X-factor: German bank customers are favouring notes that start with the distinctive ‘X’ serial numbers, which show they have come from BerlinPosted on 06/13/2008 8:03:58 AM PDT by BGHater
Notes printed in Berlin have more currency for bank customers who fear a 'value crisis'
Ordinary Germans have begun to reject euro bank notes with serial numbers from Italy, Spain, Greece and Portugal, raising concerns that public support for monetary union may be waning in the eurozone's anchor country.
Germany's Handelsblatt newspaper says bankers have detected a curious pattern where customers are withdrawing cash directly from branches, screening the notes to determine the origin of issue. They ask for paper from the southern states to be exchanged for German notes.
Each country prints its own notes according to its economic weight, under strict guidelines from the European Central Bank in Frankfurt. The German notes have an "X"' at the start of the serial numbers, showing that they come from the Bundesdruckerei in Berlin. # More on currencies
Italian notes have an "S" from the Instituto Poligrafico in Rome, and Spanish notes have a "V" from the Fabrica Nacional de Moneda in Madrid. The notes are entirely interchangeable and circulate freely through the eurozone and, indeed, beyond.
People clearly suspect that southern notes may lose value in a crisis, or if the eurozone breaks apart. This is what happened in the US in the Jackson era of the 1840s when dollar notes from different regions traded at different values.
"The scurrilous idea behind this is that if the eurozone should succumb to growing divergences, then it is best to cling to most stable countries," said the Handelsblatt.
"There are no grounds for panic. The Italian state is not Bear Stearns," it said.
Germans appear to be responding to a mix of concerns. Many own property in Spain or Portugal and have become aware of the Iberian housing slump.
A spate of news articles in the German press has begun to highlight the economic rift between the North and South of eurozone.
There is criticism of comments from Italian, Spanish, and French politicians that threaten the independence of the ECB, viewed as sacrosanct in Germany.
But the key concern appears to be price stability. Germany's wholesale inflation rate reached 8.1pc in May, the highest level in 26 years.
The cost of bread, milk and other staples has rocketed, adding to the sense that prices are spiralling out of control. Ordinary people are blaming the new currency - the "Teuro" - a pun on expensive - for their travails in the supermarket, even though the recent spike in farm goods and energy prices has nothing to do with monetary union.
Inflation touches a very sensitive nerve in Germany. Holger Schmeiding, from Bank of America, said the country had suffered two traumatic sets of inflation in living memory, first in Weimar in 1923 and then in 1948.
"People suffered a 90pc haircut on financial assets in the currency reform of 1948. The inflationary effects of two world wars were catastrophic," he said.
A group of leading German professors warned at the outset of EMU that the euro would tend to be weaker than old Deutsche Mark, and that it would fuel inflation over time. German citizens were never given a vote on the abolition of the D-Mark, which had become a symbol of Germany's rebirth after the war.
Many have kept a stash of D-Marks hidden in mattresses to this day. A recent IPOS poll showed that 59pc of Germany now had serious doubts about the euro.
X-factor: German bank customers are favouring notes that start with the distinctive ‘X’ serial numbers, which show they have come from Berlin
Hmm...I’m thinking I ought to offer ‘em 80 cents on the dollar (metaphorically speaking) for the notes with the “bad” letters on them. A fool and his money...
Who’s stopping you?
I’ve been calling this for years. The devaluation of the dollar has no economic basis, but it does have a political one. It’s breaking the Euro, and has been done with the specific purpose of driving Germany out of the EU. When that happens, the Euro - and the EU - collapses. Leaving the US once again as the only player-of-power on the block.
I was laughed at a few years ago when the devaluation of the dollar started, but time is showing otherwise. Germany IS the economic engine of the EU. Financial pressures on the Euro via cheaper dollars (which most other countries use as their main indicator currency) hurts Germany ten times more than it does any other EU member. And Germans will always look for Germany’s own interests first and foremost, rather than those of the EU (like the BeNeLux countries would).
Darn tootin'! The CEOs at Bear Stearns can up in the slammer.
Perhaps they have heard of the times when you ‘needed a wheelbarrow’ to carry your ‘paper’ to the bakery! Or when they were let out of work early to get to the store BEFORE the collapse of the day.
Well, there are many confluent factors and therefore, points of view. What’s funny, to me, is how attitudes are changing. Even highly educated Europeans are very naiive in such matters. When France rejected the EU constitution, the Euro dropped a tad, but Europeans were unhappy with that development. It was trading at around 1.25 euros to the dollar. Now that it’s well past what the beaurocrats had determined was the breaking point (1.50 euros to the dollar), even the naiive PhDs are taking notice.
Did you catch the NYT interview with the CEO of Louis Vuitton Moet & Chandon some years ago where he said that Bush was devaluing our currency purposefully? For such a laughably dumb guy, they sure give him a lot of credit.
And of course it’s not a reaction to the Irish vote.
This is not an analogous situation as Euros are issued under the authority of a central government. That was not the case in the U.S. in the 1840's.
The paper notes circulating in the U.S. in the 1840's were not issued by the authority of the U.S. Federal Government. The U.S. Government issued paper money for the first time during the Civil War.
In the 1840's the paper money was issued by hundreds of local state-chartered, private banks. Naturally, some banks were deemed to be, and actually were, safer than others.
Dont' call Greece a "latin" country. That's very insulting to them, going back thousands of years.
Most of the German businessmen I know said the same thing, but put the breaking point at $1.20 to the Euro, and the best balance at parity ($ = €).
Germany is, for all intents and purposes, THE economy of the EU. They are equivalent the the US; Germany runs the EU's engine, the US runs North America's and the Pacific Rim's engine. As the Euro increased in value, it absolutely crushed the Germans, and is continuing to do so. Non-EU sales and exports are getting hammered, and costs from overseas operations (which Germany has a TON of) are skyrocketing compared to equivalent overseas companies.
Now, you can crush the Spaniards, Italians, or French (or the BeNeLux countries). They'll whine, but ultimately roll over and play "nice". The Germans though, will simply turn back to themselves. They'll pull out from the Euro before watching their country fall apart (rightfully so). And when that happens, the EU as a block goes away. And the only credible economic balance to the US goes away, too...
Did you catch the NYT interview with the CEO of Louis Vuitton Moet & Chandon some years ago where he said that Bush was devaluing our currency purposefully? For such a laughably dumb guy, they sure give him a lot of credit.
Yep... Saw that! He's partly right, though - the Fed and the US Government have a stealth "cold war" going with the EU over monetary control of the World. Right now, it looks like the EU is "winning"; however, it's as victorious as the Germans were on December 16th, 1944...
The tide is turning, though, and I think between the fears over the Euro, the complete crash of the Spanish and Portuguese economies, and the Irish defeat of the EU Constitution (I believe that will happen), we'll see the EU slowly start to fall apart.
I hope you are right.
I am ok with the EU’s economic union, but I am bitterly against political union with the continent. Anything that breaks the EU political union is ++good with me.
Beautiful bank notes Polybius. I love seeing examples of tangible history.
Ditto on the bank notes. Sort of interesting based on what you posted and some I found via google these notes seemed to have pretty ladies on them. Sex sold even in Victorian times. ;)
People still carry cash?
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