'Icesave... angry, frustrated and upset...' blog discussion

CFC

jaceytee wrote: »

We shouldn't blame Martin at all but Pandini has a point - brand carries responsibility and Martin has created an image where he is trusted big time. The "Can you afford to not have the money for 6 months?" question would have been a real showstopper for me.

And Martin has the responsibility to spoonfeed you & Pandini in baby lickel words .....why, exactly? Oh, I forgot, because you pay his wages, and you pay for his financial thoughts?

Ooops.... no you don't.

Free is worth what you pay for it. In the case of this site, it's worth a great deal more than that. If any of you wanted financial advice, you should have put your hands in your pockets and coughed up for it.

And doubtless you would in fact have received the same recommendations!

milliebear00001

Scepticalquestions wrote: »

People like you really hack me off. These are not risk takers these are people that have been taught from childhood that a bank is a safe instituation to put there money.
You describe this now as a gamble to put money in a bank?

Your Patronising SOB!

Sorry, coming late to this so have only read the last few pages of quotes. It is true that most people regard banks as a completely safe place for their money. It is also true that this is not correct. Banks have gone under before and will do so again. NO investment is ever 100% safe. Government bonds - generally regarded as THE safest investment - have been defaulted on, in the UK, in the last 50 years. The fact that so many people view banks as completely safe is a reflection of the lack of financial awareness generally. It is something we should tackle as a matter of urgently through the school system (moves are afoot in secondary schools...). This site makes recommendations about 'best buys' and Icesave were offering good rates. It's fair enough that they were recommended on that basis. What is for sure though, is that the precarious nature of Iceland's economy was known in the summer (the Government is getting flak on the news tonight for the same reason) and yet nobody (bar a few people on this site) appears to have issued any warnings to would-be investors.

So...yes, buyer-beware, but that's hard when most people are never taught that all investments, including banks, carry risks, and particularly when banks going under has only happened previously once in a blue moon, and when nobody was warned to avoid Icelandic investments even when their problems were well known.

d.edna

filthylucrenoo wrote: »

d.edna, I think you're the only person who can say why you're pompous.
You said:

Personally I'd give you the capital back and nothing else, interest is free and considered a bonus, You never had the interest to begin with.

Interest up until the date a bank is declared in default (or until the date of maturity of a fixed term bond) is included in the amount to be reimbursed under the compensation scheme up to the limit of £50,000. As you may be aware, Alistair Darling has undertaken to reimburse all monies. Thank god he's in charge and not you.

I'm funding this as a tax payer! I disagree that people who invest in foreign banks (Some but not all before you say) do so to avoid UK tax, Admittedly ICESAVE was an approved bank and offered UK products.

If I was inchargeI personally wouldn't bail the banks out, they are setting a precident, They are saving privately owned banks, if my business goes under, Alistair Darling should bail it out!

You think I'm pompous but I'm getting sick of funding people getting their cash back and demand interest, How can you have interest? its money you have never seen and just earn!

Oh You sir have earn't a place on ignore

psdie

d.edna wrote: »

... I'm getting sick of funding people getting their cash back and demand interest, How can you have interest? its money you have never seen and just earn!

You are forgetting that, without interest, savings lose value due to inflation (currently running at approaching 5%/yr). If deposits were refunded without interest, savers would effectively be receiving back up to ~5% less than their money is worth (depending on timings).

Others here have attempted to argue that saving in a bank account is the same as investing - i.e., that one is balancing risk in order to obtain profit. This misses the point that earning interest is the only way to ensure that cash does not lose signficant value every year, as notes in a safe or mattress would.

Keeping your cash in a bank account earning interest at at least the level of inflation (RPI) is an unavoidable necessity unless you wish to see those funds gradually evaporate. More worryingly still, if the level of inflation rises above available bank interest rates (perhaps significantly so, as has happened to Iceland and Zimbabwe), you lose the ability to preserve the value of your cash.

Someone early in this thread wrote in capitals and spouted the end of the financial market as we know it. History teaches us that markets are cyclic, so that's unlikely, but they made one interesting point: in times of serious financial unrest, converting cash to hard assets such as precious metals is worth considering, as their value is more likely to survive than that of a particular currency (regardless of whether it is banked).

It makes you think though: In volatile markets such as we're currently experiencing, is there really a steadfast way to preserve wealth? If everyone suddenly clamours to invest in something like precious metals, their prices would become inflated beyond "conventional" value, so would be vulnerable to severe devaluation in future.

Hmmmm ... thoughts? Are there reliable means of protecting wealth through volatile financial markets? I'm beginning to suspect that there isn't: cash currencies are only as good as the physical assets of the nation behind them, and physical assets are vulnerable to fluctuations in value in line with supply-and-demand.

Keef

www.icesave.co.uk/financial-protection.html
financial protection

If we cannot pay any amount we owe you on your savings accounts, you will be able to claim compensation. The maximum compensation is limited to 100% of the first £35,000 (rising to £50,000 with effect from 7 October 2008) of your total deposits held with us (the same as every FSA regulated bank and building society in the UK). In the unlikely event of a claim.

