Germany Guarantees Private Deposits

David Phillips Sun Oct 05, 2008 at 06:04:50 PM GMT Print-friendly version Facebook

First it was Ireland,then Greece, but now one of the major EU economies has taken the decisive action of guaranteeing all private bank deposits.

http://news.bbc.co.uk/1/hi/business/7653317.stm

This is an idea that was originally suggested for the UK here on 30 September:

 http://www.labourhome.org/story/2008/9/30/155312/572






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Germany Guarantees Private Deposits | 9 comments (9 topical)

Re: Germany Guarantees Private Deposits (#1)

by adwilliams134 on Sun Oct 05, 2008 at 06:27:14 PM GMT

Rumours on News channels - Darling is set to give 10% backing to UK bu Tuesday


Re: Germany Guarantees Private Deposits (#2)

by swatantra on Mon Oct 06, 2008 at 10:37:29 AM GMT

Once again Germany has broken ranks which could cause a conflagration (last time it was recognition of Bosnia H). The EU should have stuck fast to a united resolution.


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Re: Germany Guarantees Private Deposits (#3)

by adwilliams134 on Mon Oct 06, 2008 at 12:19:58 PM GMT

Germany are now in the process of clarifying their situation and it looks like something went awry betwen what Merkel said and what she meant.   Gets Darluing off the hook a bit in that he may not have to raise to 100%,  however Denmark has just given 100% gurentee and Sweden is in the process of giving a large guarentee.

Certain countires within the EU who are also in the euro are looking exceedingly fragile and there's not a lot that can be done because of rules concerning the ECB and the fact that whatever it does applies across the whole of the eurozone.


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Re: Germany Guarantees Private Deposits (#4)

by Floating voter on Mon Oct 06, 2008 at 12:58:58 PM GMT

" rules concerning the ECB and the fact that whatever it does applies across the whole of the eurozone."

It gives rise to some fantastic opportunities. I have some cash in a sock in the drawer and I'm hoping to buy either Belgium or Holland by the weekend! 


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Re: Germany Guarantees Private Deposits (#6)

by adwilliams134 on Mon Oct 06, 2008 at 04:59:23 PM GMT

You'll get them both by next week on BOGOF


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Re: Germany Guarantees Private Deposits (#8)

by Floating voter on Mon Oct 06, 2008 at 05:56:37 PM GMT

If the ECB does not get its act together pronto, I'll get Spain and Italy thrown in. Two for the price of four - a super BOGOF!!!

Interest rates need to drop so that it is not worth holding capital in reserve. Money needs to flow. In the US they dropped rates to 2%, the ECB put them up.


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Re: Germany Guarantees Private Deposits (#9)

by adwilliams134 on Mon Oct 06, 2008 at 06:52:24 PM GMT

It's not retail interest rates that are the probem. If anyhing they could do with a small rise.  The problem is the interbank rates - they are up around 15% between some banks so they can't afford to borrow from each other.  We, he great public,  are merely spectators in all of this as it has no effet on our everyday lives - yet.

The biggest problm is CDO/CDS/SIV (cue snowfake, chuck your two pence worth in)   CDO/CDS/SIV obligations are greater than the entire planet's GDP,  have been grossly over-valued and chopped up and mixed so everything is contaminated to a greater or lesser degreee.   Every bank knows this and so they are wary of taking each other's CDO/CDS/SIV as collateral for short loans without applying huge interest rates between each other.  To make matters far far worse,  a huge percentage are due forsettlementat te end of this month.   The sub-prime fiaco is the starter.  The Main Course is a well portioned dish of CDO/CDS/SIV and rapidly approaching.

On another note,  the US now wants to make te morage industry regulated as an amended part of the SOx regulations.  Altogh SOx is US law,  any company that trades in US bonds has to adhere to it even in it's own country.  So it will affect our banks.   Basically they want an end to self-certified mortgages,  mortgages limited to 90% of value,  the selling price legally certified by the estate agent as the true price and full credit registers between credit houses so that home-owners cannot take secondary loans out on the property until the mortgage is paid off.


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Re: Germany Guarantees Private Deposits (#5)

by snowflake5 on Mon Oct 06, 2008 at 02:01:44 PM GMT

We don't know what happened, and what state of German banking is in.

I agree that we should have a united front - the "beggar my neighbour" thing was exactly what did for everyone in the 1930's.


It might be well to declare a blanket guarantee across Europe, then no one would have any incentive to move money around.


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Re: Germany Guarantees Private Deposits (#7)

by adwilliams134 on Mon Oct 06, 2008 at 05:02:38 PM GMT

But this is the age of the internet and if you got all the countries in the EU to agree a common strategy it would be a miracle,  let alone all of Europe.  And for it to be truly effective it would have to be the same as the USA and Asia as a whole and Russia.

And that is not very likely I would suggest,  especially if one country (as opposed to a bank) starts to go tits-up and goes it's own way for it's own sake.  Which it will.


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Germany Guarantees Private Deposits | 9 comments (9 topical)