Thursday, July 23, 2015

The World's Biggest "Hedge Fund", $30 Billion Bigger Than Bridgewater, Remains Mysterious As Ever

Few things are as misunderstood as Apple's $203 billion cash hoard, first and foremost because of this amount $168 billion is not cash at all but actual securities: treasuries, investment grade bonds, perhaps stocks and junk, something Zero Hedge first made quite clear back in 2012 when we presented "The World's Biggest Hedge Fund You Have Never Heard Of" - Braeburn Capital, Apple's asset management corporation, tasked with preserving (and enhancing) the value of Apple's biggest asset: its "cash equivalents" which are anything but cash.
As the following chart shows, with $203 billion in investable dry powder which is probably the best way of calling AAPL's cash and investments...

... the Cupertino-based company is more than $30 billion larger than what is generally accepted to be the largest hedge fund in the world, Ray Dalio's Bridgewater, which however "only" managed some $171 billion as of May 2015.
Following our report, many tried to cover up the fact that nobody really knows what is on Braeburn's books, punting to the general explanation: "it is all invested in ultra-safe securities." Other said "It says it only invests in “highly rated securities”—think government bonds from rich, stable countries, and debt issued by companies with very solid finances. The overarching objective is “minimizing the potential risk of principal loss,” which means it’s safe to assume that Apple is not operating a secret investment casino in the Nevada desert."
Only that is not exactly true.
AAPL's gargantuan securities hoard, and the fact that the company is no longer a maker of gadgets as much as a massive hedge fund, was noticed two months ago by Bloomberg who wrote that "Apple Is the New Pimco, and Tim Cook Is the New King of Bonds." This is what BBG said:
Apple Inc., Oracle Corp. and the other tech giants hoarding half a trillion dollars in cash have joined the ranks of the biggest buyers of the debt, often snapping up as much as half of some bond issues, according to five people with knowledge of the transactions.

Apple, which had $193.5 billion of cash and marketable securities as of March 28, is now one of the biggest buyers of shorter-term debt sold by investment grade companies, often taking as much as $200 million of a $1 billion issue, according to four people with knowledge of the deals.

I am sure asset managers like Vanguard and Pimco would prefer Apple call them and have them manage the money rather than competing with them,” said Kevin McPartland, the head of research for market structure and technology at research firm Greenwich Associates in Stamford, Connecticut.
Of course they would: just think of the asset management fees that are not being paid.
But that is precisely why AAPL is now also the world's biggest hedge fund: with an "AUM" of over $200 billion, it would much rather do its asset-management decisions in house, and specifically in this house.
Or actually, that was the house located at 730 Sandhill Road in Reno, Nevada where Braeburn was housed as Zero Hedge first revealed, until shortly after our report when it decided to disappear. Cue Apple Insider from March 2013:
... the office at that address is now in use by another firm (Randstad finance and accounting). Asked about Braeburn, the receptionist told AppleInsider that she only knew that the firm is no longer operating at that location and that she didn't know where it had relocated. A search of Apple's record filings did not turn up a new address.

Apple doesn't appear keen on publicizing the address of its Reno operations ; neither Siri nor Maps offer any help in locating the Braeburn offices the way they do direct users to Apple's stores (including the one located in Reno) and its main headquarters facilities in Cupertino.
Actually that's not true. A 2 minute search reveals that Braeburn moved just down the road to a more impressive looking location at 6900 S. McCarran Blvd, Suite 3020, in Reno.

Far from the "boring, staid" buyer of ultra-safe treasuries, what is notable is that slowly but surely AAPL has become a dominant force in the corporate bond market, and has migrated into far riskier (and potentially illiquid) assets: as noted above, "[Breaburn] is now one of the biggest buyers of shorter-term debt sold by investment grade companies, often taking as much as $200 million of a $1 billion issue, according to four people with knowledge of the deals."
Which leads us to the second point about AAPL's "cash" - 90% of it is held offshore: in the latest quarter $181 billion of AAPL's cash, or about 90%, was held abroad.

