German Of The Day: Graf Draghila

That means Count Draghila.

Draghila

You know, as in Mario Draghi, the European Central Bank President?

Mass-selling German newspaper Bild on Friday accused European Central Bank President Mario Draghi of “sucking dry” the bank accounts of Germany’s savers, a day after the ECB cut interest rates deeper into negative territory.

Next to a photomontage of Draghi with fangs and dressed as a vampire, Bild’s headline read: “Count Draghila is sucking our accounts dry.”

Hoping to kick-start economic activity nearly a decade after the euro zone’s debt crisis, the ECB on Thursday cut interest rates deeper into negative territory and promised bond purchases with no end-date to push borrowing costs even lower.

“The horror for German savers goes on and on.”

Save Money At Your Own Risk, Thrifty Germans

That virtue is going to cost you in today’s Europe.

Cash

Germany in Uproar as Negative Rates Threaten Saving Obsession – Germany’s overcrowded banking industry has long contended with sub-par profitability, but after five years of negative rates, lenders are running out of ways to offset the hit to earnings. With the country gearing up for regional elections next month, the ECB is an easy target for a country known for its risk-averse attitude to money and its habit of hording savings in checking accounts. At 2.35 trillion euros ($2.6 trillion), no other country in the euro area has a larger pile of retail deposits.

“These suggestions show how far the undesired side effects of the ECB’s negative rates stretch.”

Grossly Undervalued?

Grossly overvalued? The main thing is, gross.

Navarro

When it comes to the advantage that Germany has taken of the euro, Navarro is right about effect, if not motive.

The euro has been bad for German democracy and for German savers and may well ultimately prove to be a disaster for its taxpayers too, but it has been a boon for the country’s exporters. The euro is far weaker than the Deutsche Mark would have been (as was always likely to have been the case). This means that Germany’s decision to abandon its old currency in favor of the euro has acted as a disguised devaluation, a devaluation that has only deepened as the structural imbalances within the common currency have dragged the euro down still further.

Navarro sagte der “Financial Times”, Deutschland profitiere in seinen Handelsbeziehungen von einer “extrem unterbewerteten ‘impliziten Deutschen Mark'”.

Talk About Crossing A Red Line

Somebody call the President or something.

Red Line

I’m gonna buy a mess of these. But like what will be my German Bund’s 10-year yield at -0.030 percent? I mean, will there still be any of my investment left?

“Nobody buys bunds at these yield levels thinking they are attractive. Demand for haven assets is being driven by fear of Brexit and growth concern. Investors are buying bunds as a hedge against uncertainty.”

German Of The Day: 5 Billionen

That means 5 trillion (don’t ask, but it really does). And that’s how many euros German savers have set aside for a rainy day.

Trillion

That’s going to be one rainy day.

Zwar investierten die privaten Haushalte ihr Geld trotz niedriger Zinsen vor allem in kurzfristige und vermeintlich sichere Bankeinlagen. Trotzdem wuchs ihr Geldvermögen von Juli bis September 2014 um 28 Milliarden Euro oder 0,6 Prozent auf 5,01 Billionen Euro, wie die Deutsche Bundesbank mitteilte.

Why Are Filthy Super-Rich Germans So Low-Key About Their High Finance?

Well, for one thing, they know better than anyone that they live in the notorious German Neidgesellschaft.

ALDI

And for another thing… The figures show that private wealth in Germany is more unevenly distributed than in any other country in the eurozone. While the richest 1% have personal wealth of just short of one million euros on average, a quarter of adult Germans have no wealth or even owe money.

ALDI schönen Sachen!

Rich Germans Actually The Euro Zone Po Folks

As recently reported, rich Germans have suddenly and inexplicably become the poor men of Europe, relatively speaking.

Poor

According to the latest ECB Vermögensstudie (wealth study), the Cypriots, of all people, are among the richest citizens in the euro zone. Germans, on the other hand, have come in at last place.

Wait a second. Wasn’t there something recently about Cyprus striking a 10-billion euro bailout deal with the European Union? I must have got that wrong (or the Cypriots certainly got that right).

Ausgerechnet die Zyprer gehören zu den reichsten Bürgern der Euro-Zone, Deutschland steht am Ende der Rangliste.

 

It’s Good To Be The German

In case you didn’t know it, Germans are sitting on a big honking tremendous pile of money.

The Bundesbank thinks that German private households are in posession of ein paar tausend Milliarden or “a few thousand billion” euros (stick with that, believe me: Billion is Milliarde in German, trillion is Billion). They’ve got more set aside now then ever before, in other words; some 4.7 trillion euros.

And 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. Rereading this is starting to make my stomach hurt.

Privatleute vertrauen Vermögen den Banken an.

What’s Mine Is Mine

And what’s yours we probably don’t even want to talk about.

German households have never had as much money at their disposal as they do now = Germans have never been as rich as they are now. Private financial assets are now valued at 5000 billion euros here (is that more than a bazillion?).

Like I always say:

A mark, a yen, a buck, or a pound
A buck or a pound
A buck or a pound
Is all that makes the world go around

Vermehrt wurde das Vermögen vor allem in Form von Bankeinlagen und Bargeld.

The crisis is over, let’s save even more!

In case you hadn’t noticed, German psychology is different than other kinds of folks’ psychology (volks-psychology?). At least when it comes to saving money it is.

Whereas Americans, let’s say, save the little that they can when times are hard and then toss it out with both fists like crazy people the first chance they get, Germans save when the times are hard and then save even more when the times are good again. The spending part gets removed from the calculation here entirely.

And that’s what’s happening now, again. Now that the financial crisis is ancient history and everything is booming here again and unemployment is supposedly under three million and milk and honey are flowing down the streets and into the gutter and all that, private Germans are saving more privately than ever–an average of about 11.5 percent of what they’ve earned this past six months.

And no, they don’t maybe know something that the rest of us don’t know. They’re just hamsters. It’s in their jeans. I mean genes.

“Für die privaten Haushalte zusammen ergibt sich ein Sparvolumen von rund 93 Milliarden Euro.”

PS: I’m thinking now it’s maybe just a big game or something that only the initiated (the Germans themselves) know about. Whoever has saved the most money by the time he or she dies, wins.