America’s central bank wraps up a two-day policy meeting on Wednesday as markets wait for hints about a rate rise.
With Greece once again said to be on the verge of exiting the Eurozone, where it has been on and off for the past five years, a move which would demonstrate that an “irreversible” currency is very much reversible and just what happens when Mario Draghi runs out of other people’s “political capital”, here a reminder that despite Europe’s common currency, some European bank notes are more equal than others, courtesy of a post that was written over three years ago. Because sadly, despite all-time record market highs, nothing has changed in over 1000 days of so-called progress.
From This is Money:
How to find out what country a euro note is from
As forecasts hit fever pitch of Greece being bundled out of the euro, there was bound to be plenty of wild speculation – and a snippet doing the rounds is that holidaymakers should be worried about holding Greek euro notes.
Travel firm DialaFlight even posted a blog, swiftly removed, making some fairly bold claims about whether Greek euro notes would prove worthless if the troubled nation fell out of the currency.
It asked: ‘Will other members of the Eurozone accept them? If not anyone holding Greek Euros may find themselves out of pocket.’
‘Greek euro notes,’ I hear you cry. ‘But surely the whole point – of this euro experiment was that everybody has exactly the same money?’
And that is true. The euro is a common currency, entirely equal across all nations, and while it is printed in individual member countries, wherever your note comes from the design is exactly the same.
But while the Eurocrats would have you believe that each of those notes is absolutely equal, there is one tiny crucial difference that lets you see where they come from. That involves a little-known trick I learnt about a few years ago.
Every euro note has a serial number on it. And at the start of that serial number is a prefix (usually a letter) – and this is what tells you where it is from.
Where do my euros come from? The code breaker
Star pupil German notes begin with an X, while bottom-of-the class Greek notes start with a Y. (It it ironic these letters correspond with the two determining chromosomes?)
Spain is V, France 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.
But there is a crucial point for anyone considering being swept up by talk of Greek euro notes proving to be duds, if it falls out of the common currency.
While we don’t know what will happen if a country drops out, as cunningly the euro experiment architects didn’t build in an exit strategy, we can be fairly certain it won’t involve a small army of Eurocrats marching around, checking the letters on your banknotes and taking them off you.
Beyond the fact that this is completely impractical, that’s because notes from different countries end up all over the place.
Some quick pocket surveys conducted by This is Money readers when I first wrote about how to work out where your euro note came from revealed the extent.
One reader on the furthest westerly reaches of the Eurozone in Ireland had the following: 5 German, and one each of Greek, Belgian and Irish.
Another, in Greece, had four notes out of a Greek cash machine that read like the start of a bad joke: Two Germans, a Belgian and an Italian.
Meanwhile, we also conducted another test today in the This is Money office. Richard Browning has luckily just bought €130 from our very own Arthur Daley, Ed Monk, on his return from an Italian holiday.
He has five Dutch notes, a Slovakian, a French note and a German.
Clearly, there are going to be a lot of Europeans and businesses out there, with assets that have no link with Greece, but a stash of notes with a Y on them.
If Greece does head back to the drachma, one way to make a bad situation worse would be to start randomly cancelling those notes – that makes it highly unlikely to happen.
In reality, no one knows what will take place. Mainly because the Eurozone authorities seem to have decided that even admitting the possibility that a ten-year-old currency experiment could fail in some way, would be tantamount to triggering its decline.
That’s unfortunate for Greece, but fortunate for those who love a bit of spurious speculation.
The best guess is that euro notes would remain as they are, and in order to iron out any problems with money supply, some would be gradually withdrawn. That would most likely mean any Greek holding euro in cash and able to get them out of the country would still be able to spend them.
Where they would be hit is in their assets. Savings, investments, property values and all the important things that make up their wealth, would somehow be transferred back into drachma (most probably) and greatly devalued compared to their previous euro status.
So, those checking their pockets and finding a Greek Y in there should have no need to panic, unless they’re playing euro Top Trumps, of course.
Ever since the Fed launched its unprecedented, unsterilized debt monetization rampage known as quantitative easing, coupled with seven years zero interest rates, there has been much confusion about how the Fed will achieve two gargantuan tasks: i) hike rates, and ii) reduce the amount of holdings on its balance sheet. The quandary, according to conventional wisdom, is magnified because something like this “has never been done before.”
Conventional wisdom is wrong: something like this has been done before; the reason why nobody wants to talk about it is because it ended in epic disaster.
The chart below shows the Fed’s balance sheet expressed as a % of GDP: it has grown from its long-term “normal” 5% to just over 25%.
Submitted by John Whitehead via The Rutherford Institute,
“It is perfectly possible for a man to be out of prison and yet not free—to be under no physical constraint and yet be a psychological captive, compelled to think, feel and act as the representatives of the national state, or of some private interest within the nation wants him to think, feel and act. . . . To him the walls of his prison are invisible and he believes himself to be free.”—Aldous Huxley, A Brave New World Revisited
“Free worlders” is prison slang for those who are not incarcerated behind prison walls.
When it comes to the contents of the TPP, the most important law of Obama’s second term, merely leaking its contents to the press can have result in imprisonment or treason charges, which, considering recent revelations that a substantial portion of the bill was drafted by and for the express benefit of pharmaceutical companies, was to be expected:
It’s no secret that things are getting tougher for China’s manufacturing sector as the country embarks on a difficult transition from an investment-driven economy to a model led by services and consumption. Domestic demand for metals has fallen as “idle cranes, empty construction sites, and abandoned buildings” (to quote Bloomberg) betray a sharp economic deceleration. Export growth has slowed, rail freight has collapsed to what look like depression levels, and industrial production remains in the doldrums and will need to fall far further if China is serious about getting its pollution problem under control.
Last week, Greek PM Alexis Tsipras submitted two three-page proposals that were ostensibly designed to close the gap with creditors. EU officials were incredulous, calling the drafts “not serious.”
Tsipras had effectively resubmitted Greece’s previous proposal (i.e. a proposal that did not include concessions on a VAT hike or pension cuts) only this time, he included a second document that outlined how Athens hoped to tap leftover bank recap funds from the EFSF and bailout money from the ESM. Greece took that same proposal to Brussels over the weekend and it didn’t fly there either, leaving Europe to wonder just how far Tsipras was willing to go with the brinksmanship.
The problem is simple and it’s been outlined in these pages extensively. The game of chicken can theoretically go on at the political level for some time. That’s because the bundled IMF payment isn’t due for another two weeks and even if it were missed, Christine Lagarde has quite a bit of discretion as it relates to sending an official failure to pay notice to the IMF board and triggering cross acceleration rights for Greece’s other creditors.
Once upon a time, merely suggesting that a Eurozone country may be kicked out, let alone suffer capital controls, was enough to get one sued by the Hague for crimes against humanity, if not outright droned. Now, and as has been the case for the past 4 months, that it is the Troika’s explicit intent to foment a depositor panic and instigate a bank run in Greece with the hope of overthrowing the Tsipras government, everyone is allowed to chime in.
So, without further ado, here is what the next steps for Greece may be as well as a walk through of its capital controls, courtesy of JPMorgan.
Capital controls, ECB rules, and bellicose rhetoric
There are increasing media reports that capital controls are being prepared for implementation possibly as soon as this weekend should the discussions with Greece not generate a deal. This raises a number of questions about how capital controls would work, and how their imposition would effect the negotiation process.
Submitted by Michael Snyder via The Economic Collapse blog,
Corporations, individuals and the federal government continue to rack up debt at a rate that is far faster than the overall rate of economic growth.