Could people REALLY lose all their savings?

max10000

I keep reading reports that U.S savers could lose their entire savings over the next year. Scaremongering maybe, or not...
In the UK, all savings accounts cover you up to £85,000. Is this ABSOLUTELY guaranteed? i.e if banks in the U.K start to collapse next year, one after the other, what's the worst that could happen?
Could people lose all their savings, or would the government step in and have money printed up?
I mean it could cause suicides surely (sorry for the doom) if people lost everything....is that REALLY possible?

Masomnia

Of course it's possible. Very unlikely, but possible. Probably better enjoying Christmas and not worrying about it.

lilac_lady

No-one knows or if they do, they're not telling.

Gromitt

max10000 wrote: »

Could people lose all their savings, or would the government step in and have money printed up?

If all the banks collapsed it wouldn't matter how much money you had printed or stashed in a safe as it'll all be just worthless paper. All that paper does is prove you have access to that amount of money, the money itself still has to exist somewhere, and if there is no banks left, the money will no longer exist.

That would be the same for the governments £85K guarantee - fine IF they have somewhere else to get the money from. If multiple banks collapse at once they might just say "We can't afford, sorry.".

So yes, it can happen. If it does, we could all be back to swapping a handful of potatoes for an onion (for example). The only 'real' currency left.

Ark_Welder

If banks do start to collapse then they will probably be nationalised and shareholders will be wiped out - as with Northern Rock and Bradford & Bingley - but depositors should be OK, at least up to the FSCS limit.

A collapse would just be the latest in a long list of previous episodes: http://en.wikipedia.org/wiki/List_of_banking_crises


Of interest might be the Secondary Banking Crisis in the UK in 1973-75.

2010

max10000 wrote: »

I keep reading reports that U.S savers could lose their entire savings over the next year. Scaremongering maybe, or not...

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Yea, yea, yea, scarmongering, you wouldn`t be doing that would you with your first ever post?

meunier

That loss is exactly what happened in the Great Depression of the 1930s - which, I believe, is why regulatory bodies to help protect against such were created.

My own parents lived through this period as children. It very much formed their own (and as a result their children's) moral codes. Coming to their political maturity in the 1960s, the world saw a man walk on the moon. It hasn't happened since.

I wonder will the same happen again in the 2020s? Somehow I doubt it. The toll of greed that began to knell oh, so sharply in the 80's will, I somehow think, have much to answer for.

Reaper

meunier wrote: »

Coming to their political maturity in the 1960s, the world saw a man walk on the moon. It hasn't happened since.

Political maturity or moon walks? 6 Apollo missions involved moon walks.

Ark_Welder

Reaper wrote: »

Political maturity or moon walks? 6 Apollo missions involved moon walks.

Top Of The Pops had several too.

MoneySaverLog

2010 wrote: »

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Yea, yea, yea, scarmongering, you wouldn`t be doing that would you with your first ever post?

Probably one of these metal prospectors

jamesd

The UK government would do what it already did in some cases: nationalise the banks. So no, it's not really credible that all of the money in a UK account could be lost. The government's ability to do that is supported by its ability to tax us to repay the costs and we're collectively a good credit risk.

It's still not an absolute guarantee but failure would require stocking up on cigarettes chocolate and canned goods as alternative currency. You'd have worse things to worry about than the savings, like how you're going to get food when nobody is shipping it around.

In the US a similar system is in place for retail depositors that tends to result in smaller banks having their business taken over overnight or over a weekend when the FDIC decides that a bank is becoming insolvent. They have a long list of failed banks and who took them over.