Savings scaremongering?

Something that was bothering me recently was the fact a few posters had previously muttered darkly about moving savings offshore to keep them safe in the event of public finances really hitting the wall.

As somebody who has been carefully saving for years now (to invest in property of course), I was a little worried but also curious as to how something like this would work.

The posters had implied that the actual savings were at risk rather than just the interest earned from them. Is this just scaremongering? I’m well aware that higher DIRT is a possibility and that such taxes might make saving a less attractive option than “investment” elsewhere but I fail to see how the government could actually take your savings from you which is what some posters implied. Anybody care to enlighten me?

I’m well aware that inflation might damage savings but it couldn’t possibly be any worse than the loss taken by putting savings into bricks & mortar. Is it perhaps inflation these “doom mongers” were referring to?

That must have been our real doom and gloomers :slight_smile: Personally I can see a worst case scenario where we leave the Euro. In that case savings are likely to be frozen and converted to avoid a flight. I give that a .001% probability (up from .0001% after our Lisbon vote).

Other than that you’re really talking a nightmare scenario - unless posters were talking about the risk of a banking collapse which is again extremely unlikely but would obviously be incredibly bad news for savers.

I would have thought that a bank getting in trouble like Northern Rock would represent the risk to savings? Obviously if the government stepped in like they did in England your savings would be safe, but if they didn’t there would be a loss. I actually removed money from an Irish Nationwide fixed term deposit because of this fear and popped it into Rabo 6 month fixed term (I think Rabo has the best credit rating in Ireland) although I wasn’t sufficiently worried to stop regular saver. Thinking of starting a joint account saver in Anglo Irish Bank, but again there seem to be murmurings that that bank might be one of the ones more at risk of going down, though don’t know how likely that is.

I took the keyword from the OPs post to be “offshore”

The state could never seize your savings from you as it would be unconstitutional.

Sweden has a ‘wealth tax’ which you become liable for if you have a large wad of cash in the bank. I don’t know the threshold or the amount of the tax though.

I thought the fear related to banking collapse possibilities?

As ARW says, the only real reason I can think of for moving it offshore to hedge yourself against the possibility of Ireland leaving the Eurozone. Extremely unlikely IMHO. In fact I’d say it’s more likely we leave the EU but remain in the Eurozone - and that’s also extremely unlikely. As for DIRT increases, you’d still be liable to that if you moved your funds offshore but remained a resident of ROI. And the banks are sharing this info throughout the EU. So chances of successful evasion are slim (whatever about the moral arguement).

Otherwise the standard advice applies about not putting all your eggs in one basket. In the event of an Irish bank collapse, the government guarantees you 90% of your money up to a max of €20,000 Euro. So don’t have more than about 22,000 Euro in an individual bank account. The guarantees are more generous in other jurisdictions. E.g. NR is governed by the UK guarantee scheme which is, in general 90% up to GBP 35,000, and to top that NR itself seems to have an unlimited guarantee at the moment. Similarly Rabo is governed by the Dutch guarantee scheme which is something like 100% up to EUR 20,000 and 90% of the next EUR 20,000. AFAIR the Danish guarantee is also more generous, and NIB are governed by this. These figures aren’t exact, but you get the jist.

So shop around.

I would have to disagree with that comment about forced conversion in the event of Ireland leaving the euro. It would at the very least require some new draconian legislation to forbid people retaining foreign currency and banks taking FX deposits.

I was thinking of the Argentinian model where bank accounts were frozen and USD holdings forcibly converted.

Well essentially there was forced conversion when we joined the Euro. Someone on AAM stated that the laws were drafted such that any prior contracts drafted in IEP (i.e. before the Euro even existed as an idea) were to be converted to Euro at the official exchange rate. Same with bank accounts etc. So the govt could equally draft a law stating all Euro contracts, bank holdings etc are to be converted to New Irish Punts (NIP) at a fixed rate on a fixed day. Sure it’d be draconian legislation. But we’d have to be in a pretty dire situation to pull out of the Euro in the first place IMHO.

ARW mentions Argentina. I think the Russians did something similar in the early 90s during one of their currency reforms. Not sure of the exact details, but it had the effect of seriously decreasing the savings of many middle class people. And this was a few years before the issue where the Russians defaulted on their foreign loans/bonds or whatever that was back in 1998.

The Germans may be the first to pull out of the Euro… (OK so it’s from Ambrose Evans-Pritchard)

I notice he doesnt provide a link to the Handelsblatt article. I think the story is BS. Wheres the Handlesblatt story Pritchard?

If a couple of extremists screened their banknotes for latin notes as some kind of publicity stunt I could understand but AEP is reporting it as if its mainstream germans doing it. Total BS.

Is that on the capital sum or the interest earned on the capital?

To clarify, I’m not asking how to evade or advocating evasion of any kind but I was wondering what does happen in extreme circumstances. I guess the examples of Argentina & Russia answer that query.

I know one or two pinsters have criticised Ambrose before; how about this latest view?

That sounds like BS to me as well. Sure, one or two cranks might insist on carrying German issued Euro notes. But if this was gaining any momentum we’d have heard about it by now. Quick search of the web (auf Deutsch) didn’t pull anything back for me.

Don’t think the comparison to the US in the 1840’s is valid anyway. AFAIK each state bank stood behind its own Dollar back then. Now each national bank just prints its own Euro (which look identical). The ECB stands behind it (I believe)

Anyway if you’re interested, Irish Euro notes have a T in the first position in the serial number.

The article exists.

“Es geht um eine kleine Minderheit”

it’s a small minority.

So the article says it’s just a few people…but this is not the impression that Ambrose is giving.

Google translate tells me that Ambrose has been stretching the truth a bit for his Telegraph audience.

Giving the Audience what they want.

I’m a little concerned by the number of links to the Telegraph that I’m seeing on the pin as if articles in the Telegraph were evidence of something or led credibility to an argument.

Generally speaking, linking to a telegraph article is a white flag. It’s say’s “OK you win, my opinion is BS, even the Telegraph agrees with me”.

-Rd

The new Swedish governmrnt has abolished it’s wealth tax.

Property taxes used to be a real beauty, you had to pay a percentage based on the tax valuation of the house, but then additional factors bumped it up such as proximity to water or if your bathroom was tiled more than half way up the wall!

Mrs. G is Swedish but hasn’t lived there since leaving school, on and off we have considered moving there (on at present!).

The Swedes do taxes very well! :frowning: But at least they do give you some return on them :slight_smile:

For example one thing that is crippling many young couples in this country is child care costs, in Sweden it is subsidised by the state and no matter how many kids you have the max. you pay per month is approx. €150 total.

The problem with moving there now is that they too have their own property bubble and whilst it is easy to rent an apartment in Sweden it is almost unheard of and very expensive to rent a house.