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The mysterious question is why anyone would take their 500 EUR notes from the mattress to buy government bonds at this time? Can anyone explain the reasons to me?
by Metatone (metatone [a|t] gmail (dot) com) on Wed Oct 8th, 2008 at 11:42:11 AM EST
Another way it can work is this.

The extension of deposit guarantee from €20k to €100k will lure the binladens out into banks' savings, and that will compensate the flow from ordinary savings to government bonds. The net effect will be as if the bonds had been purchased with binladens. Maybe this is part of the reason for Spain raising the guarantee above the EU's agreed new minimum of €50k. Spain's per capita incomes are not among the highest in the Eurozone so it makes no sense that we'd have among the highest deposit guarantees.

Otherwise, if it works it will say something really weird about the Spanish political economy.

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith

by Migeru (migeru at eurotrib dot com) on Wed Oct 8th, 2008 at 11:47:23 AM EST
[ Parent ]
... up from $100k to $250k (€67k-77k to €167-192k, assuming $1.30-$1.50/€).

The argument was that while the original amount is adequate for most households, it is not adequate for all small businesses bringing their payroll onto account.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Wed Oct 8th, 2008 at 04:53:55 PM EST
[ Parent ]
I'm not aware of Spain giving any reason for the €100k limit.

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith
by Migeru (migeru at eurotrib dot com) on Wed Oct 8th, 2008 at 05:07:53 PM EST
[ Parent ]
laundering.. bring it here and now is white!!!

A pleasure

I therefore claim to show, not how men think in myths, but how myths operate in men's minds without their being aware of the fact. Levi-Strauss, Claude

by kcurie on Wed Oct 8th, 2008 at 01:02:19 PM EST
[ Parent ]
That may or may not work.

My grandfather has bought all his last cars in cash! I doubt any tax free guarantee would make him bringing his money into a bank.

A grandfather of an uncle in law had 30,000 Euro in his basement. It was changed from DM to Euro and I think it was even totally legal income. There are simply weird people...
Maybe it will work, when the interest is high enough.

Der Amerikaner ist die Orchidee unter den Menschen
Volker Pispers

by Martin (weiser.mensch(at)googlemail.com) on Wed Oct 8th, 2008 at 10:17:50 PM EST
[ Parent ]
It's voodoo IMHO.

But Spain already squeezed out a large amount of cash out of the underground economy in the late 80's and 90's.

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith

by Migeru (migeru at eurotrib dot com) on Thu Oct 9th, 2008 at 03:48:22 AM EST
[ Parent ]

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