Very worrying stop press news re Anglo Irish

masonic

melbury wrote: »

Found this today, what do you think?

http://www.guardian.co.uk/world/2009/jan/11/ireland-economy-world-news

If nothing more, it demonstrates the ECB would be crazy not to bail them out if the worst happens in the short term.

melbury

Have just been talking to Anglo Irish Bank and was told that if in the extremely unlikely event of the Irish Government not being able to repay investors, then the ECB would He then directed me to these bits of information, which are a bit complicated for my brain!

http://www.finance.gov.ie/documents/publications/other/faqbankguar.pdf

http://www.finance.gov.ie/documents/publications/statutoryinstruments/2008/si4112008.pdf

I just hoped to see in big letters that the ECB would back them up.

Midnight_Cowboy_2

melbury wrote: »

Have just been talking to Anglo Irish Bank and was told that if in the extremely unlikely event of the Irish Government not being able to repay investors, then the ECB would He then directed me to these bits of information, which are a bit complicated for my brain!

http://www.finance.gov.ie/documents/publications/other/faqbankguar.pdf

http://www.finance.gov.ie/documents/publications/statutoryinstruments/2008/si4112008.pdf

I just hoped to see in big letters that the ECB would back them up.

Yes, it doesn't say anywhere that the ECB will back them up. AIB's reassurance is nice but only verbal.

I'm going to take some action. I'm going to write to AIB and the Department of Finance in Ireland ask them. That way I'll (hopefully) have written confirmation of what the score is.

gozomark

if you want a guarantee from the ECB, you should write to the ECB - a letter from either Anglo Irish (which isn't AIB) or the Department of Finance in Ireland will mean nothing if Ireland did go bankrupt

JP45

I doubt very much that you'll get such an assurance in writing, whether you write to Anglo Irish, the Irish Government or the ECB.

Whether or not the ECB would step in in the event that the Irish Government failed to honour its guarantee to savers has to be a matter of judgement. My own view, fwiw, is that the potential impact on the global banking system, on the Euro and on depositors' confidence in the banking system in general, would be so severe that it would force the authorities - the IMF or ECB - to step in. In other words, the same sort of judgement call that has led most western governments to bail out their banks, despite the crippling burden this has placed on taxpayers.

melbury

Midnight_Cowboy wrote: »

Yes, it doesn't say anywhere that the ECB will back them up. AIB's reassurance is nice but only verbal.

I'm going to take some action. I'm going to write to AIB and the Department of Finance in Ireland ask them. That way I'll (hopefully) have written confirmation of what the score is.

Please, will you let us know what response you get.

JamesJames101

Dear all

Firstly, to clarify my involvement with AIB, I sold my house end 2007, started renting and put a lot into AIB in Nov last year in a one year bond. Melbury - we seem to have a lot in common!

To me, losing this money would be unthinkable. I got it out of Northern Rock (there as protected by UK government) and into AIB as i am getting 7.02% interest. NR was paying much less.

What a great rate of return - more than 7 times the base rate! Wow.

AIB has been nationalised - now my money is safer - but only marginally as it was already guaranteed by Irish government.

So - in the next 9 months, Ireland is going to go bankrupt, the EU is going to turn its back on it, and the IMF is going to let it go to the wall and I am going to lose all my money! That's funny! If that does happen, then we will probably be in a world where money doesn't matter anymore but guns and a good hiding place do.

When the 7% bonds were available it was in the vain attempt to keep the bank from being nationalised - and came with a 100% government guarantee, backed by the EU and ultimately the IMF. The cost of Ireland being allowed to fail would be astronomical - we are in a global economy lest we forget.

So in November I will be taking my money out. But I will probably regret the fact that I didn't tie it up at that fantastic rate of interest for longer.

Oh yes - Iceland - their banks were not backed by the Icelandic government (becuase the banks liabilities were something like 4,000 times the Icelandic GDP - I recall if this is wrong then correct me - but definitely a damn big number!). Also, they were not in the EU. The two cases are not comparable although good media fodder.

Anway, if people want to pull out of these cracking interest rate bonds (and also possibly face a penalty) then you got to do what you believe in. Myself I am staying in and very grateful to be receiving the interest I am.

gozomark

you mean Anglo Irish not AIB... other than that, agree

melbury

JamesJames101 wrote: »

Dear all

Firstly, to clarify my involvement with AIB, I sold my house end 2007, started renting and put a lot into AIB in Nov last year in a one year bond. Melbury - we seem to have a lot in common!

To me, losing this money would be unthinkable. I got it out of Northern Rock (there as protected by UK government) and into AIB as i am getting 7.02% interest. NR was paying much less.

What a great rate of return - more than 7 times the base rate! Wow.

AIB has been nationalised - now my money is safer - but only marginally as it was already guaranteed by Irish government.

So - in the next 9 months, Ireland is going to go bankrupt, the EU is going to turn its back on it, and the IMF is going to let it go to the wall and I am going to lose all my money! That's funny! If that does happen, then we will probably be in a world where money doesn't matter anymore but guns and a good hiding place do.

When the 7% bonds were available it was in the vain attempt to keep the bank from being nationalised - and came with a 100% government guarantee, backed by the EU and ultimately the IMF. The cost of Ireland being allowed to fail would be astronomical - we are in a global economy lest we forget.

So in November I will be taking my money out. But I will probably regret the fact that I didn't tie it up at that fantastic rate of interest for longer.

Oh yes - Iceland - their banks were not backed by the Icelandic government (becuase the banks liabilities were something like 4,000 times the Icelandic GDP - I recall if this is wrong then correct me - but definitely a damn big number!). Also, they were not in the EU. The two cases are not comparable although good media fodder.

Anway, if people want to pull out of these cracking interest rate bonds (and also possibly face a penalty) then you got to do what you believe in. Myself I am staying in and very grateful to be receiving the interest I am.

Nobody has been able to confirm that the guarantee is ultimately backed by the EU.

Must admit I bottled out and wrote to Anglo Irish yesterday requesting my money back - I know I am being a total wuss and will kick myself come November when I could have had all that extra interest, but I just can't go through the next nine months worrying that we might lose our life savings.

If I could have seen in black and white that the ECB would back Ireland if the worst happens, I would not have taken this cowardly step!.

Knowing my luck, they will refuse to give me the money though

gozomark

Nobody has been able to confirm that the guarantee is ultimately backed by the EU.

because there is no explicit backing by the EU (via ECB presumably)