There is a familiar German saying: „An der Börse kann man schnell ein kleines Vermögen machen….wenn man mit einem großen anfängt.“ (You can make a small fortune in the stock market …. if you start with a large one.) While Americans have watched their life savings evaporate over the past 10 days – $2 trillion of wealth has been wiped out – the average German is not feeling the same pressure. To be sure, there is plenty of fear, for the global financial meltdown is sure to result in job losses in Germany and everywhere else on the continent. But the collapse of the stock market is not causing much anxiety because not that many people own stock. Germans put their hard-earned money in passbook savings accounts – preferrably at the local Sparkasse – savings and loan institution. This behavior drives stockbrokers and mutual fund managers in Germany crazy. Just last August the Bundesverbank Deutscher Banken (Federal Association of German Banks) complained that Germans had amassed € 5 trillion in financial assets but only 9% were invested in equities. The German banking customers were "risk averse" (risikoscheu), was the complaint; they preferred security to a high rate of return. Also, unlike their American counterparts, Germans have not piled up massive amounts of consumer debt on their credit cards:
Unlike in fellow European Union countries like Spain, Ireland and
Britain, Germany has no real estate bubble. Germans abhor credit. And
few own stocks; just 5.4 percent according to a study by the Deutsches
Aktieninstitut, a nonprofit group in Frankfurt that promotes equity
ownership. Instead, they put their euros into passbooks and savings
accounts – 11 percent of their incomes on average, often into
Sparkassen, municipally owned savings banks that are popular and stable.
Even those Germans who have their accounts at the large private banks can sleep well after Angela Merkel announced that all deposit accounts would be completely guaranteed by the Federal Government.
There are very compelling historical reasons for the risk aversion of Germans. Germany went through two traumatic periods where people lost everything: first, the hyperinflation of the Weimar Republic which destroyed the German middle class, and they the total destruction of WWII. The tech bubble of the late 1990s opened the window a bit on stock ownership, but the subsequent implosion only reinforced the old, entrenched behaviors.
But it is not just risk avoidance that keeps Germans from buying stocks. It is also a lack of necessity. Today most Americans must fend for themselves in saving for retirement while Germans can count on a pension provided by the state. And, since Americans are notoriously undisciplined savers, they usually are forced to chase after the higher returns promised by the stock market:
Schließlich mussten die Deutschen kein Geld für ihre Rente anlegen.
Um die Altersvorsorge hat sich der Staat gekümmert, manchmal spendierte
der Arbeitgeber noch zusätzlich eine Betriebsrente. „Man war gar nicht
gezwungen, für höhere Renditen zu sorgen“, sagt Professor Gerke. In
den Vereinigten Staaten dagegen liegt die Altersvorsorge in der Hand
der Bürger. Dies macht viele zu Aktionären. So ist eine Tradition
entstanden: Die Menschen kümmern sich selbst darum, wie viel Geld sie
verdienen wollen, um für das Alter ein Polster zu haben. (Germans simply are not required to invest money for their retirement income. The state is responsibile for their retirement and occasionally their employer provides a supplemental pension. "People weren’t required to seek out higher returns," said Professor Gerke. In the US, on the other hand, the citizens have to provide for their own retirement plans. So many Americans own stocks. This has become a tradition: people determine for themselves how much money they need in order to have a cushion for old age.)
In the past week, though, that "cushion" (Polster) has been wiped out by the stock market crash. Most Americans would gladly trade places with their German counterparts.
