cancel
Showing results for 
Search instead for 
Did you mean: 

Is your money safe ??

Community Veteran
Posts: 7,906
Thanks: 588
Fixes: 8
Registered: 02-08-2007

Is your money safe ??

When the coalition took over our debt was £1,002 Billion. By the time of the next election this is likely to have increased to £1,613 Billion.
The Government have said that any savings up to £85,000 will be covered in the event of a Bank going bust, the last time there was a run on the Banks the Government bailed them out which is likely to result in Billions of pounds in losses for the taxpayer. Not that the government had much choice, had they failed to do so most people would have had no access to their accounts.
At present the government can borrow money at fairly good rates but looking at other countries it seems that as the debt increases lenders require even higher rates of interest until a tipping point is reached when a country is paying more out that what it gets and effectively is bankrupt (ie Greece)
So if our debt increases we could reach a stage where the government might not be able to raise enough money to cover any further runs on the banking system so any guarantee is more to reassure savers than something the government can be certain of doing.
Some people will remember a post titled, ' All Hell will be let loose' which sounded very much over the top at the time but the way things are unfolding in Greece the title might be appropriately applied to that country, hopefully it will not apply here.
7 REPLIES
Steve
Pro
Posts: 6,679
Thanks: 247
Registered: 13-07-2009

Re: Is your money safe ??

Quote
When the coalition took over our debt was £1,002 Billion. By the time of the next election this is likely to have increased to £1,613 Billion.

What happened to saving money, All the poor that have been hit harder to save money, Wheres It going?
Community Veteran
Posts: 7,906
Thanks: 588
Fixes: 8
Registered: 02-08-2007

Re: Is your money safe ??

Good question.
It is said that those in the top band of richest people in the country have seen their wealth increase well above inflation whilst everybody else has seen a decrease.
Apart from a few general exceptions I am convinced this is true.
Community Veteran
Posts: 3,826
Thanks: 44
Fixes: 1
Registered: 24-09-2008

Re: Is your money safe ??

QE = inflate your way out of debt Cry
Inflation of a debt actually makes the money owed less in real terms.
It is why the rich get richer, they borrow at low rates to hedge against inflation.
not a very good article here from 2009 http://www.dailymail.co.uk/money/article-1174613/Britain-inflate-debt.html
Any solutions suggested anyone?
One I heard today:-
Quote
We could be in for a surprise if Obama, Cameron and Hollande and the rest of the G8 ministers gang up on Merkel and promote Growth over Austerity. She is likely to toss all her Euros out of the pram, and go back to the D.Mark

Interesting.
Community Veteran
Posts: 13,920
Thanks: 514
Fixes: 7
Registered: 01-08-2007

Re: Is your money safe ??

Quote from: Steve
Wheres It going?

IF you've not seen it yet mate, watch the film called 2012. Maybe that'll get you thinking Wink
I need a new signature... i'm bored of the old one!
Community Veteran
Posts: 5,314
Thanks: 462
Fixes: 1
Registered: 21-03-2011

Re: Is your money safe ??

Ahem. May I mention http://www.goldline.co.uk/ ; They can't tinker with the physical stuff.
Now Zen, but a +Net residue.
x47c
Grafter
Posts: 878
Registered: 14-08-2009

Re: Is your money safe ??

The cost of meeting/paying the £85k FSCS guarantee is NOT met from the government.
It is met from a levy imposed on the other savings groups by the FSCS.
In the past the mechanism has been the government lend the money to the FSCS to pay out the depositors immediately.
The FSCS then claws this back from the other savings groups/ banks/building Societies to repay the government.
Of course these savings groups in turn pass the costs of the depositor bailout on to the customer via lower interest rates on savings and higher motgage costs.
This is one bad side effect of having such a guarantee
The bad pushes out the good who end up paying for the bad.
There is no 'risk premium'  meaning riskier groups no longer need to offer higher interest rates to persuade people to deposit money with them as people no longer have any incentive to check out a groups solvency as they know if they go bust they will get their £85K regardless.
The Government can always 'print money' without end as we have our own currency so we as a country cannot go bust - though the currency may drop in response to a 'mega print job' as each £ now become worth less on an international currency exchange basis - and this makes imports (like oil!) more expensive.
In my opinion the solution to the Euro problem is not that various southern Euro countries should leave - but that Germany should.  
Germany has profitted handsomley from the Euro as being in it kept Germany's exchange rate lower than it would have been had they remained on the D.Mark.  This lower than expected exchange rate made their exports cheap and made them lots of money.  So as well as using this to pay for re-unification Germany lent money to the PIIGS for them to borrow so that the inhabitants of the PIIGS could buy German cars etc: Its a balance of payments problem in essence.  So now Germany has to figure out whch is cheaper - leave and watch their currency rocket which will squash exports flat or stay and continue to bailout the PIIGS which is going to cost 'em.  Much like London/the S.East regional economy subsidises/bails out the poorer parts of the UK except we have a political/economic/fiscal/legal union and a common language to facilitate movement of people - and the EU does not.
I await with interest what is going to happen next.......
The defecit reduction in the UK has largly been an illusion - the annual defecit is probably not growing as fast as it was previously thanks to the savings made - and while each year produces a budget defecit this defecit then gets added to the accumulated debt. To get the debt total down you need to run a budget surplus and with that surplus you reduce the debt mountain and with it the interest payments payable on the debt.
Fortunately most of our debt bond issues have very long maturity dates (decades) so does not need re-financing in the immediate future - unlike the PIIGS countries
Community Veteran
Posts: 3,826
Thanks: 44
Fixes: 1
Registered: 24-09-2008

Re: Is your money safe ??

Quote from: x47c
Euro problem is not that various southern Euro countries should leave - but that Germany should. 

Second time I've heard that today, set up with a new currency (EuroMarks) and take any of the strong Northern European countries with them.