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The Euro Wont Survive This Depression


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By spending I presume you mean borrowing?

And I don't see how all the major economies in the World can claim help from 'abroad' - they are 'abroad'.

:)

NO, you need spending before the borrowing...otherwise there wouldnt be a crisis.

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And if they're a number in a Channel Islands account? Or a Swiss Account? Or a UK based Euro account?

If any German government brought back the DM I presume they would swap 1 DM for 1 Euro held by German citizens in any foreign based Euro account. If the money was held in a foreign currency then an exchange rate would apply.

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Cross fingers before D-Day IMO, speculative attacks would begin immediately, if the country's fundamentals weren't good.

cf sterling 1992.

Better for weak economies to withdraw and float straight away.

Surely you need a dual currency period to allow companies etc to make the change? You can't just create a new currency and stop another from being legal tender overnight.

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Which bank account and where?

How much money do German citizens have in foreign bank accounts and how much money do foreign citizens have in German bank accounts?

I don't know the answer to this question, but I would suspect that German banks have more of other peoples money than other countries have of theirs.

Important question: where is the banking licence and deposit guarantee?

Ideally in a core EZ country like Germany.

This can be muddied when banks have subsidiaries in other countries ... you might not be getting what you think you are.

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Surely you need a dual currency period to allow companies etc to make the change? You can't just create a new currency and stop another from being legal tender overnight.

If you expect speculative attacks or bank runs, I think you must, or you're left in an untenable position trying to defend the rate you set. If you're leaving for reasons other than desperation (i.e. in a position of financial strength), then it's different, you can expect an orderly transition.

It's not that different from imposing capital controls when you think about it, again that's something that must be done suddenly and with surprise.

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Surely you need a dual currency period to allow companies etc to make the change? You can't just create a new currency and stop another from being legal tender overnight.

All Euros issued by the Budesbank would become DM's I presume

I suspect they keep very careful track of how many they 'print' and where and in what form German citizens capital is held

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On Newsnight yesterday a City guy claimed that all Euros have a letter identifying which central bank they have been issued by and that Germans will only accept Euros that have been issued by the Bundesbank.

When he said this the Spanish govenment guy on the other side of the table defending the Euro nearly fell off his chair.

So basically a Euro note starting with code X is a Deutsche Mark.

:blink:

Utter utter nonsense. I was in Germany last week spending left over Euros that I had in my wallet that I took out of a Irish cash machine. Now I accept that by some miracle that all of the notes the Irish ATM issued were originated in Germany but I totally and utterly doubt it. I am back in Germany in two weeks and I will use the left over Euro notes that I got from Austria this weekend and will let you know if they are not accepted.

Dont hold your breath.

Brrrrrppp ding, cuckoo.

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The closest examples I can think of were the splitting of Czechoslovakia in the early 1990s (each country ended up with their own Crown) or the breakup of the USSR (a less encouraging precedent). In theory, it should be possible for some countries to break from the € without complete chaos. In practice, it will depend on which country it is, and how competently they handle the process.

I think the bank accounts would be easy to sort out (by nationality of incorporation of the bank's legal entiity rather than that of the depositor, unless these new fangled Euro-companies like Allianz SE :lol: sit in some kind of legal limbo), but the physical cash would be much harder, given the huge amount of matress money kicking around. I didnt realise about the "X" mentioned above but the concept of legal tender will be tested in the €-zone if that serial number was allowed to have any bearing on who got what on breakup.

I agree with the OP to the extent that there are going to be huge ramifications whatever happens - either disbanding of the € as we know it, or the completion of a centralised superstate as fiscal policy gets run entirely from Brussels. A hideous thought.

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Utter utter nonsense. I was in Germany last week spending left over Euros that I had in my wallet that I took out of a Irish cash machine. Now I accept that by some miracle that all of the notes the Irish ATM issued were originated in Germany but I totally and utterly doubt it. I am back in Germany in two weeks and I will use the left over Euro notes that I got from Austria this weekend and will let you know if they are not accepted.

I think he is talking specifically about mattress money - not day to day transactions?