It is here that Braeburn comes in, because it is funds held by Apple's offshore subs that provide the funding for Braeburn. As BBG reported a month ago, "Apple... had $171.3 billion of its cash and marketable securities in foreign subsidiaries and “generally based in U.S. dollar-denominated holdings” as of March 28, according to a regulatory filing." Make hat $182 billion as of June 30.
And just like every massive hedge fund, which prefers to operate in the shadows, Braeburn gets its share of shadow suitors seeking their share of its funds:
“We treat them as we treat Fidelity or Vanguard or any other investor,” said Curt Zuber, treasurer of Sydney-based Westpac Banking Corp., which has issued $6.1 billion of U.S. dollar-denominated bonds in the financial year started Oct. 1 and a total of $22 billion since October 2012.

All four of Australia’s biggest banks, heavily reliant on offshore debt markets, have sent representatives to Reno, Nevada, where Apple’s money-management unit, Braeburn Capital Inc., is based, according to people with knowledge of the trips. Oracle’s cash managers are also based in the city known for its casinos, where hotel rooms costing as little as $69 a night provide cheaper lodgings than banker stops in New York, Boston and Newport Beach, California, where Pimco is based.
The curious secrecy surrounding AAPL's asset manager once again raises the same flag we noted 3 years ago: just what does Braeburn hold, becuase while we would be happy to take Tim Cook's word, we would be happier if we could see some AAPL 13Fs.  Recall from September 2012:
Braeburn has no reporting obligations: there is no Investment Advisor Public Disclosure (IAPD) entry on Braeburn for the logical reason that it is not an investment advisor: it merely manages an ungodly amount of cash for AAPL's millions of shareholders. There is also no SEC filing 13-F filing on Braeburn's holdings. As such, not confied by the limitations of being a "long-only", it is in its full right to hold any assets it feels like, up to and including CDS on housing, puts on Samsung, or Constant Maturity Swaps that pay if the 10 Year collapses. It just doesn't have to report any of them.

Nobody knows: and that's the beauty of Braeburn. It is the world's largest hedge fund that is not really a hedge fund, nobody has heard of, and nobody knows just what assets it holds.
Another reason why some may want to know just what debt AAPL is buying: in a bond market as illiquid as the one right now, should AAPL be forced to dump any of its billions in TSYs, IG, Junk paper (say because rates are rising) just what will happen to the market price in what is generally quite a bidless market? 
Recall that the only reason why Bill Gross' departure and subsequent surge in redemptions from Pimco's Total Return Fund did not roil the market - as so many expected - is because as we learned laer, PIMCO sold from itself... to itself. 
Which leads us to another question: just what is the fair value of AAPL's "cash" if and when the company is actually converting it to real cash, and/or the bond market locks up due to the creeping wave of illiquidity, as so many increasingly fear.
And why is all this taking place in Reno, NV instead of Park Avenue or Wall Street? Because as we reported three years ago, Apple "uses Braeburn primarily in its capacity to find legal tax loophole all around the world and avoid paying taxes" and Nevada is perhaps the best state in the US where one can do just that.
Which also brings us to a tangential point: with only $22 billion cash held domestically, at a run rate of $10 billion in quarterly stock buybacks, AAPL will have no choice but to issue anywhere between $10 and $15 billion in bonds in the coming weeks since the company appears to enjoy a floor of about $20 billion in cash held domestically. All of this will continue at least until such time as the US allows corporations to repatriate the hundreds of billions held offshore without suffering a tax hit.
Perhaps the only question is whether AAPL's asset management unit will buy the bonds issued by AAPL's operating company used to repurchase the shares of AAPL's shareholders.
Until then: sorry Bridgewater, but you are still not hedge fund #1.

Tuesday, July 21, 2015

Japan Inc Rocked By Massive Accounting Fraud: Toshiba CEO Quits After Admitting 7 Years Of Cooked Books

