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You are here: Home Moving to Country Facts Specter of financial wipeout haunts Germans

16/11/2008Specter of financial wipeout haunts Germans

Germans are haunted as few other nations can be by memories of most of their money practically vanishing during the 20th century.

The people of Europe's biggest economy are "risk averse" as a result, according to Manfred Schmidt, a political science professor at the University of Heidelberg who has written extensively on German anxiety. 

Inflation 1923 - Germany © Wikipedia Commons
In 1923, the Great Inflation wiped out Germans' money for the first time. In 1948, most savings vanished at the stroke of a pen when the old currency was demonetized. In 1990, it was the turn of East Germans to lose half the value of larger savings. 

In the past month, Berlin has moved to guarantee personal savings at banks, guarantee interbank lending, and prop up the shakiest banks but the world crisis has caused few bankruptcies or joblessness among ordinary Germans yet. 

A key reason for that has been the absence of any real-estate bubble like those in Spain, Britain and the United States. 

"Just the opposite,"  told the Bundesrat, Germany’s upper chamber of parliament. Real-estate prices in the past decade had been low compared to earlier times. 

"The second point, which plays a big role, is that we have a savings rate in Germany of 10 to 11 percent," he said, unlike the United States with a negative savings rate of minus 0.5 percent, requiring it to suck in other nations' surplus cash. 

"We have also not had a credit crunch in recent weeks and months," Steinbrueck added, though business did face higher interest charges. 
Finance Minister Peer Steinbrueck © by Bertelsmann Stiftung

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