EDIT - sorry , I meant 1888 at post 18. Apologies

Edited by Toilet-Currency
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Utter utter nonsense. I was in Germany last week spending left over Euros that I had in my wallet that I took out of a Irish cash machine. Now I accept that by some miracle that all of the notes the Irish ATM issued were originated in Germany but I totally and utterly doubt it. I am back in Germany in two weeks and I will use the left over Euro notes that I got from Austria this weekend and will let you know if they are not accepted.

Not utter nonsense, just mostly nonsense. Some people may recall a news story about a year or so back, in which a small number of Germans (probably their equivalent of UKIP) had been asking for German euro notes when they withdrew cash. Of course this led to claims of "the Germans are rejecting PIIGS euro notes" etc. If Hendry was relying on this old non-story as the source for his Newsnight comment ... well, he didn't need to stoop to such a level, he'd already won the debate.

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Not utter nonsense, just mostly nonsense. Some people may recall a news story about a year or so back, in which a small number of Germans (probably their equivalent of UKIP) had been asking for German euro notes when they withdrew cash. Of course this led to claims of "the Germans are rejecting PIIGS euro notes" etc. If Hendry was relying on this old non-story as the source for his Newsnight comment ... well, he didn't need to stoop to such a level, he'd already won the debate.

I did a search on German Google and found this in several forums from March last year. I've got Google to translate it

http://translate.google.com/translate?hl=en&sl=de&tl=en&u=http://www.xing.com/net/geopolitical/vermogensschutz-und-krisenvorsorge-300585/geheime-geldcodes-auf-euro-noten-19481106/

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Guest The Relaxation Suite

Not posted for a while but just wanted to repeat what I was saying last year

that the Euro won't survive this depression IMO.

When I said this last year I was handbagged by most of the people who replied

Some even claiming that the pound would join the Euro by Xmas :lol:

And that the Euro would soon replace the Dollar as the World's reserve currency :lol::lol:

In 10 years time the strongest currency in the World will be the Dollar - followed by the Deutsche Mark

The Euro has got at the most 5 -10 years IMO.

:blink:

I enjoy your posts, but I can't see where you get your optimism about America from. I am a very pro-American person, have spent a lot of time there and written about it professionally, but right now I see nothing that would make me think it can maintain its global hegemony. Even its regional hegemony will be eclipsed eventually by Brazil, although admittedly not for some time.

I presume you base your assumptions on the US military, which is mammoth compared with the next ten combined. But this can change so quick, so fast. The British military went from world's greatest to poo-butt defence force in just over 50 years. Thanks to the US never being able to pay its debt off, ever, I feel we should realistically expect a large reduction in its military forces, and with that will come loss of political influence. This is bad news for us all, but there it is.

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I did a search on German Google and found this in several forums from March last year. I've got Google to translate it

http://translate.google.com/translate?hl=en&sl=de&tl=en&u=http://www.xing.com/net/geopolitical/vermogensschutz-und-krisenvorsorge-300585/geheime-geldcodes-auf-euro-noten-19481106/

Interesting article

I had never realised that Euro notes were identifiable in this way until seeing it mentioned on newsnight

And if it is unimportant why has this been done?

The notes could all be printed in one place with consecutive numbers, so why are they printed by each central bank with a recognisable identification code?

If we reverse the scenario and Greece defaulted then what would happen to Greek Euro notes - presumably they would no longer be accepted as legal tender in all other Euro states and they would be identified by the country code.

My guess would be that 99% of the Euro's in circulation in Germany would have the X code and any that didn't could be exchanged by German citizens at banks in the event of a failure of monetary union

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I think the Euro will survive the current problems. It's a strong currency, despite what's happened in Greece.

If Greece were to leave the Euro, then it would have to design, mint and distribute a new currency to replace it. A bankrupt country wouldn't have the funds to do that. And if Greece did leave the Euro currency, it would still be a member of the European Union, so it would still be receiving help from its fellow members.

The only way a country would leave the Euro currency would be through a domestic nationalist anti-EU government coming to power.

The chances of any country leaving the Eurozone are less than the chances that the UK ends up within it.

