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Peter Hun

The Disastrous Consequences Of A Return To The Deutsche Mark

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Europe is discussing the horror scenario of a break-up of the euro zone. At present, that still seems unlikely (Obviously they don't read HPC), but experts are alarmed. A comeback of national currencies would be fatal -- especially for Germany.

The deutsche mark is still around. Even almost nine full years after the introduction of euro notes and coins, German households still have an estimated 13 billion deutsche marks -- stashed in hiding places, in collections or under grandma's mattress. And, if opinion polls are to be believed, almost 50 percent of Germans would like to see the currency reintroduced as the country's official means of payment.

In fact, pollsters at the EU's Eurobarometer have determined that: "For many Germans, the deutsche mark was the symbol of economic security, stability and prosperity." Those are attributes that euroskeptics will never be able to associate Europe's single currency with.

From one perspective, they might be right. Hasn't the financial crisis in Europe gotten drastically worse in recent weeks? First it was Greece, and now Ireland too has had to draw on the €750 billion ($993 billion) euro rescue fund set up this year to prevent the euro zone from breaking apart.

A number of other euro-zone countries may be about to share the same fate. Financial markets are already betting that Portugal will need a bailout. And, if worse comes to worst, it could even happen to Spain, which would surely mean the end of the euro as we've known it.

But what would really happen if the euro collapsed? Would it really herald a return to the good, old days, to a Germany that uses the much-revered deutsche mark? Or could it actually be a harbinger of chaos and economic depression?

Daniela Schwarzer, an analyst of EU economic policies at the Berlin-based German Institute for International and Security Affairs (SWP), sees two possible scenarios.

According to the first scenario, Germany and the other more stable euro-zone countries -- such as Austria and the Netherlands -- would jointly introduce a "hard-currency euro." A similar idea was recently floated by Hans-Olaf Henkel, the former president of the Federation of Germany Industry (BDI) on German public television. Henkel called for the establishment of two distinct euro blocs: a northern one "that doesn't want any inflation and is used to budget discipline" and a southern one that can go ahead and devalue its currency whenever it feels so inclined.

According to the second scenario, Germany actually would return to the deutsche mark. There would no longer be a shared-currency zone in Europe, and each former euro-zone country would decide its own monetary policy again.

But is that something anyone would really want? After all, Germany has reaped all sorts of benefits from the euro. A collapse of the common currency would have dramatic effects. Here is a list of possible consequences:

http://www.spiegel.de/international/europe/0,1518,731798,00.html

Edited by Peter Hun

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Attempting to break up or leave the euro would trigger an immediate run on the banks. Would you just leave your cash in the bank if you knew it was about to be converted into a weaker currency? No, you'd get it out and re-deposit it AFTER the devaluation. The only orderly way out would be years of parallel running first. Some analysis of the Irish situation here.

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The German currency unit would go through the roof taking the price of all that lovely German stuff with it, while demand for that stuff would go through the floor as Germany's major trading partners car crashed.

The only medium term solution is print.

I wonder when the Germans will realize this.

And I wonder when they will realise there is no longer term solution because the Germans can't prevail upon the Irish and the Mediterraneans to stop being so corrupt.

Indeed, once the printing starts they're probably gonna get more corrupt.

Well, you would do wouldn't you?

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Der Speigel and other media need to fill white space with something for people to read over their coffee. This can be news, which is expensive to collect and generally therefore syndicated so your competitors also have the same news item, or it can be opinion. The latter is not only cheap it is targeted at the readership. Over time the line between these gets blurred as the editors get lazy. It happens to all media. In the end its hard to see which is which. Reporting someone else's opinion as news is a good space filler too. "House prices soar" "according to research by John Smith (aged 6) in Manchester" - that kind of thing.

One of the results of this is people in the UK think people in mainland Europe actually like the EU. Most don't. Its a faceless organisation that is easy to scapegoat for the shortcomings of whatever.

