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Banks Still Alive - Why?


absconded

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Joined
Jan 31, 2009
Messages
398
Pardon my ignorance, I´m a layman and not an economist.

It´s dawned on me that my doom predictions for the banks over the last year have thankfully not come about.

I´ve got it wrong. They have not collapsed.

Keeping my first line in mind, can someone with greater knowledge than myself explain how there has not been a run on the banks given the following:

Roughly €1,000 Billion owed by the country between public and private debt.

The State is taking on €50 + Billion of bad loans racked up by banks/developers.

The State which is running massive budget deficits saying it can guarantee your deposit.

Shrinking Tax take and soaring unemployment & outward migration.

So why is there still between €80 ~ €180 Billion on deposit with Irish Banks (Depending on which figure you believe)?

On the face of it you would think that leaving money on deposit with a bank that is only existing due to a guarantee made by a bankrupt government is not guaranteed at all.

Have I been way off the mark, or is a run on the banks inevitable?
 

Squire Allworthy

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Joined
May 31, 2007
Messages
1,404
The state has made itself liable and has guaranteed the deposits and more besides.

So the question becomes much more interesting, how will the country fair?
 

roc_

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Dec 5, 2009
Messages
6,468
(a) Think of the facts of the situation as it really is - the figures as they stand; the opinions of properly detached economic observers who have done their time in economic science; the historical precedents of countries who have experienced similar economic and social phenomena as us; the bent of the ruling politicians and big business who are symbiotically intertwined and whose intentions are quite clear to most independent thinking people...

(b) Now think of how our media apparatus communicates this situation, and the pictures and 'facts' and accompanying emotions that forms in the mind, on account of the manner in which it transmits to our minds this situation.

Scary, huh? - It's a modern form of totalitarianism. We inhabit a world that is removed from reality on account of it.
 
Joined
Sep 10, 2008
Messages
3,584
The banks are alive for one reason.

Spinless Irish people who bend over backwards whilst their government shovel`s our money into their greedy vaults.

And to top it all off they now want to start evicting us from their homes.

Que - Are sure, what can we do about it.
 

absconded

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Joined
Jan 31, 2009
Messages
398
(a) Think of the facts of the situation as it really is - the figures as they stand; the opinions of properly detached economic observers who have done their time in economic science; the historical precedents of countries who have experienced similar economic and social phenomena as us; the bent of the ruling politicians and big business who are symbiotically intertwined and whose intentions are quite clear to most independent thinking people...

(b) Now think of how our media apparatus communicates this situation, and the pictures and 'facts' and accompanying emotions that forms in the mind, on account of the manner in which it transmits to our minds this situation.

Scary, huh? - It's a modern form of totalitarianism. We inhabit a world that is removed from reality on account of it.
Scary indeed, I wonder if people thought of their money as having been given for safekeeping to a terrible businessman being guaranteed by a drunken endebted gambler would they feel so confident. I only leave pocketmoney in their at the end of each month.
Salary paid in - outgoings covered - remainder withdrawn. But leaving money on deposit? No Way:lol:
 

absconded

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Joined
Jan 31, 2009
Messages
398
The state has made itself liable and has guaranteed the deposits and more besides.

So the question becomes much more interesting, how will the country fair?
Run on Banks = State Collapses?

No Bond buyers = Banks Collapse?

I keep think I´m missing something, I can´t figure why there´s that much money on deposit if its security is so uncertain.
 

lonemother

Active member
Joined
Sep 16, 2009
Messages
110
I know two events are never the same, however some of the similarities between the corruption, cheap credit, ties to a strong currency, debt and difficulty with repayment leading up to the Argentine crisis have uncomfortably familiar echoes. Like all crises or disasters it’s a pattern of weaknesses & failures in the overall system which leads to collapse, never a big bang. I’m sure this is far from the definitive version, as many will probably point out, however it gives a good idea of the trip, the fall & how they dusted themselves off & got back up and running again. We’ll have our own entry in a few years, I’d say the current one has been written a bit too soon.
http://en.wikipedia.org/wiki/Argentine_economic_crisis_(1999%E2%80%932002)

