Posted on 05/15/2012 10:42:07 PM PDT by Olog-hai
An online travel company has advised worried holidaymakers to 'get rid' of their Greek euros in case the crisis-hit country leaves the single currency.
As German Chancellor Angela Merkel conceded for the first time that Greece could be forced to quit the euro, DialAFlight warned travelers that their Greek euro notes could become worthless.
However, while some experts predict that Greece could leave the single currency within weeks, there has been no official acknowledgement that their euro notes would become worthless.
The blog post on the company's website—which has since been removed—was advising Britons to check the origin of their euro notes, saying that Greece could use them as an interim currency while new notes are being printed.
It used an example of Czechoslovakia devaluing its currency 20 years ago, when it rubber-stamped all notes overnight so they could be used while a new currency was printed.
The operator questioned whether other European countries will still accept Greek euros if the country is no longer officially part of the currency and said Greek notes are easily identifiable by their serial number. …
A spokesperson for ABTA—The Travel Association—said: "A euro is a euro regardless of where it is printed. If Greece were to leave the euro, nobody can predict 100 percent accurately all the effects this might have, but it is safe to say that there would be a transition period when you would still be able to pay with euros in bars and restaurants, as is common in many countries where currencies such as the euro or dollar are accepted in parallel to the local currency." …
(Excerpt) Read more at dailymail.co.uk ...
The timing of this is pretty bad if you think about it. Summer vacation period is coming up and hundreds of thousands of Europeans would be going to Greece in May, June, July, and August. Planes would be lined up in France, Germany, England, and the Netherlands.
If suddenly your planes (ever so carefully made) had to deal with some vast change on currency...then you’d question the idea of going to Greece. I’m betting it’s an all-time low record of folks with plans for a Greek vacation this year. Hotels will likely be half full, and the revenue that they would have made....is non-existent.
The only thing that would make it worse is another volcanic eruption that spewed ash into the atmosphere.
I am in Athens now. If it weren’t for the news I wouldn’t know anything is going on out of the ordinary...well except for the riot police in a bus yesterday probably heading for the center of town. But life is sort of quiet here in the embassy district. Our hotel, the Hilton, isn’t empty and there are plenty of foreign languages to hear from the guests along with Americans.
I suppose if we wanted to go join the crowds we could find them but we’re not about to do that.
The Financial Times discussion board is on fire with today’s news. What I find utterly amazing is how many people still think they can salvage the Euro through stimulus spending. It was doomed from the start when they based it on an aggregate of members’ fiscal policies. There should have been an iron-clad, no-excuses-whatsoever policy that members commit to eternal balanced budgets with neutral-party auditing to ensure compliance. Unfortunately that would have ruled out have-your-cake-and-eat-it Socialism but it would have been the only way for the Grand Project (tm) to survive.
In the end the problem is cultural. In the U.S. We out of necessity had to develop a can-do, self-reliant culture: you cannot tame an unexplored continent any other way. The Euros haven’t had been faced with that for millenia.
Ruled out socialism? The Treaty of Lisbon imposes the “social market economy” on every member state whether in the eurozone or not, so that’s out of the question. The euro was set up to deliberately fail anyhow, as an excuse to grab more power; Bernard Connolly mentioned this in his book, quoting Romano Prodi.
There are real growth opportunities staring Greeks in the face if they dropped thr Euro for the Drachma, but it would require swallowing some national pride (and before the insults from outraged Greeks come, bear in mind that I’m a first-generation Greek American, born in the Great Commonwealth of Virginia). A great deal of my relatives still live in the country of my family’s birth. Nevertheless, my life here taught me that a huge opportunity is before them if they have the courage to go for it and the humility to pursue it.
First, they would be in a position to out-China China as the primary producer of low-cost goods for the EC. I imagine it would start in textiles and foodstuffs, but they could also take a page from Delaware and make Greece the premier business-friendly place in the EC. Delaware is a tiny state, but through smartly targeted policies they’ve created a niche that’s hard to attack, which is why nearly every U.S corporation of any consequence is incorporated in Delaware—so much so that the state derives a full 25% of its revenue from business fees, and their zero sales tax in no small part has a huge effect on their jobs sector. The Greeks would do well to consider becoming the new Delaware of the EC.
The second thing the Greeks need to do is start thinking like Pacific Rim countries—when surrounded by larger economies, develop a niche of excellence, and use that growth to aggressively pursue other markets in a way that maximizes the use of comparative advantage. This requires discipline, industriousness, and professional pride (pride in *excellence*), and perhaps this might be the hardest mental shift of all.
It *can* be done. They’ve done it before—they’ve just forgotten how.
Someone told me yesterday that the entitlement mentality here is ridiculous. I saw posters on the way from the airport with the hammer and sickle. Seems like there is a war for the soul of Greece.
I recall the feeling during the latter Reagan years, where there was a sense that Freedom was “on the march”, more people across the globe were living in Freedom than ever before, and democracy all over was breaking out...
Today, it seems the pendulum is swinging just as fast as then, only in the opposite direction. Including here in the US.
In the cradle of democracy socialism is a proven complete failure and so the communists hope to make it even worse. So ironic.
The liberals should be hanging their heads in shame...but of course they have none.
Thinking about it, this guy does make a little sense. I can see the rest of the monetary union declaring that all Greek issued Euros are null and void. Or the possibility that a Greek issued Euro be pulled and the corresponding value as a Drachma issued to the holder of the note.
In any case when it comes to money, bankers are really tight and won’t willingly lose a cent to the customer. I feel that the Europeans are in for a very rough ride soon and I am praying that the rest of the world doesn’t become embroiled in another one of their wars.
That, I think, is the problem. They could do what you've suggested from within the Euro by dropping taxes on capital and unshackling private business from the myriad of regulations it must negotiate.
Instead, by returning to the drachma at 50%, they will further impoverish themselves. Exports will be very attractive -- for a while -- but that's an effect of devaluation that is very short-lived.
The Euro notes will have value regardless of where they are printed; the Euro simply won’t be tied to Greek’s economy any more (and the other countries will probably retire those notes as they surface).
A few years back Ecuador was using US dollars as their currency. It didn’t tie their economy to ours in a way we felt; they simply had no more confidence in their own currency. The UK will accept Euros, but they kept their own currency; Greece will simply have to start issuing a new currency (even if they continue accepting/trading Euros).
“I can see the rest of the monetary union declaring that all Greek issued Euros are null and void.”
That would be like declaring coins with a San Francisco mint mark unusable because CA is in the crapper.
You have a point. But those Greek Euro coins and notes eventually flow through the banks. They could be removed from the money supply at that point.
The big point here is that if Greece leaves the monetary union and all of the Euros they printed and minted stay in the money supply then their effect on the Euro will still be there. Remove the traces of their coinage and printed versions of the Euro and you increase the value of the remaining currency as there are fewer coins and bills.
It’s a type of deflation if you will.
Turn off the History channel for a while and you will sleep easier.
They would have to remove them as they turn up in other countries (as they do with the US $1,000 bill, and are starting to do with the Canadian penny).
I can see the latter happening - within Greece, but not the former. Are not Greek Euros in circulation throughout the EU as part of the common currency? It seems like declaring Greek Euros to no longer be legal tender would be like the U.S. declaring that money from the Denver mint is no longer valid. It ain't all in Colorado. Not a perfect analogy, but I think it expresses the problem well enough.
Dang it - I knew I should've read further down the thread. You beat me to this analogy.
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