Should people starting perparing for a default

heads.crack.goo.feast.time.???I've my machete ready, and a list of feckers with tinned goods drawn up.:rolleyes: Yawn. We don't scare so easily anymore OP, we've all been here too many times, thanks to jonjothemiser.

There will be two euros.

The good one. And the not so good one.

My money is in a German bank so I hope I made a good choice.

phasers wrote: »

This is the main part I don't understand. I don't trade on international markets, I buy milk in aldi. How can the money just become worthless?

Prices change so rapidly that everyday items rise exponentially and money becomes worthless.

Look up cases such as these:http://www.cnbc.com/id/41532451/The_Worst_Hyperinflation_Situations_of_All_Time?slide=4

Do note though that these are the ultra worst case scenarios. But this is how your money could conceivably become worthless. Whether you buy milk in Aldi or not is irrelevant if the cost of milk rises 1000% in a week. Unless you plan on sucking milk straight out of a tit, you're in bad luck!

Tadeo Square Granola wrote: »

We wont default,we have the croke park agreement :rolleyes:

:rolleyes:

Tadeo Square Granola wrote: »

Argentinian default lead to rioting overnight,i think this bank guarantee was ministers jumping to save their pensions and not to be strung up and hung by the general public.

The problem is Ireland would just go "ah jaysus, bleeding recessiont!"

And then Joe Duffy would have a field day.

So deposits aren't safe? what about online banks like Rabo and (is Northern Rock still going?)

@ sqoud, I thought the dollar was screwed too??

phasers wrote: »

So what will actually happen if Ireland defaults? I honestly don't understand.

The short answer is, nobody really knows because there has never been a sovereign default within a currency union before.

The long answer...

Normally if a country defaults, it means that they don't meet their scheduled debt payments. At this point, a country is usually running a deficit, and relies on investors buying government debt in order to keep the government running. As a result of the default, however, they are shut out of international markets (because the interest rate on their debt becomes too high to credibly borrow) and the IMF comes in with emergency loans. These loans are contingent on deep cuts in public spending, which usually involves mass layoffs and reductions in social welfare programs. In the short term, unemployment and poverty spike; the question is, how fast do they come back down again. When Argentina defaulted, unemployment spiked to over 25%, and a third of the country was thrown into poverty.

If a country controls their own currency, they may start printing money before a default, which would inflate away debt, but drive up inflation. This essentially destroys the savings of middle class people, and hits poor and working-class consumer particularly hard, as food and fuel costs may skyrocket (especially if these are imported goods). If a country controls its own currency during a default, it generally plunges in value (thus creating the same effect as printing money - there is too much currency floating around).

Now Ireland is already shut out of international markets. The IMF has already come in, although to date Ireland has not made nearly the kinds of cuts experienced in Latin American countries in the 80s and 90s. Ireland also doesn't control its own currency. It can't inflate its way out of crisis. And it missed its opportunity to burn the banks (a la Iceland) with the 2008 blanket guarantee. In the meantime, investors have turned their ire on Spain and Italy, who together account for something like 18-20% of the EU's GDP (but don't quote me on that!). Given all of these factors, at this point, I don't really think anybody can credibly predict what will happen if Ireland defaults: will the ECB intervene? Will the German public rebel against monetary transfers? Will a major Spanish or Italian bank collapse?

Nobody really knows at this point, and that is what makes a lot of people nervous.

ilovesleep wrote: »

The dollar is also on the verge of collaspe.

God!