In Latin America, just before a bankrupt state entirely runs out of money, it is traditional to try one last smashand- grab for the savings of the private citizen. We have seen this trend not just in South America’s recent financial history but down through the ages.
Could it happen here? Could the savings of the private citizen be expropriated by the State to pay the last of the Croke Park promises? Or worse, could the remaining wealth of the private citizens be used to pay the odious debt of the banks? The answer is yes, and you have to be aware of this because this is often the way things end when a state goes bust.
When the likes of Argentina ran out of options, it swiped its people’s savings in various elaborate stitch-ups. We may be going down the same route. In Argentina this led a friend of mine to describe Argentinian compatriots as “great patriots and terrible citizens”. When they play football they are the most passionate supporters but ask them to keep their money at home and they will laugh, citing the last time patriotism was used to rob them. No gracias, amigo. Could it happen here? Cinnte!
What does he mean by this?Could the savings of the private citizen be expropriated by the State to pay the last of the Croke Park promises?
Thanks Ciaran - Very worrying article indeed. I assume if it came to Gov dipping into our savings, that even deposits that we have in UK / South African / Dutch banks, that are resident here in Ireland, are not safe from their grabbing hands ?
What does he mean by this?
Marion
When the likes of Argentina ran out of options, it swiped its people’s savings in various elaborate stitch-ups. We may be going down the same route.
What does he mean by this?Could the savings of the private citizen be expropriated by the State to pay the last of the Croke Park promises?
I can't see how the gov't could do this as money would be beyond the jurisdiction. Hence the flight of deposits to various other countries already taking place.
No, this is not what happened. Depositors were restricted from withdrawing more than a certain amount of money per month, but their deposits were not wiped out. The default was on $130bn of foreign debt, which ultimately was restructured at about 30c on the $.Obviously, all Argentinian deposits where wiped out when Argentina defaulted.
I have had this discussion with many people in the past year and have heard your argument several times. Could I ask you why you personally think that current bond yields are too high and why the market's default risk is too high? Is it just because someone is willing to fill the gap, i.e. IMF/EU?I still dont really believe it will come to that and buying bonds at 9.7% will seem like a great deal in a few years time... we may all wish we had done it? We all live here do we really think Europe will allow us to lose our pensions, savings and futures now we have the IMF deal...
I think what he means is that given the current budget deficit the state is borrowing in order to pay for current expenditure. Current expenditure includes the public wage bill which under the Croke Park agreement cannot be touched. Now what would happen if the state could no longer borrow money to cover the existing public wage bill? Would the state start appropriating personal deposits?Are there promises in place to increase public sector pay in return for new work practices and increased working hours outlined in the Croke Park agreement?
I would imagine that the state would be able to restrict access and/or tax out funds, just like they can force foreign banks to subtract DIRT from any interest paid at present.No, I'm referring to those banks that are resident in this Country - ie Investec / Rabo / Nationwide UK. Would Irish Gov have ability to reach into peoples deposits on these instutions also ?
Personally as bad as it is, we have our fall back the EU, hence why I dont think it will end up being as bad as everyone makes out, at some point they will step in and the reality is its not that much money to the whole of the EU to save us. Having said that would I buy bonds at 9.7% Yes if I could afford to lose the money.I have had this discussion with many people in the past year and have heard your argument several times. Could I ask you why you personally think that current bond yields are too high and why the market's default risk is too high? Is it just because someone is willing to fill the gap, i.e. IMF/EU?
B
In an European Community environment could Ireland expropriate money from Nationwide UK, Rabo, Northern Rock, etc?
I don't discount David McWilliams at all.
I am just wondering what he meant by the statement that I quoted.
What does he mean by this?
Are there promises in place to increase public sector pay in return for new work practices and increased working hours outlined in the Croke Park agreement?
If there are I am not aware of them.
I am somebody who will, possibly, be affected by the Croke Park agreement.
Marion
But simply having someone supply us with more money to plug the deficit does not solve the problem, it merely alleviates the symptom. The problem Ireland is facing is that there is too much debt; adding to the debt is only making things worse, not better.Personally as bad as it is, we have our fall back the EU, hence why I dont think it will end up being as bad as everyone makes out, at some point they will step in and the reality is its not that much money to the whole of the EU to save us. Having said that would I buy bonds at 9.7% Yes if I could afford to lose the money.
Despite what people inlcluding David McWilliams claim, we are nearly 10 years after the Argentinian crisis and they still don't have access to capital markets.
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?