And for the day that’s in it…. GO ON IRELAND!
 

absconded

Well-known member
Joined
Jan 31, 2009
Messages
398
I know two events are never the same, however some of the similarities between the corruption, cheap credit, ties to a strong currency, debt and difficulty with repayment leading up to the Argentine crisis have uncomfortably familiar echoes. Like all crises or disasters it’s a pattern of weaknesses & failures in the overall system which leads to collapse, never a big bang. I’m sure this is far from the definitive version, as many will probably point out, however it gives a good idea of the trip, the fall & how they dusted themselves off & got back up and running again. We’ll have our own entry in a few years, I’d say the current one has been written a bit too soon.
http://en.wikipedia.org/wiki/Argentine_economic_crisis_(1999%E2%80%932002)

And for the day that’s in it…. GO ON IRELAND!

OK, I can see from that that a government solution to our problem might be to freeze your € account deposit while it leaves the Eurozone and starts paying you worthless crap punts. etc etc IMF etc etc etc.

That´s all the more reason for a run on the banks, no?
 

Broke

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Joined
Oct 1, 2010
Messages
480
Banks are still going

Pardon my ignorance, I´m a layman and not an economist.

It´s dawned on me that my doom predictions for the banks over the last year have thankfully not come about.

I´ve got it wrong. They have not collapsed.

Keeping my first line in mind, can someone with greater knowledge than myself explain how there has not been a run on the banks given the following:

Roughly €1,000 Billion owed by the country between public and private debt.

The State is taking on €50 + Billion of bad loans racked up by banks/developers.

The State which is running massive budget deficits saying it can guarantee your deposit.

Shrinking Tax take and soaring unemployment & outward migration.

So why is there still between €80 ~ €180 Billion on deposit with Irish Banks (Depending on which figure you believe)?

On the face of it you would think that leaving money on deposit with a bank that is only existing due to a guarantee made by a bankrupt government is not guaranteed at all.

Have I been way off the mark, or is a run on the banks inevitable?
The banks are still alive because the two Brians are looking after there mates in the banks and Galway tent.
 

lonemother

Active member
Joined
Sep 16, 2009
Messages
110
OK, I can see from that that a government solution to our problem might be to freeze your € account deposit while it leaves the Eurozone and starts paying you worthless crap punts. etc etc IMF etc etc etc.

That´s all the more reason for a run on the banks, no?

It's certainly one scenario, a pretty doomsday & scary one at that. I'm one of those who has a (very) small few quid in the bank & I've decided to research the options on getting some of it out of here. It appears a couple of UK banks may offer some options, including euro accounts, I really haven't enough information on these yet. They appear to be more holding accounts with poor interest rates. Anyone who has advice, please feel free to let us know. Like everyone, the unknown, the fear of the half understood/misunderstood & the constant bad news are making me nervous. It's all jumpy heard stuff and I don't fancy being on the outside.
 

absconded

Well-known member
Joined
Jan 31, 2009
Messages
398
It's certainly one scenario, a pretty doomsday & scary one at that. I'm one of those who has a (very) small few quid in the bank & I've decided to research the options on getting some of it out of here. It appears a couple of UK banks may offer some options, including euro accounts, I really haven't enough information on these yet. They appear to be more holding accounts with poor interest rates. Anyone who has advice, please feel free to let us know. Like everyone, the unknown, the fear of the half understood/misunderstood & the constant bad news are making me nervous. It's all jumpy heard stuff and I don't fancy being on the outside.
Setting up offshore accounts is getting trickier due to money laundering rules, however still possible. Although it´s hard to know if during a general banking collapse you´d be able to get hold of your money held outside the state without traveling.
My bet for small amounts is to keep it in cash.
 

lonemother

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Sep 16, 2009
Messages
110
Not in this postal code! Even the banks are possibly safer..........
 

hmmm

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Oct 4, 2006
Messages
2,834
On the face of it you would think that leaving money on deposit with a bank that is only existing due to a guarantee made by a bankrupt government is not guaranteed at all.

