IMF calls for a tax on household savings


#21

I think the undercover economist book had a section about taxes which have the least impact on behaviour . The once off tax was it - though I think it was in the context of income tax- apparently some economist came up with it about 2 decades ago IIRC.

Obviously in reality one couldn’t trust the Irish authorities to not think it was a great idea and repeatedly do it - while protecting themselves - but I can see how it works when a “one time event” happens - such as revolution/world war/independence etc.


#22

I’d agree with much of that article.

I wonder is a bank deposit ‘bail in’ or whatever just the gentler way to pay off the bank bailouts that occurred? I mean, if the banks throughout Europe had been allowed to fail with all parties burned, would the effect overall on the deposit base have been something like -20% to -30%, allowing for some overshoot because the fallout and cross contamination from failing banks would’ve meant absolute carnage for a while.


#23

Ireland’s ‘official’ debt to GDP is c. 125% and our full annual deficit is +7% (all government costs)

About 20% of Ireland’s GDP is an accounting transaction (i.e. likes of Google routing revenues offshore on which we earn no tax)
independent.ie/business/irish/google-pays-17m-in-corporation-tax-here-as-revenue-hits-155bn-29620300.html

There is lots of analysis on the web what Ireland’s ‘true’ GDP is but Seamus Coffey did a simple comparison.
The league table alone (with Luxembourg), will show you.
economic-incentives.blogspot.ie/2013/04/gdp-and-international-comparisons.html

Ireland’s true like-for-like debt to GPD is c. 155% and annual deficit c. 9% (i.e. worse that Greece).
The troika know this and that is why they are so hardcore’ regarding Ireland maintaining its austerity targets.
(After all, at 125% Ireland’s debt is no worse that Italy who is undergoing less forced austerity than our coming budget).

Ireland made an amazing recovery in 1990 from a debt to GDP of c. 120%.
At that time the country was materially underleveraged (bottom of the Euro league table in consumer indebtedness).
The leveraging up of the Irish consumer (i.e. the true Celtic Tiger) led to dramatic GDP growth and killed the debt.

Not so sure the same feat can be achieved now that the consumer if very indebted (top of the Euro and World league tables).
Some how, one way or another, this will have to be paid for.

The ordinary consumer maxed out and the Germans are awake to Google (and others) in getting Euro revenues gross to Bermuda.
Property taxes, wealth taxes - i.e. taxes on those who have it are the only credible way out (and even that will take time).


#24

Varadker was on Marion this morning and stress tests came up. He was asked if the banks failed where would the money come from, after a bit of stuttering and mumbling, some one else mentioned the dreaded Bail in. Varadker was about as re assuring as the Chairman of a Football club whose manager has lost the last 15 games, total confidence then your fired. :frowning:


#25

Nobody with an ounce of sense has any more than their monthly cashflow in an Irish bank since the night of the bank guarantee. Was there not a monster thread here about where best to stash the cash? I presume the consensus was in as many non-Irish baskets as practicable.


#26

Most of the people I speak to and maybe its those I hang around with still have varying amounts of money in Irish Banks, if I speak about this issue I am met with “Sure twill be grand”


#27

Had our stash out foreign in Keytrade Belgium since returned it to Irish shores as figured the worst was over and “twould be grand” :blush: now.

Looks like the safest place for it is in property or big pharma shares and to think I used to laugh at my Grandfather and his mistrust/dislike of banks.


#28

Surely the risk of (say) a 20% haircut on state-guaranteed savings (which would cause a huge political shitstorm) is lower than the risk of losing 20% on property or pharma stocks (which would result in no one batting an eyelid)?

Also, I’m not sure I’d want to be holding property in a country where there are savings haircuts and capital controls. How is Cypriot real estate doing?


#29

It seems obvious but Diversification is the answer. A bit here, a bit there. Just need to stop procrastinating…


#30

Good chance property/share prices will rebound over the medium term,with a haircut is like those radio ads…when its gone its gone.


#31

A serious question :

What if I place a very large deposit in a Paddy Power account (say over 100k), obviously I’m not going to get any interest on the money, but would the cash be safe in the event of the Gov’t making a call on bank deposits ?

I presume it would but I’d like to tease it out on here. Remember a bank deposit will only return about 1.1% net, currently. I think the money is safer in PP provided I don’t use it for indiscriminate gambling. Also, I can make withdrawals via PP shops whenever I require cash and they don’t charge a fee for the process. :bulb: .


#32

Just like those people who had all that safe money in Full Tilt Poker?


#33

[citation needed]


#34

That’s my take on it. I have a giant wedge in Irish banks. If they grab 10% of it I’ll still be ahead, because I did the sensible thing and locked in high rates last year. At 20% I’ll be taking a loss, but less than what I would have risked with any other approach. I’d definitely prefer a raid to creeping inflation which could completely kill me over time. Obviously my preferred option would be for the thieving f*ckers to keep their grubby paws off it altogether. :smiley:


#35

I think PP is a much safer bet than full tilt poker for my purposes. Also, when I logged back in just now I got an ad for “Safety Deposit Boxes” somewhere in Dublin (still prefer PP).


#36

Surely you’d be better with a TD Waterhouse account if you want to give your money to an unguarateed institution?


#37

If you put it in the governments ‘Solidarity’ bonds - would they really dare to take it? Are they really that stupid? Ok - I know.

The other possibilitY I have thought of is a stock-broking account - how would that be treated?

EDIT: and another thought - bank drafts - (or cash) in a safe deposit box These guys cost €300 per year - merrionvaults.ie/prices/


#38

This is the same piece I linked to last month
viewtopic.php?f=4&t=61044&hilit=bailout&start=27

There’s loads of offshore options for your money – HSBC Premier is excellent. All you need is to find one outside the Eurozone.


#39

No - not if they’re sovereign debt - which presumably they are. They won’t default on them until long after they haircut deposit holders.


#40

That makes it sound like a deposit haircut is a tax on being stupid enough to give money to a risky institution. If that’s the case, will such a haircut only apply to deposits with particular institutions that get into trouble, rather than a grab from all deposits in all banks trading in Ireland?