Friday Humor: Unspinning The "€100 Bill" Or How The European Bailout REALLY 'Works'

Tyler Durden's picture

By now everyone has heard the parable explaining how the entire European bailout, courtesy of near-infinite fractional reserve banking, can be taken care of using one €100 bill. Or so the yet again flawed economist thinking went. Unfortunately, this was just a parable, and a massively flawed one at that. As the below interaction between a ZH reader and his broker elucidates, here is what this idealized story would look like in the real world, that as we explained before, is drowning in about $21.2 trillion in excess debt.


It is a slow day in a little Greek village. The rain is beating down and the streets are deserted. Times are tough, everybody is in debt, and everybody lives on credit. On this particular day a rich German tourist is driving through the village, stops at the local hotel and lays a €100 note on the desk, telling the hotel owner he wants to inspect the rooms upstairs in order to pick one to spend the night. The owner gives him some keys and, as soon as the visitor has walked upstairs, the hotelier grabs the €100 note and runs next door to pay his debt to the butcher.  The butcher takes the €100 note and runs down the street to repay his debt to the pig farmer. The pig farmer takes the €100 note and heads off to pay his bill at the supplier of feed and fuel. The guy at the Farmers' Co-op takes the €100 note and runs to pay his drinks bill at the taverna. The publican slips the money along to the local prostitute drinking at the bar, who has also been facing hard times and has had to offer him "services" on credit. The hooker then rushes to the hotel and pays off her room bill to the hotel owner with the €100 note. The hotel proprietor then places the €100 note back on the counter so the rich traveler will not suspect anything. At that moment the traveler comes down the stairs, picks up the €100 note, states that the rooms are not satisfactory, pockets the money, and leaves town.

No one produced anything. No one earned anything. However, the whole village is now out of debt and looking to the future with a lot more optimism. And that, Ladies and Gentlemen, is how the bailout package works.


XXXX I edited your bailout email a little to help make it more effective to clients, please see below.
It is a slow day in a little Greek village, planet earth.  The rain is beating down and the streets are deserted. Times are tough, everybody is in debt, and everybody lives on credit. On this particular day a rich German tourist is driving through the village, stops at the local hotel and lays a €100 note on the desk, telling the hotel owner he wants to inspect the rooms upstairs in order to pick one to spend the night. The owner thinks about maybe beating the tourist to death, but decides to give him some keys and, as soon as the visitor has walked upstairs, the hotelier grabs the €100 note and shoves it in his pocket.  He owes Piraeus Bank down the street €100,000 but has little intention of repaying it as his business has been contracting for several years.  That bank also has claims of €10,000 on a butcher's business, €50,000 on a pig farmer, €75,000 to a supplier of feed and fuel, but in turn owes €100,000 to EFG Bank which itself has fractionally reserved claims on a pub owner and a prostitute who bought two homes on 105% LTV among many others.

At that moment the traveler comes down the stairs, states that the rooms are not satisfactory, and asks for his €100 note back.  The Greek innkeeper asks "what €100 note?"  The German threatens to call the police.  The innkeeper says "go ahead, ask for my brother who's a Lieutenant down at the precinct, he'll help you out."  The German storms out back into the night, €100 poorer.  No one produced anything.  No one earned anything.  However, the whole village is still buried in debt and looking to the future with a lot more optimism at the thought that maybe the Germans really are that gullible.

And that, Ladies and Gentlemen, is how the bailout package works.

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Mr Lennon Hendrix's picture

I hope he fired his broker

Misean's picture

Yeah, and hired the hooker.

Buck Johnson's picture

No kidding, also this won't be with Greece only.

vast-dom's picture

Let's keep it country simple and let the humor verge on frustrated nervous laughter like so: hire whores and do a lot of coke and commit senseless acts of hubris in your narcissistic feeble little world all as you continuosly fuck up your books while shifting and offloading your toxic losses into your shadow books then get government hand-outs courtesy of the illegal Fed (which is essentially one big shadow book of radioactive derivatives and toxic shit and smelly cheats) and the criminal Bernank which is to say, you lobby for your free funds by virtue of positioning and politicking. The equivalent of essentially printing your own money when need be as you continue to fuck everything and everyone up! How to package derivatives of ineptitude? Look to TeH FeD 101 QE $kaM as controlled by teh banks -- a perfect circular scam that overrides all economic systems save for tyranny.

