The Euro Panic.(implementation of the Eurodollar)

The machines failed. In city centers long queues formed like Depression-era bread lines, the people hungering now for cash from dispensers that no longer worked. In the countryside, cars backed up for miles as automatic tollbooths failed to digest the strange new coin. Service stations stopped serving fuel. Vending machines no longer vended. Parking meters quit their vigil over the curbs. Strikes erupted. Counterfeiting and street scams exploded. Toll roads and train stations backed up. The day that was supposed to mark a glorious milestone in European unification--E-Day, Jan. 1, 2002, when a dozen countries on the continent began using the same euro banknotes and coins--was remembered as the day that Europe stopped dead in its tracks...

Such is the specter of disaster now haunting a jittery continent. Not since the Millennium Bug came and went without biting so much as an ankle has any place seen such an outpouring of scary prognostication from smart people with serious authority. In one startling day of testimony before the European Union two weeks ago, continentwide associations of consumers, pensioners, workers and retailers used words like "scandal," "chaos" and "tragedy" to pillory the European elite for its failure to stave off what they described as an inevitable doomsday. Last week the European Federation of Accountants, not known as a bastion of apocalyptic soothsayers, complained that many businesses seem to have "no understanding of the commercial risks of not being ready," and warned of an epidemic of missed payrolls, bills, even credit-card payments. The same day the European Parliament debated a report citing the continent's "astonishing lack of preparedness" for the introduction of the euro, the European Parliament warned that an outbreak of problems on E-Day "might expose the entire European project to criticism. The stakes are high."

It's hard to believe anyone could have failed to notice what the accountants, reverting to understatement, called a "foreseeable event." A decade ago the European Union decided to launch the euro as its most practical and powerful symbol of unity. Many nations opted out, determined to protect their beloved banknotes, but most threw in. On the first of January 1999, continental Europe started setting many prices in both local money and the euro, which remains a "virtual currency," good for stocks, banks or most any transaction that does not require cash. During the year 2000, businesses were to start preparing to keep records, do deals and make change only in euros. It seems that not only did many businesses ignore that advice, but polls show that many of the 300 million people in the 12-nation "eurozone" still don't know that drachmas, escudos, francs, guilders, lire, marks, markkas and all national currencies will begin to be phased out Jan. 1. They will circulate alongside euros for about two months, but will become illegal tender the moment the changeover ends, no later than midnight, March 1.

The worries start now, at least for those aware that E-Day is coming. On a continent where up to 20 percent of the wealth is believed to be stuffed into mattresses, sock drawers and safe-deposit boxes, fear of the tax man is rife. As of Jan. 1, 2002, banks will be reporting anyone changing large sums of cash for euros to the authorities. So billions are now pouring out of the vast "black economy" and fueling everything from senior-citizen spending sprees in Germany to a 20 percent run-up in real-estate prices at holiday destinations like the Costa del Sol in Spain. The 10,000-peseta note, once a rarity because it was the favored method of secreting cash, is now in widespread circulation. Some economists even cite the black market's preference for dollars and the uncertainties surrounding E-Day to explain the mysterious weakness of the "virtual euro," which hit a six-month low last week.

There may be something to this black-market theory. Last year German Customs registered a 37 percent increase in cash intercepted at the borders and attributed most of that to the pre-euro rush. European mobsters have put their laundering machines on maximum load. Seven Italians were arrested just last week for shuttling lire to Switzerland and dollars to Sicily. "With dollars, I am not taking any risks," says a 69-year-old entrepreneur in the Paris garment industry. He is making regular visits to currency-exchange windows to stock up on dollars, and planning a quick trip to a Caribbean tax haven. "Of course I'm not going to take all my money in suitcases to the Banque de France and ask them to change it."

The scare scenarios predict a sharp turn toward the chaotic when the "Big Bang" hits. Hoping to overwhelm counterfeiters before they can exploit a nascent market, the European Central Bank decided to flood the 12-nation eurozone with 10 billion euro notes and 50 billion coins on the first day, Jan. 1, which will require the largest logistical operation in Europe since World War II. Police are preparing for a rash of holdup attempts. Nations across the continent plan to deploy their armies to guard convoys. French President Jacques Chirac last month mobilized the police, the Army and "all economic, administrative and social employees" to ensure the success of Europe's most significant reform "in the last 50 years."

He may have been responding not to the threat of holdups, but to a threat by French armored-truck drivers to strike on the eve of the big E-Day delivery if their security concerns are not met. "The gangsters may be waiting for the euro to arrive to attack," says union leader Joel Le Coq. "We're really worried." He says a strike is "probable," and also complains that the Big Bang may require his drivers to work longer than their newly won 35-hour week, creating a "security risk from fatigue." So much for the call to mobilize for a united Europe. The bankers who will rely on armored-truck drivers for euros are resigned. "If there is a strike, there is nothing we can do about it," says the director of the French Bank Association, Philippe Gerard Saveur. "That's life."