I heard a news clip on Money Matters by Larry Burkett the other day concerning the EuroDollar (?) I really don't understand what this is about and what impact it will have. Larry mentioned it is as big as y2k. Will we have troubles getting things as early as Jan? Thanks, Mary

-- Mary Howe (doesnotmatter@thistime.com), November 11, 1998

Answers

Its imaginary money sloshing around between virtual accounts somewhere in cyberspace. It really amounts to loans made in US dollars by banks that hold a small reserve of US dollars in Europe. (See Andys' post on fractional reserves above.) Trying to figure out what these 'virtual dollars' will do and where they will go is like trying to predict the exact snowfall in 2010 - you can find someone who will support any number you like. You can find 'experts' who claim the Eurodollars will all come home to roost in US banks - but won't cause any disruption - some claim it will be a disaster - some claim the banks in Europe don't trust the Euro and will hold their US dollar reserves. I don't know - and don't claim to. Seems likely to me that they will be slow to turn loose of US dollars - after all a recession in the US would hurt them just as much or more that us - but who knows?

-- Paul Davis (davisp1953@yahoo.com), November 11, 1998.

No idea about the monetary repercussions of having a common Euro currency, but as an IT project it will be as big as y2k. Milestone in 01/99 is when they fix the exchange rates vs the Euro for all possible participating currencies. No doubt they will work in round numbers as far as possible. In the UK we will probably fix the exchange rate at a ridiculously overvalued level (as the currency is now), this is probably being engineered by the Bank of England and the Labour Party. It is thought the Euro will fail due to the history of participating countries financial management, eg the UK has always been high inflation, that is the expectation of all Brits, Germany/France have been low inflation. The Germans have always been scared of a repeat of what happened in 1923/4. The Bundesbank will rule the Euro.

-- Richard Dale (rdale@figroup.co.uk), November 11, 1998.

The fixed exchange rates will hold regardless of when members eventually join the Euro. The UK will not be in the vanguard, but may join say in 5 years time, but at the exchange rate decided in 01/99!

-- Richard Dale (rdale@figroup.co.uk), November 11, 1998.

Whoops!

Mary asked about Euro Dollars, to which Paul replied. However, I believe that the function in question (to which Richard replied) is the European common currency, the Euro, that is supposed to begin this coming January 1.

This is a big, big programming job. What's happened is that with both the Euro and Y2K happening at one time many financial institutions in Europe haven't nailed either one. As a result there's the very large possibility that they'll miss both deadlines and suffer as a result.

The stress of Euro conversion plus Y2K can easily undo European banks, and thus start a collapse a year in advance of Y2K. In addition, the two efforts (both requiring large IT resource allocation) detract one from another.

The impact will be first felt by European financial institutions, and could result in currency fluctuations and problems, in banking transfers problems, and in European stock market gyrations.

It shouldn't immediately effect our ability to prepare for Y2K in the US. Don't know about Britain, and it can well mess up the rest of Europe.

As I understand it, although the Euro conversion kicks off this January, it doesn't have to be completely integrated for a few years. When's the completion deadline, Richard?

Going back to Y2K, the entire infrastructure of our Western world rests on 3 legs: power, telecommunications, and banking. Should any one of those 3 legs collapse the other two can go down quite easily. Example: how does a bank function if they have no telecommunications (thus cannot transfer money by wire or electronic means), no power (thus no way to run their internal computers)? How does a power company function without the banking needed to collect on accounts, pay bills, pay employees, buy equipment, etc.?

-- rocky (rknolls@hotmail.com), November 11, 1998.

See an article on Euro & Y2K at http://www.zdnet.com/pcweek/stories/news/0,4153,369487,00.html (The reality is that neither is doable by when they are supposed to be....

-- Jack (jsprat@eld.net), November 11, 1998.

Let me give you another perspective other than what you have heard so far. I cannot address how technically "doable" the EURO actually is. I am no techie.

I can tell you that one has to ask the question "Who wants the EURO to succeed and why?" The idea of the EURO was born of need. The need being to supercede the US dollar as the reserve currency of the world. Why? Because, as the rest of the world sees us, the US is a financial dead horse in the process of falling to the ground. It's money has absolutely no value other than the promise to pay and it is the largest debtor nation in the world, and getting more into debt every day. It's markets are ever increasingly at risk, and the US people are slowly beginning to awaken to the monster they have created by their complacency, ignorance and blind trust.

US hegemony is about to come to an end. Who wants this to occur? Any country (and it's citizens) who's own currency value is affected by the dominance of the US dollar. Which countries are those? Any country who is part of the world economy that trades with any other country. If you were a country forced to have US dollars in reserve in order to maintain the value of your own currency, wouldn't you want those reserves to be from a country who is in very good strong financial shape? I know I would. I would sleep better at night.

Plain and simple, the European union of countries who are backing the EURO are also being joined by the world's wealthiest people and concerns. The EURO will have a gold backing, a very strong gold backing. It can certainly have more than the stated 15-18%. They want it to happen, therefore it will. This world is run by the richest and the most influential. Don't count on the EURO dying. They aren't going to let it. EURO's, although not officially being traded on the open market, are already being used in transactions amongst the larger overseas financial institutions and their wealthy clientele, both private and corporate...you don't think they're going to be caught holding a lot of US dollars on January 1st, do you?

For those of you who aren't yet connecting the dots, IF (or should I say when) the EURO succeeds in replacing the US dollar as the world reserve currency, holders of the US dollar are in for a downhill ride in value.