While Abenomics has been an unmitigated disaster for Japan's ordinary population, where the soaring stock market has benefited the top decile of the population while everyone has been slammed by a record 25 consecutive months of declining real wages and soaring input costs, there had been one bright spot: corporate earnings, which unlike in Europe or even the US, have been growing at a steady double-digit clip. What was surprising is that Japan was perhaps the one place where currency debasement was leading to an immediate flow through to rising EPS.
Then on Friday, a report out of Reuters caught our attention when news hit that 140 year old electronics conglomerate, and "pillar of Japan Inc",Toshiba had inflated profits by a stunning $1.2 billion for a whopping 7 years, with fabricated figures amounting to 30% of the company's "profits" since 2008!
Suddenly we saw Japan's profitability "renaissance" in a very different light as Toshiba's scandal suggested that, if endemic,  Japan Inc's house of soaring profits was built on nothing more than fabricated foundations.
And while we await to see which other companies will admit they too had been cooking their books in the past few years, we will have to do it without Toshiba's CEO Hisao Tanaka, who together with five members of his senior staff, resigned earlier today.
According to the FT, "Tanaka said on Tuesday at a news conference, following a 15-second bow of contrition, that he “felt the need to carry out a major overhaul in our management team in order to build anew our company." “We have suffered what could be the biggest erosion of our brand image in our 140-year history."
Tanaka et al: "Sorry we got caught"
Of course, the only reason Mr. Tanaka apologized and resigned is not because he was actually cooking books the for an unprecedented 7 years, a period during which the CEO most certainly received tens if not hundreds of millions in equity and profit-linked compensation, but because he was caught.
We very much doubt he will have much if any of his generous bonuses clawed back even as "a panel of external lawyers and accountants said on Monday there was a “systematic” and “deliberate” attempt to inflate profit figures amid a corporate culture in which employees were afraid to speak out against bosses’ pushes for unrealistic earnings targets."
The panel said Mr Tanaka, who joined Toshiba four decades ago, and vice-chairman Norio Sasaki were aware that profits were being overstated and did not take any action to end the improper accounting.
The only action he did was bow down to suckers, aka investors, and offer a 15 second apology after which he was most likely on a one-way chartered flight out of Tokyo to some non-extradition island where his millions in ill-gotten comp will buy a lifetime supply of Mai-Tais.
As FT adds, the panel said Toshiba, which makes laptops, memory chips and nuclear reactors, "needed to revise its pre-tax profit figures by Y152bn ($1.2bn) over a seven-year period beginning in 2008, in addition to Y4.4bn in inflated profits estimated by Toshiba for three quarters of the 2014 financial year. The Y152bn accounts for nearly 30 per cent of the total pre-tax profit during the period."
Taro Aso, finance minister, said the scandal highlighted the need for corporate governance reform in corporate Japan. “We could lose trust in Japanese markets and the Tokyo Stock Exchange unless true corporate governance is in place,” he told reporters.
This is not the first massive accounting scandal involving a Japanese corporations: "the government has been seeking to improve investor confidence in Japanese corporate governance since 2011 when Michael Woodford, then Olympus chief executive, blew the whistle on Y117.7bn of covered up losses at the company dating back to the 1990s."
It won't be the last. In the meantime, investors are cautioned to take any numbers out of a country where cooking the books appears to be a daily occurrence with a huge grain of radioactive salt. Take the following example example of "dubious practices" as the company: during a meeting in December 2008 ahead of the third-quarter results for the financial year, the execs were told the operating profit forecast was a Y18.4bn loss, to which Mr Nishida said: “The figure is so embarrassing that we cannot announce it this coming January”. Accountants were forced to manipulate the figures to turn the forecast into a Y0.5bn profit.
The other executives who resigned are vice-presidents Hidejiro Shimomitsu, Masahiko Fukakushi, Kiyoshi Kobayashi and Toshio Masaki, and Keizo Maeda, representative executive officer. All were board members.
Yet despite the changes at the top nothing will change as the same culture of fraud and corruption that tainted the current executive team will persist in the future. The only question is who is next to admit that the only "working" aspect of Abenomics has also been a total fabrication.

Thursday, July 16, 2015

QE For The People - What Could Go Wrong?