The compensation itself is provided by two schemes (sometimes referred to as a passport scheme) – the end result being that the total amount protected is the same as if your savings were only protected by the UK Financial Services Compensation Scheme. The protection works as follows:

• The first level of protection is provided under the Icelandic Depositors’ and Investors’ Guarantee Fund (www.tryggingarsjodur.is). The maximum protection under this scheme is 100% of the first €20,887 (or the sterling equivalent) of your total deposits held with us.
• The second level of protection is provided by the UK Financial Services Compensation Scheme (www.fscs.org.uk). This scheme tops-up your protection so that the protection under both schemes, is equal to 100% of the first £35,000 (rising to £50,000 with effect from 7 October 2008) of your total deposits held with us.
• Under EU law compensation for any losses incurred due to the failure of a bank should generally be paid within three months - regardless of whether it is through a passport scheme or the UK Financial Services Compensation Scheme.

d.edna

psdie wrote: »

Hmmmm ... thoughts? Are there reliable means of protecting wealth through volatile financial markets? I'm beginning to suspect that there isn't: cash currencies are only as good as the physical assets of the nation behind them, and physical assets are vulnerable to fluctuations in value in line with supply-and-demand.

Nothing is safe, I would have said goverment bonds, but even goverments go t*ts up, Theres gold/diamond etc but then theres the commodities market

GX1

Should the UK government bailout individual depositors, charities and local authorities who stand to lose money following the closure of Icesave?

The answer ought to be no, the UK government should not bail out depositors in an overseas bank at the expense of the UK tax payer unless it is required to do so by existing regulations on which UK savers have relied.

Icesave is a member of the UK financial services compensation scheme (FSCS) and as such the first £50,000 of retail deposits are protected in the event of the bank failing. However, Icesave was also one of a handful of banks in the European Economic Area, which took advantage of the so called passport exemption, meaning the first Euro 20,000 of any claim will be paid from Iceland’s own compensation system, with the balance being topped up by the UK scheme.

This in itself ought to have been enough to raise alarm bells with depositors who through a combination of recklessness and greed (encouraged by so called experts such financial journalist Martin Lewis who runs this website and regularly appears on the BBC) deposited their money with Icesave and a number of other Icelandic banks for the sake of earning an extra half a percentage point of interest.

Iceland’s three largest banks have expanded rapidly since two of them were privatised in 2003. By the end of 2007 they has amassed assets (loans) of about Euro 125 billion. Only a fraction of those assets were backed by deposits. The remainder were funded on the wholesale market which has now dried up.

Given that the banks’ assets are almost ten times the size of the entire Icelandic economy, it is difficult to understand how anyone could have believed the Icelandic government had the capacity to meet its obligations under the compensation scheme.

Local authorities and large charitable investors ought to have sought professional advice before investing large sums of money. That advice ought to have included appropriate health warnings about country and institutional credit risk, as well as advice on ensuring deposits were spread over a number of financial institutions in order to mitigate the risk of any one of them failing.

We live in age of personal irresponsibility. I can already hear depositors with Icesave crying “yes, I was greedy... yes, I was reckless... yes, I was prepared to risk my life savings for the save of an extra few hundred pounds in interest... but it’s not my fault... someone else ought to pay”.
 
But why should the tax payer, and investors who have acted responsibly placing their savings with UK banks like HSBC which have much stronger capital adequacy ratios but offer slightly lower rates of interest, pay for the folly of other private investors?

Why should council tax payers in Buckinghamshire pay for the folly of council officials in Kent?

The trustees of charities which have lost money ought to be called to account, and if it turns out that they acted irresponsibly by placing an unduly large percentage of the charity’s funds on deposit with one financial institution then they ought to be held to account.

In the meanwhile the government should look sympathetically at providing emergency funding to charities such as Naomi House who’s good work with terminally ill children may be threatened by the crisis.

When the dust has settled, it is also worth asking ourselves whether it is right and proper that local authorities and other branches of government deposit funds overseas, depriving UK banks and the UK economy of those funds.

In the meanwhile investors would be wise to remember the old adage “if it looks too good to be true, it probably is”.

Chartered Management Accountant
Buckinghamshire

Pandini

CFC wrote: »

And Martin has the responsibility to spoonfeed you & Pandini in baby lickel words .....why, exactly? Oh, I forgot, because you pay his wages, and you pay for his financial thoughts?

Ooops.... no you don't.

Er, yes we do.

I have so far avoided responding to my original post. It was quite clear for those who didn't need to put their own spin on it.

Many of the responses on this forum are cult-like in their defence of Martin. Anybody who suggests an even slighly contrary opinion is jumped on. Are we unable to debate any more?

I will just reiterate a couple of points.

• Martin has earned an enormous amount of money from this site.
• With power comes responsibility.
• There is a difference between blaming someone and apportioning responsibility on them.
• If this site didn't exist, less people would have opened Icesave accounts.
• Warnings about Iceland and its banks have been around for at least 6 months.
• Giving a warning, and then adding that it is"extraordinarily, unthinkably, ridiculously unlikely" for a bank to go bust pretty much negates that warning.
• People - as has been proven on every single Icesave post on the MSE forums - will read the bits they want to read, put their own spin on them, and ignore the bits they don't. The same goes for the financial advice on this site.
• Mixing well -researched journalism with a free-for-all forum is dangerous.

My original post in this thread was number 187. I was quite clear. I did not mention blame, I mentioned responsibility. I did not insult Martin. I admire him enormously - both for what he has done and the way that he has become rich doing it. But I'll say it again ... you can't get this popular without taking some responsibility.

Pinzy

Is anybody able to tell me, and provide a link to, any single high profile media person who had predicted the collapse of banks left, right and centre?

Errata

Pandini, you're posts are well argued. Are you a journalist ?