Tuesday, Sep 30, 2008
Ireland Keeps It Safe
BBC News: Irish Government Guarantees Banks
On Tuesday, the Department of Finance said the state would safeguard all deposits, bonds and debts in six banks and building societies for two years.
Posted by yoyo1 @ 12:58 PM (695 views) Add Comment
11 Comments
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1. planning4acrash said...
God help us! Hey, since its our money, can i be guaranteed?
2. tyrellcorporation said...
Coming to a UK government near you soon!
3. Cheekie Charlie said...
Trying to tempt UK savers to a safe haven? I don't think so I would stear clear of Irish and Spanish Banks.
4. timmy t said...
Reckon the UK will have to match it otherwise I can see a flood of cash going to Ireland!
5. crutchley said...
I suppose this means it's time to shift our cash into AIB then... I think they have some connection with the post office banking products somewhere along the line too
6. indiablue19 said...
Financial bunkers everyone. It's war.
7. mark said...
they are simply after foriegn investments to save banks
8. indiablue19 said...
mark said...........they are simply after foriegn[sic] investments to save banks
Which in this scenario amounts to manning the barricades or battle stations. Have to say that it is remarkable for Ireland to decide on a positive policy right away - having gotten a bit lazy as the Celtic Tiger and now being only the tiger's tail. Especially in contrast to the US leadership which merely retches and heaves, threatens and cries, yet can't free even one toe from the financial monster it created.
9. japanese uncle said...
Anyway, cash savings seems to be the safest at the moment, as money escapting funds of all sorts and stock markets have basically no place to go but cash savings (US T-bills will start to look not quite safe soon.). Meanwhile any bank in crisis is immediately nationalized to join the safest bank league paradoxically.
10. Bangybongo said...
I believe this is a very negative development for sterling.
I'm sceptical -- but do not rule out -- the flight of some UK deposits to European banks: it just seems mildly fanciful to me, though I stand to be corrected. What is of greater concern is that this shows the European Union will go to great lengths to support its banks (presumably Dublin could not have done this without a nod from Brussels).
So here's what it all ultimately comes down to in my opinion:
Europe will bail out its institutions (the Irish ones, the Belgian ones, a few German ones, some Spanish ones eventually) and we will save ours.
International investors (pension funds, sovereign wealth funds, successful hedge funds, international banks) will, therefore, eventually switch their attentions to currencies, rather than individual institutions because every time a state bails out an institution the institution gets stronger but the state gets more stretched.
And on that score, it will just become more and more evident that we are an isolated little island, hated by most of our neighbours, and that our economy' is built mainly on property, financial services, borrowing and spending.
Sterling, therefore, will be an easier target than the euro, or individual institutions. There will be punishment and isolated economies (watch out for Iceland, too) will be at the front of the queue for a whipping.
I say the aforementioned weaknesses will cause us (a) imports inflation through sterling being weak; (b) wage stagnation through poor performance among UK-oriented businesses; (c) inappropriately high interest rates to defend the currency; (d) social unrest.
11. shipbuilder said...
8. indiablue19 said...
"Have to say that it is remarkable for Ireland to decide on a positive policy right away - having gotten a bit lazy as the Celtic Tiger and now being only the tiger's tail. Especially in contrast to the US leadership which merely retches and heaves, threatens and cries, yet can't free even one toe from the financial monster it created."
The ROI government stated a month or so ago that they will not intervene in a falling housing market and will let the market find its own level - I think their judgement has been pretty sound so far in relation to fiscal matters. A spending-slashing budget has also been brought forward. They know what's coming - this may be a canny way to boost the savings coffers.