On Christmas Eve we came across a story in the Istanbul-based Hurriyet Daily News which at first glance seems largely unremarkable: a Cypriot gang – composed of both ethnic Greeks and Turks – was busted for counterfeiting money – specifically, US dollars – by police in Northern Cyprus. The authorities established that the total amount possessed by this unlikely collective is in the region of US$24m; a police operation in the coastal harbour town of Kyrenia led to the seizure of no less than 352 US$100 bills.
A few years ago, we would have regarded this item as a simple case of a criminal enterprise engaged in the forgery of hard currency. But in today’s era of quantitative easing (‘QE’), this sepia-tinged evaluation seems all-too-dated. Central banks around the world have been printing money at a furious pace in recent years, with the United States’ Federal Reserve presently committed to indefinite QE until the American economy improves. Mortgage-backed securities, treasury bills and bonds have been and are being purchased by the Federal Reserve in the trillions of dollars; the Bank of Japan – quantitative easing’s first, dubious poster child – and the Bank of England have announced or implemented similar measures, with the European Central Bank (‘ECB’) struggling to play catch-up.
With money printing now enjoying profound legal and perhaps cultural validation, should the Cypriot gang and those like them be viewed not as dollar desperados, but part of the maker subculture: persons with a DIY interest in manufacturing instruments of international exchange? Are they in fact following where the great and the good lead? And what, if any, implications should this have for the way we view currencies – and how value is attributed to them?
The period 2007- has arguably been defined by nothing more than the bad bets of private actors and the subsequent bailing out of said actors by increasingly bankrupt states. But while a significant percentage of the developed world public is familiar with the purported rescue of a large number of financial institutions, awareness of industrial bailouts seems to be much slimmer. Yet these are not insubstantial; moreover, as the case of PSA Peugeot Citroën illustrates (‘PSA’), they are almost as futile.
October 2012 saw the French government promise a total of €18bn to Banque PSA Finance, PSA’s in-house bank whose main function is to fund PSA customers’ purchases of new PSA cars. The assumed objective of this largesse is to keep Peugeot’s operations secure until 2016; in the interim, a restructuring programme and a hoped-for upturn in the contracting European automobile market are intended to lead PSA back into the promised land of profitability.
Yet on reflection, this seems to be yet another case of a state throwing money at a business which demonstrates little sign of ever being restored to full health – and which is likely to dump another large facture on the taxpayers’ collective doormat:
1. Recovery? What Recovery? Banking on a recovery in new car sales within the next year or so seems a hopeless strategy when the macroeconomic fundamentals of PSA’s main market of Europe are still characterised by uncertainty. The perceived need for external assistance – whether from the European Central Bank, the International Monetary Fund or spare renminbi or rials – has long supplanted the days of easy consumer credit.
2. Fuel Economy. With household budgets in retreat and the cost of non-negotiable essentials such as food suddenly assuming a higher priority, rare and precious petrol is being scratched off the shopping lists of millions of European households; even in the car-addicted UK, 1.3m people forsook their cars in the 12 month period from July 2010 to July 2011. With most major cities in Europe boasting excellent public transport infrastructure, this trend can be expected to intensify.
3. A Personal NHS. Cycling and walking – two of the easiest ways to keep fit and be mobile – are both enjoying renaissances, and European urban planners are reconfiguring their cities accordingly. In some Scandinavian and German cities the obvious mobility option is already the cycle – but every journey biked is one not undertaken at the wheel.