Prepare for Irish default

Embrace the unpredictable - David McWilliams → sbpost.ie/post/pages/p/whole … qqqx=1.asp

Once again, interesting article from Mc Williams. The take away message is that the whole sovereign bond market is a Ponzi scheme. The bond buyers don’t appear to be concerned regarding payback of principal but are more interested in the ability of a country to pay interest. If the bond issuing country, appears heading for a situation where the national income is not sufficient to appear to be able to pay the interest, then the interest on the bonds goes up and the CDS spread increases, making national debt even more expensive. Interestingly, in Irelands case, bullshit appears to have won out for the time being with the ‘hard line taken by the government at the last budget’. The bond traders don’t appear to have cottoned on yet that new bond issuances appear to be paying the coupon on outstanding bond issues.
Mc Williams is right. The hyenas are concentrated on the sickest and slowest of the herd at present but it is only a matter of time that they turn their attention to Irelands precarious position.
It’s at a time like this that a counter attack when they are least expecting it would be worthwhile. A concerted effort with Italy, Spain and Portugal would certainly gain their attention and would focus the attention of the IMF, Germany and France, on trying to sort out this problem, rather than let countries go down one by one.
This may be the last opportunity to maintain any sort of standard of living in Ireland for the next thirty years.

What does that mean?

He’s taking the PIIS… no?

Would it perchance mean a new secondary Euro currency for the little PIIGS?
Or would it mean that they do a fancy internal deal.

On a personal level I’ve been saving really hard during the last 15 years. And I’ve built up a decent amount of cash which is currently on account with a couple of banks. I’m very worried about what might happen to that.

I believe that property prices are going to decrease and decrease some more over the next couple of years.

But I’m now beginning to get even more worried of a global financial event that may turn my savings into worthless sheets of paper.
I still haven’t actioned my gold investment so presently I wonder what else to do.
Any suggestions on how an Irish Saver can avoid the potentially negative effects of Irish Default?

Bunds are your only man…

There will always be a German taxpayer paying tax to pay the coupon…

Dont worry. We’re still a couple of years away from that kind of scenario. There will be plenty of advance warning signs before actual seizure. Theyll sell off all state assets long before they seize our savings.

Its the people who arent using the internet who will get shafted as they wont see the warning signs
until theyre on the front page of the Irish Times. Keep reading the pin.

I posted this on another thread.

James Turk runs a company called Goldmoney.com

He will accept deposits of any size and the gold is stored in London, Zurich or Hong Kong.

The company is administered in the channel islands.

He is well regarded by even the most paranoid goldbug.

He charges a fee of about 2.5% on your initial deposit and a small administration fee each year. There is no charge to turn your gold back into euros.

You can monitor your account online and it is completly outside of the irish (and ECB) system.

Lots of anti-money laundering red tape to set up the account, but after that its pretty simple.

You can also make electronic payments, to many businesses worldwide, directly from your goldmoney account.

Except for that small matter of a bid offer spread? He doesnt sell you gold and buy it back from you at the same price, does he?

He dosen’t have a bid/ask spread. Check out the links below.

goldmoney.com/transparent-rates-and-pricing.html

goldmoney.com/buy-gold-and-silver.html

Except that is not what happened in Argentina…

The last phase of this kind of crisis has a sickening habit of unfolding very quickly.

Just like July till September 2008. If you had told people in the summer of 2008 that the Irish banking system would be completely bankrupt (all of it) within a few month they would not have believed you. I remember prepping my family in Jun 2008 so that when the 3Q crash happened they would be ready to move very quickly. I was very careful how I warned them knowing that if I told them what I really thought was going to happen my warning would be completely discounted. So when the inevitable crunch came my carefully pitched warning had worked and they were already primed and ready to execute on short notice.

After reading the most recent Anglo annual a/c’s I now think default is probable but not unavoidable. Only time will tell. In the meantime I’m planning to have another talk with my family. Organize a dry run for moving the rest of the liquid cash to safe havens in dollar and swiss franc zones until the storm blows over. Just in case the need arises. Because if and when the final crisis arrives it will unravel with frightening speed and by then it will be too late to make prudent arrangements. So you would then be just along for the roller coaster ride. Like almost everyone else.

What happens if I have say US / UK shares held electronically via a Dublin stockbroker. Should I be worried about a risk of asset seizure in that situation?

I know they forcefully converted all dollar accounts held by Argentine citizen through US banks in Argentina. Not sure what happened to non-cash a/c’s but my guess is you are OK. The big loss in these situation is forced devaluations of cash holdings.

Might want to look into the nationalization of the private pension system in Argentina last year. Got the impression it was little more than appropriation of private property by the state. Might be a model for the eurozone if things really spin out of control.

Anyone know the best way to open a swiss bank account (within all Irish legal requirements of course) from here?

Thats probably the most likely scenario, rather than outright seizure of savings.

Theyll legislate to force all private pensions to hold NAMA bonds and other government paper. This stuff wont be worth shit when you retire, so your pension will have lost value.

I doubt they’ll do that. More likely they’ll enforce a new universal pension on both public and private employees. You get to buy an excess to the current state pension. Anything else you get to have as cash. But you get to pay tax on it. So there is a big one-off boost to the state and a big rebalancing of future liabilities. We’d see a whole mess of stuff bunged into the NPRF to balance the future liabilities (think every toll road in the country and a whole rake of semi-states) while a bung of the cash would go to buying our current PS pensions and writing down expensive debt/bailout out the system.

Or maybe that’s just what I’d like to happen :angry:

I think that’s a very likely scenario. I expect private pensions will be stomped to help bailout the unfunded parts of the PS and state pension scheme.

Is there precedence for seizure of savings etc. in recent years in other countries such as Argentina? Or was it just a case of frozen accounts which then got severely devalued by rampant inflation. In Ireland’s case can anyone see a case where savings etc. are actually taken away from average joe citizen?

That’s not a bad idea actually. A big bite of the shite sandwich for everyone and the true worthlessness of the NAMA bonds wouldn’t become apparent for years and years. The NAMA bonds could be used in an ISSA style incentive scheme, except your €1 pension contribution would be converted into 60c cash and 60c NAMA bond. Everyone’s a winner, except you.

I meant to add the ‘stroke’ bit that will mean most people will welcome this. If you use the money you get back to pay down debt on a mortgage (i.e. either the excess after you fund yourself, or if you choose not to fund the enhanced pension) you get to do it tax free. A massive repayment cash boost from the banks would give them real cash to do stuff with without deflating the economy and would mean lower repayments for many which would also be a boost - how many would be smart enough to accelerate paying down their debt?