Thread: Germany Prints Old Currency in Case Euro Ditched

Ex-Bush Adviser: Germany Prints Old Currency in Case Euro Ditched

Tuesday, 04 Oct 2011 01:06 PM
By Michael Kling

Germany is printing deutsche marks in preparation to leave the euro common currency, says Philippa Malmgren, a former economics adviser to George W. Bush.

"My view is that it is Germany that will have to pull out of the euro," Malmgren said at an investors' conference in London recently, according to the Citywire news website.

"The decision has already been made by the government that leaving the euro is a possibility. I think they have already got the printing machines going and are bringing out the old deutsche marks they have left over from when the euro was introduced."

Malmgren, co-founder of Principalis Asset Management, acknowledged that leaving the euro would be a radical move that would cause Germany's export prices to jump, but said German industries are strong enough to handle price increases, Citywire reported.

Other countries have let currency unions before, Malmgren said, citing the report, "Checking Out: Exits from Currency Unions."

Countries leaving currency unions are usually larger, wealthier, and more democratic and typically have higher inflation than their partners, according to the report, published by the Monetary Authority of Singapore.

Malmgren predicts that more eurozone countries will default, causing deep changes in society, Citywire reported. "It is important to begin preparing the public to deal with this situation."

Malmgren isn’t the only one saying the euro is in trouble.

"The euro is nearing its ugly end," said Stefan Homburg, head of Germany's Institute for Public Finance, according to The Telegraph. "A collapse of monetary union now appears unavoidable."

The Bundestag, Germany's legislature, approved more bailout funds for Greece but the growing rescue fund is becoming increasingly unpopular in Germany. Many economists and investment professionals say the fund is not large enough to save Greece and other eurozone countries from defaulting.

Meanwhile, Ireland's central bank reportedly is printing Ireland's old currency in case that country leaves the eurozone. At least that's the rumor circulating in Dublin, notes Alan McQuaid, chief economist at Bloxham stockbrokers in that city.

McQuaid, writing a guest commentary for The Guardian, says he's not sure if the rumor is true. But he does hope Ireland has contingency plans in case the euro disintegrates.

http://www.moneynews.com/StreetTalk/Ex- ... /id/413225

Keiser Report: Deutschmark & Drachma Revival? (E192)

http://www.youtube.com/watch?v=YtcX7EWNKIE

Oct 4, 2011

This week Max Keiser and co-host, Stacy Herbert, talk about bailouts, defaults and currency wars in Europe as one analyst suggests the return of the Deutschmark is imminent. In the second half of the show, Max Keiser interviews Steve Woolfe, City of London spokesman for the UK Independence Party, about his party's suggestion that Greece return to the drachma and regain the ability to address its own economic problems.

The Guardian: Ireland Printing Its Old Currency, Just in Case

Tuesday, 27 Sep 2011 01:37 PM
By Michael Kling

Ireland's central bank reportedly is printing Ireland's old currency in case the country leaves the eurozone. At least that's the rumor circulating in Dublin, notes Alan McQuaid, chief economist at Bloxham stockbrokers in that city.

McQuaid, writing a guest commentary for The Guardian, says he's not sure if the rumor is true. But he does hope Ireland has contingency plans in case the euro disintegrates.

Then again, given the record of European leaders, a lack of backup plan wouldn’t be surprising.

As Greece struggles to remain solvent, the European monetary union is scrambling to stop the debt crisis from spreading. If the crisis does spread, Ireland might be next in line.

Some pundits say Ireland should drop the euro.

Being master of your own destiny does have appeal, McQuaid admits. If it returned to the punt, Ireland could boost exports by devaluing the currency and reduce its debt burden.

But if it had its own currency, the Irish would move their deposits overseas, which could destroy the country's banks.

Ireland would have trouble borrowing, and interest would have to rise to retain deposits and attract investors. Inflation would soar.

Homeowners' mortgage debt would increase when converted to devalued punts.

"The collateral damage would be huge and felt by everyone," McQuaid warns.

Creating the currency took years of planning, and dismantling it would be equally complicated.

"It is hard to imagine, as some people are suggesting, that we could just go back to the punt overnight," he writes. "So we are not going to simply finish with the euro on a Friday, and then out of nowhere come back to work on a Monday with the old punt back in existence."

Taking a different view, Alex Singleton, writing in his blog for the Daily Mail, said Europe must kill the euro, in addition to letting Greece default.

The euro itself is the problem, he asserts. By its very nature, the same monetary policy for 17 countries will always create credit bubbles in some countries. The eurozone will be constantly plagued by a debt crisis.

Giving more powers to the European Union won’t solve the problem. "There's only way to give stability to the eurozone's economies," he declares. "They need to abolish the euro."

http://www.moneynews.com/StreetTalk/Ire ... /id/412431