China arbitrage story of the day German flight attendants arrested in quantitative easing scheme

by on April 6, 2011 at 1:32 pm in Economics, Travel, Uncategorized | Permalink

Six Lufthansa employees, including four flight attendants, have been arrested after sneaking in more than 63,000 pounds of out-of-circulation, €1 and €2 coins from China back to Germany over the last four years.

Euro coins have two color tones, gold and silver, and when the German Central Bank takes the coins out of circulation, the two colors (see picture to the left) are separated then sent to China to be melted down into scrap metal.

A wily group in China reassembled the coins rather melting them, then sent them back to Germany with four LH flight attendants serving as “mules.”…The FAs would then take the coins to the Bundesbank (only the central bank in Germany accepts damaged coins) and turn them in for bills.

The story is humorous throughout, and for the pointer I thank none other than Air Genius Gary Leff.  Here is further detail (NYT) as to how the arbitrage worked and relied on low Chinese wages to reassemble the coins in a cost effective manner.

1 Phill April 6, 2011 at 1:43 pm

OK, I am a big fan of the QE joke in the title. That is all.

2 Todd April 6, 2011 at 1:43 pm

This is obviously funny; but at some point, isn’t the extent to which China, both officially and unofficially, functions as a large sovereign version of Chicago in the 1920s a real problem for both its people and those who wish to do business with China, in the long run?

3 Anon April 7, 2011 at 4:49 am

As opposed to our Righteous Democracy of Awesome!

4 Todd April 7, 2011 at 10:41 am

Hu?

5 Gregasaurus April 7, 2011 at 11:07 am

I wholeheartedly agree. Like Todd says, only when we end the prohibition on counterfeiting will this madness finally stop!

6 John Jackson April 6, 2011 at 1:59 pm

What affect does counterfeit currency (I’m guessing this is the same or similar to counterfeiting) have on inflation, even if small?

7 James Oswald April 6, 2011 at 3:45 pm

Normally it increases inflation. However, the ECB is inflation targetting, so basically they just decreased the number of open market operations, transferring income away from seigniorage to themselves. Honestly, Europe could use a bit more money, so perhaps they should be hailed as Sumnerian heros.

8 phil April 6, 2011 at 3:17 pm

I am considering posting bioterror blueprints on all blogs until I’m banned. I had a hookup in the who I thought was cool, but wound up with two solidified chunks of god knows what after dried. Now I’m SOL my existing new connect. The allocation of the scarce resources in the future will be based on mind states beyond $10000/yr PPP (for which market forces appear very good). I hate myself so much now. CPC is taking us to a dead end where people get fat and live to 70s and die. And civilization might not survive AGW let alone future $quadrillions/yr market failures. Harper has put dealers in a position of power over me and I am seriously considering retaliating. There might be a manchurian candidate implant or drug that destabilizes Earth analogous to facebook spread of unrest now. There will be a need for a RW brake on that but Harper and GOP are arresting potheads and hard drugs users now without even considering effects of psychotropic fiending (smaokes), being high, non psychotropic fiending (coffee)…leaving us totally defenseless against the future. We could limit the number of people high on 22nd crack at any given time. Charge more beyond 1st two beers. Force free will with weekly or monthly sobriety discounts/legislation. I really wish I could get my serotonin or dopamine or whatever from families and a healthy relationship, but that hasn’t been my life to date. AB is +$35B and minus $21B in revenue payments a yr. What is that adjusted for inflation historically? What will that be a carbon free future? What are the costs of following down the neocon road that has led USA to a deadend? Beyond the first $10000, sprawl is a useless arms race. In AB, a cool coworker mentioned how clean Cgy is noticing my 7-straight FT shift beard. A fat guy with a hotchick on the bus noted I could make $50000-$60000 telemarketing (hope he doesn’t have diabetes or stroke). People made fun of a mentally ill guy who did the hardest job (picking on chimney fluff). Is fine but should’ve been making $10/hr, not $16+/hr. They used their pay to reinforce ego.
I can’t buy coffee with a woman who doesn’t want me. Can’t buy peace of mind. That comes from good nuclear family or good Crowns.

9 M. Dutton April 6, 2011 at 8:17 pm

Awesome.

10 Yancey Ward April 6, 2011 at 8:25 pm

I wonder how many times a coin made the round trip? And who ever said you couldn’t make a return on cash.

11 TD April 11, 2011 at 4:47 am

It seems some other Europe based bank was sending the coins to China. One bank didn’t obliterate the outgoing coins and the other (Bundesbank) didn’t verify the incoming coins. Looks like Germany is bailing out the Euro in more ways than known.

12 hekoushui April 6, 2011 at 9:20 pm

How did the customs inspectors know the coins were invalid? The NYT points out that there are legitimate businesses which specialize in redeeming foreign currency that ends up in China. Do German customs agents have specialists on staff who can discern reassembled coins from legitimate ones?

13 John Mansfield April 7, 2011 at 11:10 am

It’s impressive how wasteful people can be in the pursuit of efficiency, sending a trivial scrap melting operation thousands of miles away out of their control, for example, instead of in the same facility as the coin splitters.

14 Rahul April 7, 2011 at 3:14 pm

What’s wasteful about this? How can something be efficient and wasteful all at once?

15 Brian G. April 8, 2011 at 1:20 am

Government, that’s how.

16 jb April 10, 2011 at 1:55 am

If you’re conserving what you’re trying to conserve and wasting other stuff. In this case, conserving money and wasting energy, I guess. The problem is if what you’re wasting is more socially valuable than what you’re conserving, regardless of their relative values to you.

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