Don’t Get Too Used To Your Money


wealthymatters.com

The article below is from Saturday’s ET.I was struck by the advice not to get too used to money and that sometimes you will regret saving it.

I also enjoyed reading all the highlighted tidbits on the economic scenario in  Europe.

I was also reminded of my history lessons from my school days;of how a sense of economic injustice in Germany led to 2 World Wars.

Hope you too enjoy reading this article .If you like this sort of thing maybe you will like a few of my older posts t00.Viz. https://wealthymatters.com/2011/04/06/lessons-from-the-weimar-republic/#more-1207

https://wealthymatters.com/2011/04/06/inflation-and-the-velocity-of-money-lesson-from-the-weimar-republic/

https://wealthymatters.com/2011/04/07/using-inflation-to-create-wealth/

https://wealthymatters.com/2011/04/12/currencies-of-antiquity/

Haunted by history, Germans resist European bailout

ET Bureau Jun 23, 2012, 04.15AM IST

BERLIN/LEIPZIG: Kathrin Swcharz is a sweet 90-year-old grandmother who lives in the sleepy town of Osmunde, just 30 kilometres away from Leipzig, the second-biggest city in Saxony. “Don’t get too used to your money,” she says. “It changes. And sometimes, you will regret saving it.”

Not a surprising statement coming from a woman who was born in 1921. The German currency has changed five times during her lifetime.

Understanding this attitude of Germany is key to understanding German resistance to the European Central Bank becoming a lender of last resort, or in layman’s terms, being allowed to print an unlimited amount of euros.

OFF the mark

It is little wonder that French President Francois Hollande’s proposal calling for the firepower of the euro zone’s permanent bailout fund, the European Stability Mechanism, to be expanded by allowing it to access liquidity from the ECB, like a bank, is unpopular in Germany.

The memory of the hyperinflation of the Weimar period, from June 1921 to July 1924, when 50,000,000 (50-million) mark banknotes were printed, remains a dark undercurrent in the forging of German policy. When the 1,000-billion mark note came out, few bothered to collect the change when they spent it. By November 1923, one dollar equalled one trillion marks. “I voted for Der Linke (the far left) in the last elections, but I think Merkel is doing the right thing,” says Andreas Konig, a baker at the city’s popular chain Lukas. “Why should Germany give unlimited credit to everyone else?”

Koning, who works a shift from 6 am to 3 pm, sums up the popular attitude of many Germans, who think that southern Europeans don’t work as hard.

That statement falls short of reality, though. According to the Organization for Economic Cooperation and Development, an average Greek worker logs 2120 hours per year – which is 690 more hours than a German worker.

On the other hand, tax evasion is a massive problem in Greece. The country’s shadow economy is estimated to be around 30 per cent of the economy. The Orthodox church, extremely rich, is exempted from taxes, and the rich often evade it.

In contrast, given the general tendency to adhere to laws and the stiff penalties involved, various methods have estimated that the size of the black economy in Germany is less than 10 per cent.

Another stumbling block is the lingering legacy of unification. It is estimated that 1.3 trillion euros ($1.9 trillion) was shifted from the West to the East after reunification in 1989. Yet, unemployment in the East stubbornly remains at double that of the West, and there are some at least who wonder whether it was all worth it. “In the old days, if you did not go against the system, the system took care of you,” says Alexander (he declined to give his last name) who is 50 years’ old and worked as a research chemist in the former East Germany.

Old-fashioned values

In a fast-changing world, Germany remains one of the few countries where old-fashioned values like thrift still have a place, even as the world of finance moves at a dizzying pace and people all over the world are hit by the after effects of cheap credit, as one clambers out of the roller coaster ride the ’90s was.

It is still difficult to get a bank loan to buy a house unless you can show an ability to repay the loan, buttressed with an healthy balance sheet stretching several years, and are ready to pay at least 20 per cent upfront. Renting remains the most popular option with cities like Berlin, even though property is cheaper compared to other major cities in Europe.

In cities in the east, such as Leipzig, it is still possible to rent a three-bedroom apartment for 500-600 euros per month, a price that could get you a tiny hole in the wall in Paris.

Finally, for many Germans it is a question of damned if you do, damned if you don’t. “If we had intervened in Libya, we would have been told that the Afrika Korps was marching again,” says a banker at the local Sparkasse. “Now that we did not, we are told that Germany has failed to rise to its international responsibilities. If Germany refuses to prop up the euro, we are blamed for being the China of Europe, profiting from an undervalued currency. On the other hand, if we do intervene, the Greeks will say that we want to take over Europe.”

For many Germans, haunted by historical memories of inflation, the obstinate costs of a reunification more than twenty years’ old, and a belief in the German work ethic, bailing out the weaker economies of Europe is a frightening prospect, with the rewards a chimera on the horizon.

(Global India Newswire)

About Keerthika Singaravel
Engineer,Investor,Businessperson

5 Responses to Don’t Get Too Used To Your Money

  1. Leonard Marks says:

    great post

  2. Schalk says:

    So, can I get your opinion on a pretty old question? Do you think the EU was a good idea in the first place? Also, do you think it was a good thing that Greece managed to stay inside the Euro (for now)?

    • Schalk,somehow I’m a person who doesn’t think in terms of good or bad ideas when it comes to politics.I think in terms of probable and improbable.I think the EU came into existence simply because sufficient number of Europeans then saw it as desirable.A few days ago I saw even Greeks talk about the desirability of the EU on BBC.This is why the EU is still round.The only European I had any chance to talk to about the EU was a Frenchman and as the EU is a way for France to project its power,I don’t think I can take his views as neutral.
      The only opinion I choose to have on the EU and the Euro is Dr Faber’s
      ” I think the euro will survive, the question is in what form. It may survive without the weaker countries or it could survive theoretically just as a currency aside from local currencies. You would have in France and Italy and Spain and Greece, local currencies and…the dollar. So, I could travel anywhere in Europe and still pay in euros.”
      So instead of speculating endlessly and uselessly on what might happen I will have prepared for a few scenarios and remain in readiness for what might happen.Ans

    • Schalk,somehow I’m a person who doesn’t think in terms of good or bad ideas when it comes to politics.I think in terms of probable and improbable.I think the EU came into existence simply because sufficient number of Europeans then saw it as desirable.A few days ago I saw even Greeks talk about the desirability of the EU on BBC.This is why the EU is still round.The only European I had any chance to talk to about the EU was a Frenchman and as the EU is a way for France to project its power,I don’t think I can take his views as neutral.
      The only opinion I choose to have on the EU and the Euro is Dr Faber’s
      ” I think the euro will survive, the question is in what form. It may survive without the weaker countries or it could survive theoretically just as a currency aside from local currencies. You would have in France and Italy and Spain and Greece, local currencies and…the dollar. So, I could travel anywhere in Europe and still pay in euros.”
      So instead of speculating endlessly and uselessly on what might happen I will have prepared for a few scenarios and remain in readiness for what might happen.

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