You responded something similar elswhere.

The answer is that depositors will fare better, of course, deposits are held up by the financial system, the ECB central bank in this case, as the ‘lender of last resort’. Lets say they decide to close AnIB.

Depositors will get their money under the Gov guarantee system, who in turn get their money from the ECB. Depositors put their money into a new bank and off it goes.

The system works IF people keep their trust and keep their money in banks (ECB backed ones preferrably). Fractional banking is maintained. Only IF all the people (deposit holders) take out all their money at once, does the system fall down, but even then there is an escape chute as the ECB or other central bank just creates more of the stuff.

MK1

ps200306> Take it as read that I know what fiat currencies and fractional reserve banking are ….. I still don’t get what the fuss is about.

The whole thing about our economic system is that it is based on trust and money is created out of nothing. Thats what central banks provide, new money, and out of nothing.

The fractional banking system allows banks to provide credit, but what levels of capital adequacy are correct to keep the system up and the trust there? Basle I had it at 12%, Basle II about 8%, and banks that were tading and not regulated properly indeed dipped below that.

So, yes, in an economic system credit is like an oil that allows people to work, create, etc. But when there is too much credit given out, it becomes an end unto itself, a monster, and bubbles ensue. Humans are the fault in the system.

So, its all about control. There is nothing wrong with alcohol, indeed I’m partial to a Corona served at 1C, preferrably in Mexico, but if I am an alcoholic, I may not perform as a human, I break down. That is what has happened with the financial systems of the world.

Too much credit plus too much credit based on assets that were not really assets, whilst central banks ‘race’ and compete with each other to create more money out of nothing.

Economics is not a science and us mere humans are at the begining if learning how to deal with it in a world that has become more and more interconnected and volatile.

Money (paper, electronic) may collapse at some point, whether in 2080, 20,080 or 200,080 !

MK1

If they have even more than that sum in the bank, I would wonder how they managed to save that much and, if they are so financially astute as to have achieved that feat, why their astuteness does not extend to protecting their savings from the shenanigans of irresponsible gambling bankers, as those who operate the banks in question have proven themselves to be.

Finally, according to the figures I have seen, deposits are in the order of €84 billion, not €175 (but if you have a link showing that figure, I would be interested in reading it.)

Personally, I do not earn sufficient money to ever achieve a €100k nest egg, even if I lived five lifetimes, but if I do not trust such banks with my tiny little deposits, I simply cannot fathom how anyone can still trust them with a relatively vast fortune. I just do not see how such a person could exist – smart enough to be able to accumulate a large deposit, but too stupid to move it to someplace safe? No; it just doesn’t compute.

‘The only reference to a bank in Harry Potter is Gringotts, which is located on Diagon Alley in London and has hundreds of vaults. In these vaults, a person can keep whatever he or she wants (like a security vault). Hagrid indicates that wizards have “just the one” bank.

http://en.wikipedia.org/wiki/Harry_Potter_universe#Economy

Let’s continue this fascinating discussion on The Oil Drum….I assume you’re a Doomer? What’s your take on Shale Gas? Tar Sands? *yawns*

Britain is a corporatocracy, like most other previous ‘Nation States’. It is owned, not by its’ voters, but by its’ ‘shareholder pension fund class warriors’. Hence the profits of Antarctic Pandora will accrue to them, just as THATCHER! ensured North Sea Oil and Gas wouldn’t enrich the infrastructure of the soi-disant Nation State.

And just like the previous hidden junta in ‘Ireland’ sold off Corrib for buttons……

best
Mad Paddy From Brum

ps: The Muses aka, ‘voices’. I do get them seen too regulary. But my psychiatrist refuses to treat them. He says it’s impossible to cure my condition with any known drugs or E.C.T. My official diagnosis is ‘Genius’, but I prefer the ‘lyrical – satricial’- etc. It’s more informative for the casual reader. Have a nice day.

http://www.thesun.co.uk/scotsol/homepage/sport/2875767/Republic-of-Ireland-0-Brazil-2.html

best
Andy

‘Hybridity Is The New Authenticity’, and the Brazilians cheering on both teams last night would probably agree – as they enjoyed the ‘glass half full, glass half empty’ switching to a glass of stout.

http://www.irlandeses.org/healy_gort.htm

DMcWs’ ‘diaspora convergence hypothesis’ is now in danger of transmogrifying into a nightmarish re-run of the ‘diaspora divergence disasters’ of previous eras, such as the 50s when my parents ‘volunteered’ to leave.

There is now an ‘internal diaspora of outsiders’ who have been expelled from the inner sanctum of the FF/FG priesthood. Battered by deflationary appeasement, they helplessly watch as businesses, families and friends are mired in the quicksand. Whilst the FF/FG ‘fraud sqaud’ of Irish Identity Dissociation pull on their stained green jerseys whilst drunkenly lip syncing the doomed ululations of ‘Amhran na bhFiann’:

http://www.independent.ie/opinion/columnists/kevin-myers/kevin-myers-we-do-not-have-a-settled-identity-for-our-anthem-2078557.html

Kindly yours
‘Mad Paddy From Brum’ aka: The Saxon Foe…*rollseyes*

AIB is dead. Get over it.

Eventually, it would appear that “We are where we are” despite ad nauseum warnings.

Armageddon is a bad place to be, to lose everything but the truth is, most Irish people won’t lose anything if the banks fail. If they’re clever and face reality.
If you have a few pound, stick it the credit union. And you’ll get 21% over 5.5 years from the post office savings account.
They’re all Govt backed for now.

If that fails, we’re all in the doghouse.
Life always goes on though.