Gots to love it. Happy New Year! No Friday mirth like the simple obvious facts! 


Oh and it's only a matter of time before the german's bomb the fuck out of that inn and then the rest of the islands!!!!! Germans are many things, but generally speaking gullible ain't one of 'em.

rocker's picture

The really sad part is that Goldman Sachs rules the world. Germans included.  No Contagion ............

John Browne was on Bloomberg today spouting how the U.S. banks have 10 trillion in derivatives on European Swaps.  Hmmmm.

Ahmeexnal's picture

But they are obedient slaves who will do as told.

It has been this way for thousands of years.

knukles's picture

See... so the devoted student of Paul "Grand Asshole of E-con-comics" Krugman would say: "Just proves, we gotta issue more debt and print more money.  Am I the only fucker who understands Keynesian economics?"" 

1fortheroad's picture

I dont see the problem, that 100 didnt create any debt and many people did get paid for their services.

knukles's picture

Actually, great observation.
Wonderful demonstration of an instantaneous increase in Velocity.  Now imagine that happening with all the net free reserves in the global banking system being enjoined in the process.


GeneMarchbanks's picture

Funny... cause it's true.

malek's picture

If Greece remains only halfway how it was 10 years ago, Greece would be about the last European country in which an innkeeper completely rips you off like that... by my own experience.

Sudden Debt's picture

And than the germans return in stucka bombers and level the town....

i_fly_me's picture


-1 for the beer spray on my screen.

Scirocco's picture

Someone just freaked out - explains oil smackdown


Iran’s Navy Chief Says Iran Doesn’t Mean to Close Strait: Xinhua 


Web link:


SheepDog-One's picture

CFR rebuts- 'We want war with Iran now'


css1971's picture

Care to decode:

?? ????????URL?????


for me? I understood "URL" if that helps.

The Reich's picture

Reality divided by one billion. 

Agent P's picture

Wait a minute...are you telling me there are prostitutes out there that provide services on credit?

Urban Redneck's picture

the decoupling of "credit" and "plastic"

taniquetil's picture

the coupling of "credit" and "silicon"


Fixed that for you

Return2Sanity's picture

In this country, prostitutes who provide services on credit are known as politicians.

Al Gorerhythm's picture

In this country, are the people who accept their services aware that they (politicians) are prostitutes or do they think they just got lucky?

philipat's picture

Yes, they are called Central Bankers?

vast-dom's picture

no credit needed when the taxpayer foots the hooker tabs.

DormRoom's picture

I'm glad you wrote this.  It Explains how financial churn may increase GDP from investments, but not productive enterprises.   The disconnect between between money-par-production-value & money-par-synthetic-flow has widen with the debt super bubble.


If the churn stops, no one can roll over, collateral chains are shortened, and it is game over (money flow collapses back to the most efficient, competitive, & productive ongoing concerns, which modern finance is not.  But the chimera that is retail/investment too big to fail banks, implies a huge real economic collapse).

Mr Lennon Hendrix's picture

The broker's example is decent in respect that it shows how debt/credit has no value- people just hand them out like cupcakes at a tailgater.

GeneMarchbanks's picture

Not for regular folk they don't. At least not anymore. You'd think they'd just go back to matching savers and borrowers, safe mediation and risk management, but no. The unwind of the derivatives market will bring this all to light soon so now it all really makes no difference.

SheepDog-One's picture

Water, water everywhere...but not a drop to drink.

LowProfile's picture

The broker's example decent in that respect (that it shows how debt/credit has no value), but in one important other aspect, it is pure unadulterated bullshit because IT ASSUMES NO TAXES.

Big Swinging Richard's picture

True dat, but Greeks don't pay taxes anyhow.

