Busted: Bankers and The Global Economy

June 29, 2008

Panic in Support for the Euro Reported

Germans have begun to reject euro bank notes with serial numbers from Italy, Spain, Greece and Portugal. This reality is raising concerns that public support for the monetary union may be waning in the Germany, perhaps in reaction to Ireland’s rejection of EU’s founding attempts.

Bankers, being naturally detail oriented, have detected a curious pattern where customers are withdrawing cash directly from branches as they screen bank notes to determine the origin of issue. More Germans are asking for paper from the southern states to be exchanged for German notes.

Each country prints its own notes according to its economic weight in European Union under strict guidelines from the European Central Bank in Frankfurt. For example, German notes have an “X”‘ at the start of the serial numbers.

Some people clearly suspect that southern bank notes may lose value in a crisis, or if the eurozone breaks apart. A similar action happened in the US in the Jackson era of the 1840s when dollar notes from different regions traded at different values.

More and more, Spanish and Italian bank notes are being handily rejected. Officials state, “There are no grounds for panic. The Italian state is not Bear Stearns.” However, the Italian state does have ties to the Vatican, which is a key player in the Union, the currency and the global central banking system.

The excuse is that Germans are responding to a mix of concerns. Many own property in Spain or Portugal and have become aware of the Iberian housing slump. The German press has been highlighting an economic rift between the North and South members of the Union.

The cost of bread, milk and other staples dramatically increased, as in the United States, adding to the sense that prices are spiraling out of control. Confidence in the Euro is waning as citizens blame weakness in Euro for rising prices.

Inflation is responsible for change in attitudes. Germany is edgey, having suffered two traumatic sets of inflation in living memory, first in 1923 and then in 1948. The inflation was what is often referred to as hyperinflation, where a wheelbarrow of money was required to buy the simplest of staples. In this light, many Germans haves stashed old Deutsche Marks, the currency of the “old country” before the Union.

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