Quite nerve wracking. I was all cashed up house wise in 2009.
The banking industry of course tells us it different this time, nothing to worry about. They said that back in 09 also.
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I would not have expected differently from you ...
For anybody else - they might just do their due diligence. Not all ETF's are the same.
However - if you love fear mongering ... here is news for you: Any investment might turn sour. Your matrass might burn down (with the money in it), your house (potentially your largest investment) might sit on the impact point of the next Chinese satellite crashing down and polluting it with radioactive substances (not insurable event) , any bank holding your cash can fail and if the next vulcano blows up under your NZ investment property it might be too late to check for your insurance cover - don't forget - insurances go pear shaped as well.
Better spend all your money right now - and enjoy the rest of your weekend ...
First of all don't listen to anything I say. I have no idea, just a vague interest and time on my hands.
Second what is the super safe investment. I might be interested in troubled times like these.
Banks go under in the US. Is it a small bank that went under? If so, maybe not a big issue globally. NZ banks main security is the NZ housing market I believe.
Cash would have been good last year compared to most investments. Particularly c.f. house prices. Just make sure you don't panic and do something stupid like listen to me. If you are holding cash while you wait for house prices to bottom, it is quite possible this is a lot safer than burying gold in your back yard or buying a gold etf.
Who knows... I don't.
As I understand it, bank deposit guarantee schemes have a defined limit or cap - you're insured up to the insured value and anything over is at risk. The Silicon Valley Bank is playing this out in the US scenario, which I think is similar to New Zealand's OBR.
From the Washington Post:
https://www.washingtonpost.com/busin...dic-insurance/
"On Friday, a run on deposits led to the closure of Silicon Valley Bank, making it the second-largest bank failure in U.S. history. The bank was shut down by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver.
The FDIC, in turn, created the Deposit Insurance National Bank of Santa Clara and announced that all insured depositors will have access to their insured funds no later than Monday.
“Uninsured depositors will receive a receivership certificate for the remaining amount of their uninsured funds,” the FDIC said in a statement.
The situation provides an opportunity to remind depositors how much of their money is protected by the federal government."
So I think that in your scenario you'd be b*ggered.
As for "protection" I suppose the only thing to do would be to spread your money across whatever number of banks it takes to make sure that all your money is insured.
I do not think NZ has a deposit insurance scheme yet, although it has been discussed.
https://www.rbnz.govt.nz/regulation-...ank-resolution
The OBM chart in the link says that the "unfrozen funds" are govt guaranteed but it also says
We will then do a high-level assessment of the bank’s losses and freeze a conservative portion of account balances.
The frozen funds are not cancelled or written off, and the depositors and creditors continue to hold a legal claim to these funds. To the extent that all or some of these funds remain available after all losses have been covered, they will be returned to depositors and creditors.
Shareholders to lose first then I used to think bondholders but now I am not sure, depositors might just get lumped alongside bondholders and in the case of covered bonds they are ranked below them. maybe unsecured depositors are ranked below bondholders, I am not sure.
If we are ever talking about using the OBM, then gold buried in your back yard would be a better bet. Lets hope the new home owners with big debts don't start losing their jobs we have invested a lot in them through the banks. Thanks to Adrian's FLP and at one point in time I think he loosened LVR restrictions as well, what a hero, with the courage to act.
To be honest based on recent history shouldn't we expect the NZX to do well on Monday.
A least the power, property and retirement village operators.
A pivot and negative interest rates can't be too far away now.
US$300 billion US bank put under administration.
Some perspective:
US economy is 103 times the size of NZ economy.
So the US$300 billion is equivalent to a US$2.91 billion bank being put into administration.
That’s equivalent to a NZ$4.7 billion situation - the finance company sector collapse in NZ cost depositors & the government $7 billion.
So the bank failure is hardly going to hit the broader US economy and the financial system. Maybe similar or equivalent banks and financial institutions with heavy exposure to the venture capital and crypto scam industries.
No risk of contagion but don’t let the doomsayers dissuade you that it’s Lehman all over again.
Just as crypto is the new global currency system just 15 months ago, remember?