Have I been way off the mark, or is a run on the banks inevitable?
Because we are not bankrupt. You would assume from reading all the threads on here that we are bankrupt or about to go bankrupt within a few days, but the fact is we aren't and we won't. People like Cassandra wishing it does not make it true. Neither is the world's financial system about to collapse any day soon.

Ultimately, even if we can't borrow money on the markets we will be backstopped by the European fund which means that bankruptcy/default is extremely unlikely. What is likely is we will have to get used to being a bit poorer, plus we will have a large debt to pay off which will take a decade or two of further pain. Even so, no Irish person is going to starve and no-one will be homeless unless they choose to be.

That is the reason why there are large deposits in Irish banks and will continue to be large deposits in the future.
 

lonemother

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Sep 16, 2009
Messages
110


hmmm, like the crazy financial times?
Ireland's taxpayers have shouldered too much By Wolfgang Münchau
Published: October 3 2010 19:49 | Last updated: October 3 2010 19:49
FT.com / Columnists / Wolfgang Münchau - Ireland
The European political establishment recoils so much at the idea of default, it is willing to accept extreme hardship. Just look at Latvia. But Latvian brutalism is not going to be realistic for Ireland. Brian Lenihan, the Irish finance minister, might wish to ponder whether his monumentally unfair taxpayer bail-out is what will ultimately “bring down Ireland”.
 

lonemother

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Sep 16, 2009
Messages
110
You keep telling us we're not bankrupt, does it have any caveat on it, or are you Brian sure? We've got major problems and an pretty implausible solution at present. Your in 'finger crossed territory' as far as I'm concerned. Only the ECB are lending, what happens if Portugal starts to go down too? Will the fund if tapped by too many countries cause too much political stress in the stronger lending countries? I'm not wishing doom, I'm looking for hope here. The 'not bankrupt' answer isn't fully convincing me. More assistance needed, I'm happy to listen.
 

hmmm

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Oct 4, 2006
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2,834
The 'not bankrupt' answer isn't fully convincing me.
What does bankruptcy mean for a country? It means being unable to borrow further funds. We can borrow now and we will be able to in the future. If the markets won't lend to us we can borrow from the European fund setup for this purpose. They'll impose strict conditions, but we are not bankrupt.

2 years ago, in the midst of the worldwide financial crisis there was a real risk that European countries and banks could go kaput, that risk has passed.

We're in this situation of not being bankrupt thanks to the (forced) generosity of our European neighbours however, if we were on our own we'd be finished.
 

absconded

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Joined
Jan 31, 2009
Messages
398
What does bankruptcy mean for a country? It means being unable to borrow further funds. We can borrow now and we will be able to in the future. If the markets won't lend to us we can borrow from the European fund setup for this purpose. They'll impose strict conditions, but we are not bankrupt.

2 years ago, in the midst of the worldwide financial crisis there was a real risk that European countries and banks could go kaput, that risk has passed.

We're in this situation of not being bankrupt thanks to the (forced) generosity of our European neighbours however, if we were on our own we'd be finished.
WTF are you talking about?
I save my own money and you are in no way convincing me to put it in the bank.
Euro coming to save us my ass! And I guuss neither of the brians is storing their loot onshore either. Explain to me again why we are not bankrupt considering what I took trouble to outline to you in the original post. Please explain where the money is coming from. Mayo gas?
 

conservative green

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Oct 1, 2008
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I woudn't worry about the security of your deposits. The ECB will not allow default on banks deposits in a member state.
 

absconded

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Jan 31, 2009
Messages
398
I woudn't worry about the security of your deposits. The ECB will not allow default on banks deposits in a member state.

I´m amazed by the blaze attitude of you and others.

Seems like we in Ireland are allowed print green/blue backs forever. I don´t understand. We owe lots of money, we make feck all, and you guys are saying don´t worry about a thing.
Morally the banks should sink, and your expectation for the EU to come and save us from this FF created mess is apalling.Or does the EU owe us a living after FF telling lies to the woeld about us being fabulous for the last 20 years.
 
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