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Its time for Plan B if you have cash stashed in euro accounts
Source: http://www.iexpats.com/2012/05/its-time-for-plan-b-if-you-havecash-stashed-in-euro-accounts/ November 20th, 2012
The Greeks are already withdrawing their funds from the countrys troubled banks, fearing the European Central Bank will stifle funding and let them fail if the countrys debt crisis worsens. Spain and Cyprus have the same issues. Most European countries have a financial deposit protection scheme but watch out for account limits. Most schemes protect up to a maximum limit held in several accounts with the same bank. The two points to watch are Financial limits the threshold is a total held by one customer across any number of accounts, so someone with 100,000 in six accounts with in the Isle of Man is exposed, as the islands financial protection scheme covers up to 50,000 with any one bank. Banking licences In recent years, financial problems have forced banks to merge, sell or join other groups. Most financial protection schemes apply to accounts across all the brands held under one licence. For instance, in the UK, the Lloyds Banking Group includes Lloyds TSB, The Halifax, Bank of Scotland, Cheltenham & Gloucester and BM Solutions, so anyone with more than 85,000 in accounts across these brands is not protected. Many banking schemes offering compensation have never had to deal with a failed financial institution and work on the basis that they will raise a levy or cash from the government to repay investors and customers who have lost money. This can take years to sort out, just ask the customers of IceBank that collapsed during the credit crunch. Related posts: The IRS has pushed back the start date of FATCA the Foreign Account Compliance Tax Act from Janu...
Two killer factors are circling the euro economies and are about to strike: The perception of collapse is spurring investors in to action. The economic result doesnt matter, they have to move their money because of the chance that the eurozone will implode Sooner or later the rescue cash will run out because the rest of the world is broke as well. No ones creating cash, so no one is getting richer, its just like a rearrangement of the deck chairs as the ship sinks. The rest of the world has shown forbearance and some degree of sympathy by standing back to let the euro have some air while governments and central banks put a rescue plan in to place. Sadly, squabbling and indifferent attitudes to the problems of others has failed to deliver the promised solution. The Greek economy is in meltdown and whether they stay in the euro is anyones guess. Spain is another black of debt where managing the economy gets tougher seemingly by the day. Moodys is the latest credit agency to downgrade bank ratings with 16 banks losing their status, including Santander. Bankia has already had an injection of rescue cash, but is in the middle of a run on deposits that might yet pull it under. Government bonds are now only selling with a near crippling 5% plus interest rate which is driving away international financiers who perceive the risk is too great for the return. This comes hot on the heels of reports of widespread withdrawals from ATMs across Spain and Greece in the last few days estimates suggest that up to 2 billion has been removed from banks in the last three days, said Jason Gaywood, director at currency specialist HiFX. The danger now is that panic will set in as the population races to get their money out resulting in the self-fulfilling prophecy of a run on the banks. We witnessed this situation here in the UK back in 2008 when people queued for hours to withdraw cash from the doomed Northern Rock. The difference now is that a large number of banks and nations are affected and the risk of contagion is acute. Related posts: The IRS has pushed back the start date of FATCA the Foreign Account Compliance Tax Act from Janu...
The euro is about to reap the result of months of dithering by leaders who lacked the moral strength and political will to deal with the rising tide of debt.
The euro has hit a four month low and is likely to collapse even more as squabbling politicians in Greece face another election after failing to agree who will lead a government. The election in June could well herald the countrys departure from the eurozone as the question to voters is not so much who to elect but whether they should vote for or against austerity measures and sticking with the euro. The underlying problem for Greece is traditional economic tools to manage a faltering economy simply are not available because the government is not in control of the countrys currency exchange rate. Interest and exchange rates are governed by richer countries in the eurozone, and where Greece could have devalued the drachma in the past to ride out an economic storm, the option is no longer available. Departing the eurozone for economic obscurity is an option but while the will-they-wont-they drama plays out, the economic indecision that has plagued Europe for months continues to damage the euro. France reckons that the country will have to pay 66 billion if Greece leaves the eurozone. The big question for new president Francois Hollande and Angela Merkel in Germany is whether the financial damage is easier to bear if Greece stays in the euro. The US dollar and the Pound have profited from the euro debacle and are likely to strengthen, but in the long run Europe is a big trading partner for both. Certainly the fear for the UK and the Pound is the euro will drag the economy down even further. Putting a price on the euro against the dollar and pound is difficult as the gap widens by the hour. The euro stands at 1.2747 (Up 0.14%) against the dollar and 0.7998 (Up 0.48%) against the Pound, while the Pound v dollar rate is $1.5938 (Down 0.35%). Related posts: The IRS has pushed back the start date of FATCA the Foreign Account Compliance Tax Act from Janu...