By Raoul Ruiz Martinez
Following the latest EU debacle in Cyprus, it has brought the issue of depositor protection across Eurozone once more to the fore. If the safety of your bank deposits is a primary concern and the welfare of your own life equally as important, then read on.
EU finance ministers, intentionally or otherwise, are once more drawing focus away from the reappearance of chaos and potential contagion with statements and petitions on attacking offshore tax havens. Whilst this is serious business for the people who have worked hard to achieve financial success, the political elite appear satirical in their endeavours, especially when some have been forced to unveil investment capital held offshore and undisclosed for tax assessment. Allegedly the driving force behind this is so that we can all “come clean” together, which has already reached the public domain here in Portugal with the “manifestation of wealth” policy.
There is already some reasonable political opposition which has been begging the question as to why would one do such a thing?After all not everyone has built up their wealth through drug trafficking, money laundering or any other imaginable anti-compliant activity known to humankind, although we are still left with this paranoid belief that we are, these days, anything but honest and hardworking.
Traditionally, before idealistic confederations and huge teams of ambitious politicians, the sovereignty of national economies were the only concern as our future was safeguarded by statutory compensation schemes and welfare systems that, like oil, were overflowing and seemingly eternal.That is now being pushed further away and today, for all of the systemic problems caused since this era of financial crises began in late 2007, everyone “must pay” as it would appear that €1 trillion a year of lost taxes simply has not been accounted for.
Without true sovereignty the Eurozone is naturally taking more time to resolve its problems than for the US or the UK.In the meantime, those countries facing bailouts may have to seriously start contemplating the unthinkable by cutting welfare benefits, which has in fact been rolling out in the UK for some time.
Whilst none of this is pretty to watch, it would appear to be long overdue. One must plan, in a financial sense, very carefully to ensure that the money we have in the bank will be there tomorrow and that when we reach that ripe old age of 70 we can afford to pay for things such as long term care.
The conundrum with most who have a cautious approach is that interest rates remain at historical lows, certain offshore banks or jurisdictions are not able to fully protect depositors savings, and if you move money anywhere people will be paying out of their capital to cover the shortfall of that particular Sovereign state whose hands are tied up.
Sound financial advice should come with reason, logic and accountability, and work towards creating and protecting your savings or wealth that considers the risk of loss or failure at every level and any conceivable outcome.This was what was missing when big problems swamped everyday savers with Icelandic banks in the Isle of Man, when it appeared that they had not been funding the depositor protection scheme.Even today Cyprus has set an example as to the uncertainty of the EU depositor protection scheme, and with other smaller EU members also with unsurprisingly oversized banking sectors at seven times their national GDP.
It is more likely that the ECB will do everything in its power to stop the contagion spreading and protect personal and private wealth, but it will come at a cost.Sometimes for the cost of unbiased and professional advice you can protect your own welfare rather than depend on the sovereignty that is held to ransom.
This article is intended to provide a general review of certain topics and its purpose is to inform, NOT to recommend or support any specific investments or course of action.
Raoul has a weekly radio feature “Raoul’s Rant” on the Owen Gee Solid Gold Sunday morning show on KissFM Algarve, as well as the “Money Minute” feature during the week on the breakfast show with Si Frater.
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Raoul Ruiz Martinez is a resident financial consultant for Finesco Financial Services Ltd., Glasgow. Finesco Financial Services Ltd is authorised and regulated by the Financial Conduct Authority (FCA). | 289 561 333