A number of economists propose in the FT to implement what has been dubbed "QE for the people".
They start off quite well, noting:
"The evidence suggests that conventional QE is an unreliable tool for boosting GDP or employment. Bank of England research shows that it benefits the well-off, who gain from increasing asset prices, much more than the poorest."
As is often the case with these things, they go on to propose something even worse than what's already being implemented:
"Rather than being injected into the financial markets, the new money created by eurozone central banks could be used to finance government spending"
Government spending already benefits from QE at the moment. Since Draghi's announcement, Italian and German borrowing costs have dropped. And then we haven't even discussed all the other ways the ECB has found to prop up sovereigns, such as the cheap LTRO loans to banks, who channeled the money through to governments, especially in Spain and Italy. This is so well-known that it was called the "Sarkozy trade" - a term adopted by markets after the French president suggested that governments urge banks flush with ECB cash to buy their bonds. So why try more of the same?
Those calling for a "political Europe" should take notice that large-scale transfers have already been implemented within the Eurozone since 2010, through the EFSF, ESM and primarily (German economist Hans-Werner Sinn estimates to the tune of 75%) through the ECB. When one receives a loan with an interest rate which is lower than the market level, one receives a gift, in economic terms.
The economists argue that "mixing monetary and fiscal policy" isn't a problem because "traditional monetary policy no longer works".
They must have missed the alternative of Austrian economics. Post-World War II Germany and its relatively strict hard money policies can perhaps be instructive for a model that has been tested. Japan has been trying excessively loose Keynesian monetary policies after its bust around 1990, withnegative results. But the authors seem to prefer to apply the principle "When in trouble, double".
A particular problem with financing governments through the printing press is that Parliaments are being bypassed, exactly the reason why politicians  prefer to let Mario Draghi do the brunt of the dirty work in the euro crisis.
I hope it doesn't come as a shock to anyone, but my suggestion is the following: governments should be funded by taxes alone, democratically controlled through Parliaments. Ideally these taxes should consist in one invoice per citizen, detailing the services received. Perhaps socialists may want to add a “solidarity” invoice to rich people, raising funds which can be transferred on in a transparent way to those perceived to be in need. Clearly this system is way too transparent for the sake of any political purpose and would mean the end of a whole industry of tax advisors, but perhaps it may one day serve as a model for any future new country.
An alternative put forward by the authors which goes to the heart of their "QE for the people" - proposal is the following:

"Each eurozone citizen could be given €175 per month, for 19 months, which they could use to pay down existing debts or spend as they please. By directly boosting spending and employment, either approach would be far more effective than the ECB’s plans for conventional QE"

Why be so modest and only give €175 per month, someone may suggest? However, money shouldn’t be manipulated to support economic growth. On the contrary, manipulating its value will create uncertainty and hurt economic growth.
One could compare money to a voucher in a cloak room. If Sophie has received a voucher in exchange for storing her jacket, she wouldn't exactly like it if Mario Draghi, the manager of the cloak room, gives a voucher to his girlfriend, Angela, without asking her to put up some collateral. Whereas people would know that Sophie's voucher is backed by value (her jacket), her voucher would lose value in case the voucher-supply would be increased  artificially, to the benefit of the cloak room's manager's friends.
Shall we then see hyperinflation? Warnings of hyperinflation have been wrong in the past, and some Austrian-leaning economists like Mish have beencountering warnings from their Austrian friends.
Our monetary system is still not completely controlled by governments. After a central-bank induced bubble has bust, like in 2008, when one would expect prices to go down again after they have been rising in an unsustainable way, monetary pumping still may not be sufficient to counter deflationary forces. On the other hand, even modest printing may result in hyperinflation in case citizens lose trust in currency managed by the government, or if for example a remarkably solid alternative currency emerges and becomes popular, despite the fact that one needs to use government currency for contracts and taxes (let me disclose I have my doubts whether bitcoin will ever fulfill this role, but it certainly has proven to be able to circumvent capital controls).
In other words, the proposal to give each eurozone citizen €175 per month may not unleash hyperinflation, but it may counter certain natural deflationary forces, such as those in Spain, where the euro and its easy money fueled a toxic real estate bubble which left the banking system full of bad debt after it busted. If this proposed flow of "helicopter money" would effectively be injected and prop up prices, Spanish entrepeneur Conchita may decide not to open her sandwich place after all, given how rent prices would remain too elevated.
That's not to say that in all circumstances it would be wrong for Central Banks to increase the money supply. In a system where money would be entirely private, the market may still opt for a system whereby the monetary mass increases in case value is created (after innovation, for example) and decreases in case value is destroyed (after natural disasters, investment bubbles or wars, for example). Going back to the example of the cloak room, it's obvious that more vouchers are needed when new people arrive with jackets. If the government takes over the money supply from the private sector, as it has done everywhere, it should attempt to mimic what would happen in a scenario of private money.
In the case of Spain, that apparently means allowing deflation. I have understanding for those who claim that it's just madness to allow deflation in such a highly (privately) indebted country, but if that is true, it probably means we need to look at how to best organise defaults, rather than distorting decisions regarding saving and investing through manipulation of the value of money, as the authors propose. In the case of Spain, that means restructuring the banking system, something which has been done to a certain extent, with the help of a 40 billion euro bailout, but clearly not sufficiently, given the high amount of remaining bad debt. In the case of the whole eurozone, it means looking at alternatives to the current, dysfunctional currency union.
Given the massive mistakes which were made by central banks from Weimar to Bernanke and the relentless attempts to use the printing press to finance governments (after all, the Bank of England was set up to finance the King's wars), it probably shouldn't take much to convince people of alternatives, and not more of the same, right?