WakeyWakey's picture


This is an economist fantasy land that bankers must have sold to politicians to get bailouts. It is a version of the money multiplier without interest that banks use to make a loan that then goes into another bank as a deposit to make another loan.

The reality is people mostly owe money to banks who charge interest and bills due to other companies are usually settled through banks who take another slice.

The broker example only works because the banks aren't why give the bailout money to the banksters? If it had gone to the people this mess would all be over.

pods's picture

My mental image of life is that the banksters are the ones holding the shotguns, and we are poor Ned Beatty scampering up that hill in vain.


SheepDog-One's picture

Just put an arrow thru their neck.

Dick Darlington's picture

Maybe Mutti Angela is that gullible, with all her insane political ambitions and what not, but are the Germans, the real people, willing to foot the rehypothecated bill from here to eternity? I doubt it and the germans should too. The truth is they don't have the resources. Period.

boattrash's picture

I think the Germans will do it. They know 1 population that will follow up to bail THEM out, U.S. FUCK!

QuietCorday's picture

The problem with this parable is even simpler than that, namely ...

Who the hell puts a 100 euro note on a counter when he walks into a hotel?


Zero Govt's picture

the large Hotel chains swipe your card for £$€400.00 on check-in ...just in case you drink the £$€40.00 in the minbar dry and piss all over the bed, carpets and walls presumably

The Sheraton hotel wouldn't let me into a pre-paid room while my card wasn't working even though i promised, and even offered to sign a contract, i wouldn't touch their precious minbar

4 hours of total farce from these Sheraton anal retentives and they'll never get my business again in 40 years

Here's Gerald Celente having 'issues' getting $10k of his own money out of HSBC Bank. The banking tossers want to know what you're going to do with your own money?!!

BIG (hotels, banks, credit card Co's, retailers, Utilities, Govt, anything) ..they can all GF themselves

Treason Season's picture

One of Celente's better rants. Thanx

Gubbmint Cheese's picture

I am so sick of that god damned e-mail.. each time I get it.. I shake my head at how stupid the schmarmy bullshit 'solution' is. Yeah.. it's THAT easy..f*ing morons.


SheepDog-One's picture

Sure! Its so easy! Just print a 100 Euro bill and pay everyone off! Likewise, in a starving village, just buy 1 cheeseburger and tell everyone to pass it on down the line until they give it back to you....VOILA....everyones fed because they touched a burger!

I've got that same email from about 10 giddy doofuses as well, pisses me off.

css1971's picture

Actually it is that easy.

The problem is that 98% of EU money is based on debt, the leverage is 50:1 or higher. That 100 euro note has to pass through 50 pairs of hands, paying off debts as it goes.

The solution is sane leverage: 2:1 or less. God damn, it just ban fractional reserve banking.

Misean's picture

Ah, the perpetual motion ponzi machine meets entropy...

jmcadg's picture

If the Greek Innkeeper had been thinking on his feet he would have re-re-super-ultra-hypothecated the €100 to pay off his debt and still have enough to buy a monster box or two.

SheepDog-One's picture

He simply didnt apply enough leverage. Stupid Greek.

QuietCorday's picture

And you know what else?

Any decent hotel owner with debts and vacancies in a depressed economy would have said to the German: "Maybe you are not so impressed with the room, okay, but what about for 100 euros for two nights? Or 80 euros for one night? Or you can stay again for free if you pay to stay tonight, I have this loyalty system...." and then make money on room service and organising a trip to the local taverna whose owner would get the prostitute to take part in an "authentic Greek evening" that featured belly-dancing, ouzo, afelia (the pork from the butchers) and smashing plates.

Hence ... everyone gets paid and the German spends way more than 100 euros, but doesn't mind because it was a break from his teutonic existence that his wife will never hear about.


SheepDog-One's picture

What that German failed to do was get the room for 20 Euro's thru PCLN, and a Groupon hooker coupon.

ElTerco's picture

I wish Die Zeit would print this.  Maybe as an editorial?