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Guest Post: The Eurozone X-Factor
Submitted by Finance Addict
The Eurozone X-Factor
Whatever one thinks about Lord Wolfson’s euro-skeptical meddling, it certainly has been entertaining. The British baron’s offer of a £250,000 prize for the best ideas to deal with a possible breakup of the eurozone has brought all sorts of people out of the woodwork. (Including this precocious 11-year old.) But one of the most fascinating ideas on the shortlist has come from Neil Record — although I’m not sure that my takeaway was his main intent.
Suppose that a country does leave the eurozone — this was the starting premise of all the responses to Wolfson’s essay contest. Greece, as the weakest link, seems the most likely candidate. But on the other hand it’s possible that one of the strongest countries chooses to go its own way. Of course we’re talking about Germany. Whether it remains in the euro or decides to take its chances by introducing a new Deutschemark, the fact is that in the case of a euro breakup, Germany is where it’s at. Its fiscal position and reputation for prudence is among the strongest of all developed countries. If it were on its own then its currency would rise to reflect this. So, to the extent that you can choose, you will want to get your banknotes from Berlin.
Some of the economists on Lord Wolfson’s shortlist imagine a scenario where, even post-breakup, all euros are equal. This is not the case with Neil Record’s plan. In fact Record, a former economist with the Bank of England, reminds us that this is not really the case even today, in the absence of any breakup.
It is worth noting, to the surprise of many commentators, that Euro notes are not formally issued by the ECB, but by each member State National Central Bank. Each Euro note is accordingly marked with a prefix letter according to its issuer as follows:
So a Greek (or indeed any non-German resident) could sort through his or her notes as they acquire them, and pass all non-X prefix notes on to shops or back to the bank, and retain all X prefix notes, perhaps in the safe deposit box in Germany. This is as close to a free financial option that any individual will ever be faced with, since the chance of loss is nil (the cost of holding ‘X’ prefix notes is the same as holding any other prefix banknote), and even compared to a bank account, the lost interest is negligible. The opportunity of gain (even if the probability is small) is very substantial indeed.
Cumbersome? Yes. Crazy? Maybe not, if you believe in the merits of Record’s full contingency plan for a breakup of the eurozone. As to the value of contingency plans in general, remember that it has been more than a year and a half since the eurozone crisis broke out in earnest and, despite all assurances to the contrary, it’s not fixed, it’s not getting better and it may actually be getting worse (see Spain.) No one knows what the outcome will be, we only know what politicians are afraid to say — that a breakup of the eurozone might be inevitable. If you’re a European who has steadily decreasing faith that the politicians or the ECB can stabilize the situation then by now you are surely starting to think outside of the box. And you certainly wouldn’t be the first.
Record reminds us that
On 1 Jan 1999, national currency banknotes became ‘fractional denominations’ of the Euro. Exactly the same needs be done in reverse whenever [Record's] Plan comes into force. So Euro banknotes will become ‘fractional denominations’ of new national currencies. This will mean that apparently similar notes (except for the prefix) will become worth different amounts, and the exchange rates between them will be highly variable.
Could X mark the spot?
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LOL! Got physical assets? if you don't, then you will find out you don't actually own anything. Bloody paper games.
I have some Euro coins with the Guinness Harp on them that I am willing to trade for the "equivalent" Euro coins with the Nazi Eagle. What type of premium should I expect to pay?
Harp - ancient occult instrument
Origins of Harp goes back to Persia.
The oldest depictions of harps without a forepillar are from 500 BC, which was the Persian harp of Perspolis/Persia in Iran and from 400 BC in Egypt
And its on the Euro coin.
BTW - Guess who loves playing with harps?
A. Luciferians/Satanists.
King David ruled Israel from about 1010 - 970 BC.
http://www.metmuseum.org/toah/works-of-art/47.100.1
"Seated harp player, ca. 2800–2700 b.c.; Early Cycladic I–II
Cycladic; Grotta-Pelos culture
Marble"
harps are a lot older than 1010 bc..
Gold traded at $1,631.90 by 11:07 a.m. today, for an annual gain of 4.2 percent. That compares with a 6.6 percent jump in the Standard & Poor’s GSCI gauge of 24 raw materials and a 9.7 percent increase in the MSCI All-Country World Index of equities. Treasuries lost 1.4 percent. Funny, eh?
If a breakaway seems imminent they need to find an anarchist to go shoot an arch-duke or someone.
Of what race would that anarchist need to be?
Non-Aryan of course, but they need an excuse to retrieve the implied national asset collateral.
This got me thining.... If everybody can print their own notes.... And everybody is as honest as... ... ... Ghandi.... What's the chance that there's 1 crook amongst the 17 that prints a bit more than they say they print?
Ireland did that... look it up
Wich reminds me of the 50 billion the Irish printed about a year ago. It was announced back then that it's OK for national banks to print if they keep tue ECB informed.
At least Greece Has been caught before in a monetary union 100 years ago forgering the silver coins (made by their mint) with less silver than the companions.
Just convert what u have into gold and let the countries figure out the new currencies. I'm sure that you will get the most purchasing power that way
Suddenly, gold will get difficult to obtain at any price.
Lets try the Wörgl expirement from 1932 again!
or have the ECB annexed by the Swedish Central Bank
Why is it that almost every commodity today is up, yet the equities of those commodities are down, yet the etf"s tied to the commodities are up? WTF?
huh? equities of commodities? "boy, i dont understand a word you just said"-farmer in napoleon dynamite. r u talkin bout somethin like jr gold miners or somethin?
Mish has been saying the best possible solution is for Germany to leave the euro, for well over a year now.
It will give the best possibility of recovery for everyone concerned, including the PIIGS, which is why it won't happen. Since when are eurocrats interested in good outcomes for any of their respective national economies? If they were we'd have seen a few fucking defaults before now.