Edited by blankster
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I enjoy your posts, but I can't see where you get your optimism about America from. I am a very pro-American person, have spent a lot of time there and written about it professionally, but right now I see nothing that would make me think it can maintain its global hegemony. Even its regional hegemony will be eclipsed eventually by Brazil, although admittedly not for some time.

I presume you base your assumptions on the US military, which is mammoth compared with the next ten combined. But this can change so quick, so fast. The British military went from world's greatest to poo-butt defence force in just over 50 years. Thanks to the US never being able to pay its debt off, ever, I feel we should realistically expect a large reduction in its military forces, and with that will come loss of political influence. This is bad news for us all, but there it is.

Thanks

Actually I was not thinking of military might at all.

Growth in the US economy up to WW2 was not based on military might and I don't envisage its continued growth in this century being either. Actually, I think military spending would tend to depress economic growth in the long term unless the forces developed are used to acquire resources - it was military spending that destroyed the Soviet Union and arguably that led to the current economic problems in the US after 9/11.

My belief that the US economy will at least double this century is based on the fact that they have enormous amounts of land, large potential energy reserves, large amounts of natural resources and produce huge surpluses of food. They also have a stable democracy, a system that encourages enterprise and a well educated and entrepreneurial population. They also have a vast and well established industrial base that could expand rapidly once the financial situation is stabilised and a huge and very successful education and research sector.

The US does not need the rest of the World, the rest of the World needs the US. British foreign policy in the 20th Century, which was extremely successful was virtually wholly devoted to ensuring that the US became a global superpower because that was the best guarantor of both our and ultimately Europes freedom from tyranny.

:)

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I think the Euro will survive the current problems. It's a strong currency, despite what's happened in Greece.

If Greece were to leave the Euro, then it would have to design, mint and distribute a new currency to replace it. A bankrupt country wouldn't have the funds to do that. And if Greece did leave the Euro currency, it would still be a member of the European Union, so it would still be receiving help from its fellow members.

The only way a country would leave the Euro currency would be through a domestic nationalist anti-EU government coming to power.

The chances of any country leaving the Eurozone are less than the chances that the UK ends up within it.

I don't bet, but you should see what odds you could get on that at Ladbrokes

But IMO you have correctly identified the mechanism that could kill off the Euro in the end

:blink:

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The French finance minister was just on Newsnight

The Eurozone countries have taken firm action

They have had a meeting and issued a statement !

It is a very important statement because it states that the Eurozone countries will do whatever they need to do to support Greece and the Euro - so the speculators had better watch out !

Some economist, I think he was German, was also on and said that the Eurozone countries had basically stuck their heads in the sand and were hoping the problem would go away.

His view is that it will not.

The markets will test Greece and the Euro and at some point and then the 'fun' will really begin.

The Euro was and always will be a stupid idea that was never going to work in the long run

IMHO the question is not IF the Euro will fail, but how long it will manage to survive and how much tryranny European politicians are prepared to inflict on their citizens trying to save it and their own reputations.

:blink:

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I think the Euro will survive the current problems. It's a strong currency, despite what's happened in Greece.

If Greece were to leave the Euro, then it would have to design, mint and distribute a new currency to replace it. A bankrupt country wouldn't have the funds to do that. And if Greece did leave the Euro currency, it would still be a member of the European Union, so it would still be receiving help from its fellow members.

The only way a country would leave the Euro currency would be through a domestic nationalist anti-EU government coming to power.

The chances of any country leaving the Eurozone are less than the chances that the UK ends up within it.

Minting money is cheap - it's just paper and even Zimbabwe could afford it and they had a lot of notes to print! ;)

Also, there is nothing to stop them using other currency (USD) or other free market monies. If they wanted to leave the Euro zone, which may save them a lot of pain, then I'm sure something could be arranged pretty easily (1:1 with new currency, which could then be devalued etc).

Back on the original point - I don't think the USD will survive in the long run either. They have their own problems and I think a collapse of the Euro could lead to a collapse of other fiat currencies too. Once the fear is out there, I'm not sure if any big fiat currency will survive in the long run. TBH, the sooner there is such a crisis, the sooner we can deal with it, sort it, then move on.

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