Saturday, July 11, 2015

Pentagon Concludes America Not Safe Unless It Conquers The World

The document announces a shift in focus from terrorists to “state actors” that “are challenging international norms.” It is important to understand what these words mean. Governments that challenge international norms are sovereign countries that pursue policies independently of Washington’s policies. These “revisionist states” are threats, not because they plan to attack the US, which the Pentagon admits neither Russia nor China intend, but because they are independent. In other words, the norm is dependence on Washington.
Be sure to grasp the point: The threat is the existence of sovereign states, whose independence of action makes them “revisionist states.” In other words, their independence is out of step with the neoconservative Uni-power doctrine that declares independence to be the right of Washington alone. Washington’s History-given hegemony precludes any other country being independent in its actions.
The Pentagon’s report defines the foremost “revisionist states” as Russia, China, North Korea, and Iran. The focus is primarily on Russia.Washington hopes to co-op China, despite the “tension to the Asia-Pacific region” that China’s defense of its sphere of influence, a defense “inconsistent with international law” (this from Washington, the great violator of international law), by turning over what remains of the American consumer market to China. It is not yet certain that Iran has escaped the fate that Washington imposed on Iraq, Afghanistan, Libya, Syria, Somalia, Yemen, Pakistan, Ukraine, and by complicity Palestine.
The Pentagon report is sufficiently audacious in its hypocrisy, as all statements from Washington are, to declare that Washington and its vassals “support the established institutions and processes dedicated to preventing conflict, respecting sovereignty, and furthering human rights.” This from the military of a government that has invaded, bombed, and overthrown 11 governments since the Clinton regime and is currently working to overthrow governments in Armenia, Kyrgyzstan, Ecuador, Venezuela, Bolivia, Brazil, and Argentina.
In the Pentagon document, Russia is under fire for not acting “in accordance with international norms,” which means Russia is not following Washington’s leadership.
In other words, this is a bullshit report written by neocons in order to foment war with Russia.
Nothing else can be said about the Pentagon report, which justifies war and more war. Without war and conquests, Americans are not safe.
Washington’s view toward Russia is the same as Cato the Elder’s view toward Carthage. Cato the Elder finished his every speech on any subject in the Roman Senate with the statement “Carthage must be destroyed.”
This report tells us that war with Russia is our future unless Russia agrees to become a vassal state like every country in Europe, and Canada, Australia, Ukraine, and Japan. Otherwise, the neoconservatives have decided that it is impossible for Americans to tolerate living with a country that makes decisions independently of Washington. If America cannot be The Uni-Power dictating to the world, better that we are all dead. At least that will show the Russians.