Of course lots of Germans want the DMark back. (I also believe it is factually correct that many still have some notes under the mattress). I'm sure there are people in the UK that lament the decimalisation of our currency :D

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The deutsche mark is still around. Even almost nine full years after the introduction of euro notes and coins, German households still have an estimated 13 billion deutsche marks -- stashed in hiding places, in collections or under grandma's mattress.

DM 13 billion / 80 million Germans = DM 162.50

When you add up all the lost change and souvenir DM 100 notes that many Germans kept, that doesn't sound like a particularly extraordinary figure.

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Attempting to break up or leave the euro would trigger an immediate run on the banks. Would you just leave your cash in the bank if you knew it was about to be converted into a weaker currency? No, you'd get it out and re-deposit it AFTER the devaluation. The only orderly way out would be years of parallel running first. Some analysis of the Irish situation here.

Fascist ********. The Irish can simply announce a conversion to the Punt at 7am, no need to pre announce it or risk a run on the banks. Euro sign swapped for a Punt (whatever that may be...)

Other countries have switched/ remade their currencies, nothing fancy about it at all. If countries can announce new currency with the statement 'Drop 5 noughts off the old currency' switching to euro's at parity would be easy. Also note that the Euro notes and coins are country specific, Ireland has its own Euro.

Edited by Peter Hun

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Fascist ********. The Irish can simply announce a conversion to the Punt at 7am, no need to pre announce it or risk a run on the banks. Euro sign swapped for a Punt (whatever that may be...)

Other countries have switched/ remade their currencies, nothing fancy about it at all. If countries can announce new currency with the statement 'Drop 5 noughts off the old currency' switching to euro's at parity would be easy. Also note that the Euro notes and coins are country specific, Ireland has its own Euro.

LOL! No, first the new currency has to be printed. Then legislation to enact the change has to be drawn up, argued over, passed by the lower house, passed by the upper house, kicked around some committees etc. Then tills have to be changed, and vending machines etc. Then the new currency must be distributed to the banks so they can hand it out to the people, then there MUST be a change over period - you can't go from euros one day to punts the next. People aren't that organised, or they are on holiday, or in hospital etc. And of course the euro will still be in circulation and very acceptable when proferred in payment.

You can announce it at 7am if you like, but it wouldn't happen. :lol:

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LOL! No, first the new currency has to be printed. Then legislation to enact the change has to be drawn up, argued over, passed by the lower house, passed by the upper house, kicked around some committees etc. Then tills have to be changed, and vending machines etc. Then the new currency must be distributed to the banks so they can hand it out to the people, then there MUST be a change over period - you can't go from euros one day to punts the next. People aren't that organised, or they are on holiday, or in hospital etc. And of course the euro will still be in circulation and very acceptable when proferred in payment.

You can announce it at 7am if you like, but it wouldn't happen. :lol:

You can pass emergency legislation to stop people withdrawing large amounts of cash.......

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funny how they frame it in terms of making their currecy overvalued, rather than the euro being currently undervalued for germany. got to love german merchantilism.

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DM 13 billion / 80 million Germans = DM 162.50

When you add up all the lost change and souvenir DM 100 notes that many Germans kept, that doesn't sound like a particularly extraordinary figure.

Very true. Almost everyone I know over here has a souvenir framed collection of all the DM coins and notes. The figure given is meaningless in reality.

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I don't see it being that complicated.

All you need is for the use of other forms of currency to supercede others. In time, if the euro carries on rocking, this will probably start to happen anyway.

When I was younger, I lived in some odd places (former conflict zones, ex-Soviets, that sort of thing) and people used different currency for different transactions with floating rates as a matter of course. Street level would be your local currency (for bread, milk, fags, eggs, cheese) and also Deutschmarks (which was interesting because if you paid with Deustchmarks, you would always get local currency in change), then for larger transactions, it tended to be Deutschmarks, with, sometimes, Dollars and Sterling.

The interesting way to play this out for the benefit of Ireland is for them to introduce an internally circulating "New Punt" and create an artifically high peg to the euro, then undermine this through careful and controlled expansion. Thus when you convert the debt, you convert at a good rate to a currency that you then have monetarist control over.