-- Goldi (goldilucks@yahoo.com), November 11, 1998.

rocky,

Going back to Y2K, the entire infrastructure of our Western world rests on 3 legs: power, telecommunications, and banking. Should any one of those 3 legs collapse the other two can go down quite easily.

There is a fourth leg that Robert Cook identified on an earlier thread ...

If there were a fourth "triangle" (faith & morals, freedom and responsibilities, justice?) I guess you could visualize all of the sticks together in a tetrahedron: every stick in every triangle relies on the others, woven together in a nest of interdependencies, every one of which is required for civilization to stay stable..

Dont discount attitude and preparation and the pioneer spirt that loves a challenge. Standing on four legs is more stable that three.

Diane

-- Diane J. Squire (sacredspaces@yahoo.com), November 11, 1998.

Diane, you are simply wrong.

Three legged stools have been used for hundreds of years. Why? Because three points define a plane. That means that a 3 legged stool will sit, rock solid, on any ground. How many tables have you had, with 4 legs, that will rock back and forth, from one 3-legged stance to another?

Second, that grand and glorious human spirt has absolutely nothing to do with the iron triad. Show me, oh new age wonder, how to send money from Switzerland to China using that spirit......electronic data transfer (using telecommunications, banking, power) seem to work much better.

-- rocky (rknolls@hotmail.com), November 11, 1998.

IMHO you may be right about the three legs being more stable. However, the "fourth" is the seat of the stool. Without it, we will all sink into the mud.

-- Lois Knorr (knorr@attcanada.net), November 11, 1998.

Ms. Goldi;

You are 100% correct in your observations.

I too realized this some time ago. I, being the crude sort that I am, just put it as "We are locked on a roller coaster ride to h*ll with that FRN and there is no way off of it". I'll stick with my shiny stuff for value and just use the FRNs as needed for the daily workings. Very little in the bank too.

It's coming at us like a damn freight train.

S.O.B.

-- Sweetolebob (La) (buffgun@hotmail.com), November 11, 1998.

If you are into conspiracy theories and the agenda of the NWO then the timing of the introduction of the Euro is perfect. Divide and conquer is the NWO modus operandi. IT geeks trying to combat the Euro + Y2K = probable/inevitable failure on both. The dollar as we all know is already trashed - remember uncle Ross Perot's mantra "dang nabbit this here country is 6 trillion dollars in debt..." ad infinitum. Well its actually a lot more than that now Ross-baby. The big guys are quietly moving their wealth out of the USA - the Euro is being backed by gold - it is the intention of TPTB that the Euro will eventually rule and become the de facto world currency - oh yeah - cashless of course. My feeling is that this coming chaos has all been engineered to occur - if not by design then they are certainly going to take advantage of the inevitable consequences of our failure to attack Y2K en mass years ago - this will be the ultimate divide and rule game plan. My feeling also is that this time they may have srewed up - the nature of chaos theory is that you can *never* predict the end result.

This is in *our* favour. The Rothschilds et al can go to hell.

-- Andy (andy_rowland@msn.com), November 11, 1998.

Mary,

There's a difference between the Euro and Euro dollars. The Euro will be Europe's common currency; the Euro dollar is all dollars held outside of the US. It amounts to trillions and no one knows how many. When we import stuff we pay in dollars, that is how they flooded the world. This is a wonderful way to screw other countries because our $ is backed by hot air. Read "How to Win Friends and Screw Them."

-- traveller (traveller@jet.net), November 11, 1998.

I read about six months ago that a lot of investing is being done under the assumption that the Euro will become the world's main currency. Does this mean there are derivatives on the ratio of the dollar's worth to the Euro's worth?

Would European banks have a lot of bad loans on their hands if the Euro can't successfully be put into effect in 1999 or 2000?

-- Kevin (mixesmusic@worldnet.att.net), November 11, 1998.

Official timetable for Euro at the moment:

1997 European Council adopted key regulations. 1998 Participating Member States chosen. 01/01/1999 Conversion rates locked. Euro introduced Single monetary policy starts. Wholescale financia; markets move to Euro. 01/01/2002 Euro notes and coins introduced. Dual currenecy period starts. 30/06/2002 National currencies withdrawn.

-- Richard Dale (rdale@figroup.co.uk), November 12, 1998.

Oh yes Euro will be the next IT bandwagon for contractors, regardless of whether Britain joins or not. It will still have to deal with it.

-- Richard Dale (rdale@figroup.co.uk), November 12, 1998.

I am working on EURO conversion for one of the big US banks here in London. We are currently running 'rehearsl' weekends - testing all our IT systems so that they correctly handle redenomination of the financial instruments (bonds, options, swaps, repos etc.) This work has been going on for over a year - the idea that the EURO conversion on 01/01/1999 will cause the same sort of chaos as Y2k is, I think, overstated.

Also, I think EURO work will virtually disappear after January / February 99.

Y2k, however, is a totally different can of beans...

By the way, all leave over new year 1998/99 has been cancelled.

-- Dave (deales@dircon.co.uk), November 12, 1998.

Dave, disappearing Euro work, thats a pity, surely even if the main large financial institutions are ready, every organisation will have to deal with it sooner or later, starting with companies exporting etc. Yes or no?

-- Richard Dale (rdale@figroup.co.uk), November 12, 1998.

So, what is the bottom line? Should we convert our cash withdrawals to gold and/or silver?

Texas Terri

-- Texas Terri (TJSYM@AOL.com), November 12, 1998.