Friday, July 10, 2015

How The SEC Engineered Every Stock Market Bubble Since 1982

Many Americans have discovered that those entrusted to protect us often become the most dangerous threats. Whether it's corrupt copsbogus journalists, or even Ponzi-scheming church elders, it's not difficult to understand why trusting authorities has seemed like a risky proposition. Now, another institution deserves extra scrutiny. A closer look at the Securities and Exchange Commission reveals a single moment in time when the future of the country was transferred from the middle class to the uber-rich.
The story of the SEC begins with power and corruptionJoseph Kennedy became the first chairman of the SEC in 1934. Before joining the SEC, he was a manager at Hayden, Stone and Company. Kennedy left the company to trade his own account and made his fortune by manipulating the stock market. After becoming SEC chairman, he outlawed the manipulative tactics that made him rich.
Joseph Kennedy
In 1981, President Ronald Reagan appointed John Shad chairman of the SEC. He was the first Wall Street executive to lead the SEC since Joseph Kennedy. Previously, he was vice chairman at E. F. Hutton & Company.
John Shad
John Shad was the father of stock buybacksWilliam Lazonick, a professor of economics at the University of Massachusetts, explained this pivotal moment in financial history,
Shad, like the Chicago economists who influenced him, believed that a deregulated stock market was good for the economy. In November 1982 the very government agency that is supposed to regulate the stock market adopted Rule 10b-18, which instead encourages corporations to manipulate stock prices through open-market repurchases.
Instead of reinvesting profits in their businesses, management uses stock buybacks to inflate their earnings per share so they can reap windfalls with their stock options. Rather than invest in real innovation, they choose to loot the company for their own benefit, underpay their workers, and deprive consumers of true value. Recently, buybacks even exceeded operating income, which means CEOs are pillaging reserves to pay themselves. This is pirate capitalism at its finest.
We previously discussed how the stock market is disappearing in one giant leveraged buyout, but many readers were skeptical. How could the entire stock market disappear? Mathematically, it is possible, especially at the current rate of stock repurchases. In Economics 101, we are all taught that the stock market is a capital-fundraising mechanism for businesses. We assume this to be true, even in the absence of evidence. However, this hasn't been true since the SEC rigged the market in 1982.
Lazonick explains,
Since the mid-1980s, in aggregate, corporations have funded the stock market rather than vice versa (as is conventionally assumed). Over the decade 2005-2014 net equity issues of nonfinancial corporations averaged minus $399 billion per year.
Stock Buybacks
Net Equity Issues
One glance at the S&P 500 Buyback Index shows how manipulated the market really is. The index contains 100 stocks in the S&P 500 that have the highest buyback ratios, which is buybacks divided by the market capitalization. The Buyback Index, which is accessible via ETF, trounced the S&P 500.
S&P 500 Buyback Index
Since 1982, the entire market has been nothing but one massive slow-motion leveraged buyout. This places the SEC right up there with the Federal Reserve in market manipulation credentials.
Lazonick said buybacks are a disaster for the economy,
Buybacks bear a considerable part of the responsibility for a damaged U.S. economy. This mode of resource allocation serves to concentrate income and wealth at the top of the distribution and comes at the expense of investment in the types of stable, remunerative career employment opportunities that support a broad-based middle class. When the most profitable corporations are in a downsize-and-distribute mode, sustainable prosperity in the U.S. economy becomes an impossible goal.
As the market goes higher in the manipulated buyback frenzy, workers continue to be left in the dust.
Wages As Percentage of GDP
And you can always count on the manipulators to bail out at the last minute. After igniting a buyback-fueled bubble, John Shad left the SECjust four months before the 1987 stock market crash to become Ambassador to the Netherlands. Two years later, the Justice Department asked him to become chairman of Drexel Burnham Lambert. The revolving door is open for business.

Thursday, July 9, 2015

Greek Drachma Makes Mysterious Appearance In Hotel Bill

In the wake of Sunday’s dramatic referendum, there’s been no shortage of redenomination chatter and drachma dreaming.
Indeed, speculation has run rampant since deposed Greek FinMin Yanis Varoufakis opened the floodgates by telling a UK newspaper that the government was ready to go the “California” route with IOUs. Just yesterday Kathimerini reported that Athens was preparing to launch a parallel scrip in order to meet its obligations to pensioners and public sector employees and anecdotally, there’s some evidence to suggest that Greek businesses are in the midst of reverting to the drachma as we speak.
As a reminder, the image below was sent in by a tourist who went to a cafe in Greece where the menu prices appear to be back in Drachma:
On Thursday, Bloomberg is out with what it calls "the first sighting of the new Greek drachma," and although we'd like to think that the menu shown above (which we posted some 24 hours ago) actually qualifies as the "first" sighting, we were still very interested to see that the "NGD" has shown up on a receipt from the Hilton.
Between June 28 and July 4 at a Hilton hotel in Athens, transactions on a Bloomberg reporter's Visa credit card issued by Citigroup Inc.were posted as being carried out in "Drachma EQ."

The inexplicable notation -- bear in mind, the euro remains Greece's official currency -- flummoxed two very polite customer service representatives and spokesmen for the companies involved. It depicts a currency changeover that the Greek government and European officials have been working for over six months to avoid.

Citigroup and Visa Inc. declined to comment. A Hilton Worldwide Holdings Inc. spokeswoman said that the Athens hotel had billed the customer in euros, not drachmas.