Of course, it is cheating something chronic and the markets would get an inkling and the cost of your debt would increase, but when it is that or total default because everyone knows you can't pay at all, then it could be worth it.

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LOL! No, first the new currency has to be printed. Then legislation to enact the change has to be drawn up, argued over, passed by the lower house, passed by the upper house, kicked around some committees etc. Then tills have to be changed, and vending machines etc. Then the new currency must be distributed to the banks so they can hand it out to the people, then there MUST be a change over period - you can't go from euros one day to punts the next. People aren't that organised, or they are on holiday, or in hospital etc. And of course the euro will still be in circulation and very acceptable when proferred in payment.

You can announce it at 7am if you like, but it wouldn't happen. :lol:

First, the vast majority of money is in banks not in paper.

Second, you missed the vital point that each country has its one euro with unique identifiers and design. This can be simply declared as Punts. German.French banks could simply refuse or apply a exchange rate too them

In some countries old notes were delecare to be worth 1000th of the new currency and you could add a decimal point if you wanted.

Changing would be easy.

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First, the vast majority of money is in banks not in paper.

Second, you missed the vital point that each country has its one euro with unique identifiers and design. This can be simply declared as Punts. German.French banks could simply refuse or apply a exchange rate too them

In some countries old notes were delecare to be worth 1000th of the new currency and you could add a decimal point if you wanted.

Changing would be easy.

Jeez ! There'd be riots at supermarket checkouts all over the EZ as people checked their change/wallets to see whether they were giving/receiving the worthless Punts in their change.

And any Irish tourist on holiday would be handed the "euro" punts by the sackful from local shops and told to take it back home... B)

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.....

Second, you missed the vital point that each country has its one euro with unique identifiers and design. This can be simply declared as Punts. German.French banks could simply refuse or apply a exchange rate too them

....

Without doubt the most stupid thing I have ever read on here.

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Jeez ! There'd be riots at supermarket checkouts all over the EZ as people checked their change/wallets to see whether they were giving/receiving the worthless Punts in their change.

And any Irish tourist on holiday would be handed the "euro" punts by the sackful from local shops and told to take it back home... B)

In Germany people have been avoiding accepting non-German Euro notes since last year.

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Without doubt the most stupid thing I have ever read on here.

Maybe.

]Serial numbers may hold the key if euro falls apart [/b]

Behind the apparent uniformity of the euro currency it is possible to tell the country of origin. Coins are clearly marked. Notes are seemingly identical, but each serial number contains a prefix showing which country issued it.

The serial number also contains a secret clue to the country which issued the note. The clue lies in what is known as the digital root of the serial number. This can be calculated by adding together the digits, then taking the result and adding its digits together again and so on until a single digit is left.

In our example, the code reads X50446027856. The X immediately indicates that the note is German, but a second test is to add the digits. So (5+0+4+4+6+0+2+7+8+5+6) gives 47. Add these digits (4+7) gives 11. Finally add these digits (1+1) gives 2, the code number for Germany. Some countries share a code number.

But while in theory it is possible to identify which country issued the notes, many economists argue this is meaningless and could not be used to split one set of cash from another.

Europe's leaders are at least publicly determined to keep all members inside the euro and as long as they succeed all euros will continue to have the same value.

But in the event of a country falling or being pushed out of the club it will not be long before Europe's shopkeepers and consumers start looking rather more closely at their banknotes.

Land of origin: The code breaker

The 11 digit serial number on every note begins with a prefix which identifies which country issued it.

German notes begin with an X, Greek notes start with a Y, Spain's have a V, France a U, Ireland T, Portugal M and Italy S.

Belgium is Z, Cyprus G, Luxembourg 1, Malta F, Netherlands P, Austria N, Slovenia H, Slovakia E and Finland L.

http://www.dailymail.co.uk/money/article-1270294/Serial-numbers-hold-key-euro-falls-apart.html

Edited by Peter Hun

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The only medium term solution is print.

I wonder when the Germans will realize this.

1923! :huh:

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  • 312 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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