How can Ireland guarantee 400bn bank deposits? > Forum

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Subject: How can Ireland guarantee 400bn bank deposits?

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plainservice

Concerned Citizen

Posts:93

03/10/2008 3:15 PM	Alert
Hello, I am wondering how on earth can a country like Ireland guarantee 100% of savers deposits. That is €400bn, I mean if there are problems, they won't be able to print more Euros money like the UK or US. Since they are part of the Euro, which must be controlled by the European Central bank? Anyone care to enlighten me? €400Bn is 3 times its GDP!

lazen

Activist

Posts:296

04/10/2008 7:46 AM	Alert
Plain Service.They cant!Its a bluff to try to prevent bank runs.Too big to fail or to big to bail? If you want to bring down the entire Western Banking system or have a grudge against your bank now is the time! Draw it all out! If only 10%of investors took this action theyd be ********d!

plainservice

Concerned Citizen

Posts:93

09/10/2008 10:25 AM	Alert
So in theory this could be the next Iceland?

Asteve

Activist

Posts:930

09/10/2008 8:47 PM	Alert
Ireland won't be like Iceland.. Iceland is 'very special' because it is a key player in the international carry trade... by virtue of being tiny, but having its own currency. Ireland has the Euro, so it is far less attractive as a target of the carry trade. Ireland can, in principle, guarantee anything it likes... if it needs more money, it can auction bonds... and Ireland's debt can become arbitrarily high and expensive to service... a cost that must be borne by the Irish taxpayer. This is, of course, very dangerous... because such impositions can prove incendiary... provoking nations to war, or people to civil war. I agree with Lazen... it's a bluff. They're hoping that if they restore confidence, they won't need to pay out.

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