · 09-11-2010 01:47PM

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 · 09-11-2010 01:50PM

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 · 09-11-2010 01:54PM

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 · 09-11-2010 02:21PM

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 · 09-11-2010 02:30PM

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 · 09-11-2010 02:31PM

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 · 09-11-2010 02:55PM

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 · 09-11-2010 03:14PM

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 · 09-11-2010 03:14PM

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 · 09-11-2010 03:29PM

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 · 09-11-2010 03:47PM

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 · 09-11-2010 03:52PM

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 ?

Protecting Savings

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