Blythe Masters ... comming up next ... on CNBC.
The Eurozone is fine. Externally that is, no problem. USA is a basketcase in that sense. The Euro/zone will hold and the new freegold-monetarysystem is already in it´s system. Free as in freefloating, look it up in the balancesheet of the ECB.
Got gold?
Paper = paper , I rather have these: http://www.coin-rare.com/images/products/detail/2009SilverPhilharmonic.png
All Euros are not created equal.
Blythe Masters is on CNBC. She is so hot right now.
The devil wears Prada. You are lusting at the one true symbol that has crippled world finance. She is not human.... she is a demonic tool.
i'll take "becky" anyday in a satin blouse -- the madonna da`Vinci smile,... that's what does it every time http://www.youtube.com/watch?v=MWqLPxJ7kxU
I like her lazy eye.
“When did the future switch from being a promise to being a threat?”
-Chuck Palahniuk
Merkal would win Euro X-Factor with her superb S&M 'Nice Nursey' and 'Mistress Nasty' double-act
"Hello sweety, would you like some nice German taxpayer money?"
followed by
"You vil do exactly az you're told miscrient Euro pup.. zuck my nipple, NOW!"
The Record plan seems clever and well conceived. It would certainly let Europeans get settled into commerce with their home currencies again.
But as noted above, the underlying theme is simply that (1 Piece of Paper) - (1 Other Piece of Paper) = Shitwipe. The truth is that in fiat money, everyone loses, and replacing fiat with Other Fiat is the replacement of debt with Other Debt.
It's time to just be honest and tell the truth. Fiat money is bad for people.
Vultures circling....
"EU CRISIS: MARIO MONTI BLAMES GERMANY & FRANCE FOR EUROZONE DISASTER"
“Of course if the father and mother of the eurozone are violating the rules, you could not expect Greece to be compliant, ... ["Or, er, indeed Italy, Mario"]."
http://hat4uk.wordpress.com/2012/04/05/eu-crisis-mario-monti-blames-germ...
Instead of telling people what to do, why not tell them what you are doing?
http://strayingfromtheflock.org/2012/04/05/an-open-letter-to-my-friends/
Take a moment and see what I am doing. You will not be sorry
2/3rds of the world population have no idea whats really going on, and how bad its really going to get...be in the 1/3rd.
It is our duty to show them what is really going on. Tell everyone you know, even if you get "the look". That look of distain now will be a look of sadness and hunger later.
Hello knucklehead, I went to your page, but as soon as I saw you make the "loose / lose" mistake I clicked away. Holy crap. It's not that hard, really. How can you mistake 'lose' for 'loose?' I just don't get it. You never used to see this, but now a lot of people do it. Pretty dumb.
Have a nice day.
Hello grammarnazi - If a mis-spelling prevents you from checking out perspective, you should probably keep that to yourself.
It is a dicey business playing around with confetti money. Alex Hope arrested for FRAUD.
I have 10 euros in my wallet that I got as change in Vienna, at the airport. The serial starts with N which is Austria.
If they went to the Reichsmark instead, I will be a billionaire with all my 1923 marks.
Prefix (with some adjustment) country initials, as in ¿ES-euro? (si, de España), ITY-euro (naturalmente: Italia), PORTeuro (Portugal — already sounds Portuguese), ISeuro (Iceland though I prefer ICeuro), etc., and abandon the charade. Unfortunately that means NOeuros for Norway but at least Germany gets to DE-euro and saves itself.
Of course X can mark the spot.
THe DMark leaving is actually the only rational action that can be taken to stop the Eurocrisis. It would allow the rest of europe to revalue to the DMark, at the cost of the German banks, whose Euro holding would be worth 25p on the pound. And it could be done by Sat noon, if they started at say 09:30 :)
Oh, and one other consideration, the Target2 imbalance might put a spanner in the works, but better 560bEuros at 25% than 560bEuros at 0>:)
SOOOOO,
A return to the gold standard?
A weak link would leave to have the ability to print their own money.
A strong link would leave to NOT be dragged down (or need to support) the weak links.
I must have missed the part where there is ANY benefit to maintaining the Euro.
If we pull the pin on the fiat currency system and centralized economic controls now, Europe, Canada, the US, and Japan would have hard times but after say ten years we'd be OK and adapted. The "Developing Countries" the Third World would countries be seeing much harder times. The longer the Keynesian policy if followed the nastier things will be. WW II will look like a girl scout camp out IMHO if the change isn't started before 2015.
Um, no, that was the Vatican that debased the coinage. Wikipedia on "Latin Monetary Union".
All you get these day at Frankfurt banks is Italian (!!) 100 Euro notes. Last time out of 60 EUR 100 notes 48 were from Italy!
i always check this on my travels around europe and i also Monitor which country notes are issued by ATMs. Over the last 6 months a very large percentage of the crisp new notes that I have drawn from FRENCH ATMs have been GERMAN! Any ideas whats going on here? Anyone else able to report on this?
By the way a lot of these notes are printed in the UK by De la Rue. Theres a printers mark on the notes but its too small to see.
And as for the idea that Germany might withdraw from the top of the Euro - I have said for two years that this is the IDEAL option for the least painful breakup of the Euro.
However always remember that politicians seek power not value and they have track record of prevarication and action too late. Consequently this is unlikely to happen.
Last time in Frankfurt, 5Euro were German (X) , and 20's were Spanish (V).
Germany breaking away *on its own* is still very unlikely. Contingency plans for a core-euro will be made together with the Dutch and the Finns at the least.
The real black swan , and the most destructive one, would be FRANCE getting a socialist President who wins the election based on promises to get out of the Euro.