Rereading this is starting to make my stomach hurt.Observes Hermann. Not me, though. He discusses his view of the magnitude of the cash-pile that German savers and investors are sitting on. While this is in sharp contrast to the state of personal finance south of the Alps, that's still alright by me.
Because they see the Euro trending into devaluation for some period of time, it actually bodes well for the New York Exchanges at first (buying US stocks is a way of swapping your savings out into another currency,) as well as an eventual round of bargain-hunting on the European exchanges after a pullback of, say, 8-10%
This despite the nudnik flight to safety behavior of the bulk of German investors when the risks to them are readily managable:
the punch line is that they seem to have invested most of it at those awful horrible dreadful banks they like to despise so much (they make big banks even bigger, you might say). Investments in real estate haven’t even been calculated here, by the way.One of the pressing problems with all economies, even the German economy, is that a large amount of money has been pulled out of markets, and has still not gone back in. This starves companies that hire, build plant, or otherwise invest, of operating capital.
One certainty is that when the fear DOES go away, stock prices (and volumes) will rapidly rise in a large, one-time Oklahoma-landrush style event.
After all there has been an awful lot of money worldwide that has been held back since 2009 despite the enthusiastic chatter about emerging markets and notions of Chinese economic infallibility. People have watched their retirement accounts fall and eke back something, but are likely exactly where they were 4 years ago. There's anxiety about this having cost/lost time in the scale of years that they will have to keep working beyond the age that they had once anticipated.
Before you discount this is a bad way of looking at what the German investor MIGHT do, make a note of their taciturn ways that define the Sparkultur that makes them look like “the 1%”. It always adopts behavior practiced abroad for some length of time as a part of sticking with what’s tried and true, even if it’s goofy.
Going “all in” on solar panels at a northern latitude where the sun might shine for a few days every other August is a sign of this. The shared-delusion makes perfect sense to them because they keep hearing that people out there in the big, wide world think it matters, so it must be the thing a schlauer Kopf needs to do – and do it Sofort, once it is recognized.
So it isn’t quite mad to think that sooner or later, they’ll be making large withdrawals from the 1st National Bank of Sealy Posturepedic at some point in the cycle we see now. It might foretell a trend which is also true of all of the OECD societies – more popularly among those that are emerging from recession in reasonable shape than the rest, but a likely trend across the board in an effort by the great mass of individual to (if nothing else,) get personal retirement plans back on track without the rest of society’s ideas.
Europeans being “forced” to retire at 68-70? Forget the Social contract as a discussion point - the economy has made that decision for us. This holds true despite the knuckleheads frequently found marching in the streets of French cities on a seasonal basis trying to circumvent the plain fact that there just isn’t enough money to provide for all their comforts on the backs of the taxpayers whom they outnumber by "making a debate" out of it.