Campaign against zero interest rates: The German Spargroschen Trump
The German savings bank chief makes the European Central Bank a scapegoat because it expropriates savers. It would get worse without Draghi and Euro today.
Populists are men with fair hair, who are angry that someone is to blame when things go bad in the country - sometimes Mexicans, sometimes Poles or Syrians. And those who warn of the approaching apocalypse - and then explain how they would heroically avert them by simply understanding things. Build a wall. Make Brexit. Syrians out. Whereby the recipes usually turn out to be unfit - and yet not so easy. See Boris Johnson.
Helmut Schleweis, the highest representative of the savings bank industry, is applying for admission to the category. Guilt: the Italian, Mario Draghi. Misery: the negative interest. Apocalypse: that the saver is expropriated.
Whereas only helps to stop the Italian and its European Central Bank (and if it comes to one or the other elderly citizens in the country, it is best to re-introduce the D-Mark). Then the German saver gets interest again. Apocalypse averted.
In reality, the opposite could happen. There is a great deal to suggest that there are completely different reasons for zero interest rates - and that German savers without the European Central Bank (ECB) and the Italians would not get away better, but even worse. Like the Brit with the Brexit. Economy for Spargroschen Trumps.
Axel Heimken / DPA
For his mission, our Sparchef writes open letters in which he appeals theatrically to the head of the ECB - in order to let the request drift through in the "Bild" on page one. And give the impression that without the Draghi there would be no low interest rates - and that only does that to help finance ministers of supposedly troubled euro states to rehabilitate their public finances. And the German pays.
It is true that banks have been paying some kind of fee on deposits with the ECB for some time now. But there is a reason for this: they should be more motivated to lend and to stimulate the economy than to hoard money. It is also true that the ECB has been buying government bonds since 2015 in order to lower interest rates on long-term securities even more.
That this explains the German saver drama, is therefore unlikely, because the central bankers measured in terms of market volume not so crucial to buy many Bunds: even at weddings only between ten and twenty billion a month - with last almost 400 billion euros traded German government bonds in the month. Against the polterthesis of the evil ECB also says that there are many other reasons that also provide for lower interest rates.
Why the interest rates are low
The level of interest on bonds or savings accounts depends on supply and demand as a whole: how much money is saved, ie offered to the banks, and how much is demanded in return for what the banks demand. If you save a lot and invest relatively little, the interest rates will fall. The nowfall.
If, as has been the case for years, interest rates are so unusually low, it is just as unusual. This includes that:
- For the first time in decades, the economy saves more than it spends on balance , which is rather crazy. Entrepreneurs should do business and not hoard money. Compared to the German gross domestic product, companies spend less money in equipment (7.1 percent) than before the financial crisis (7.9 percent) - after ten years of growth and significantly higher profits. The demand for loans is correspondingly lower - and is it the interest rates;
- For the first time in decades in Germany, surpluses in public budgets are being introduced. That sounds great, but for the inclined saver it means that for years no new government bonds have been issued that could be bought. In other words, the state also saves more than it spends - just over 60 billion euros net last year - just under two percent of the gross domestic product (GDP). The result: the Minister of Finance does not have to advertise with high interest rates, the interest falls;
- In many countries after many years of exuberance people are trying to reduce their (private) debts - in the US, where debt once contributed to the crisis, the savings rate is now at least eight percent of GDP; she was only two percent before the crash;
- For many years now, those with the strongest growth in incomes and wealth who are saving a relatively large amount of their additional income anyway - which, according to calculations by the Bundesbank and the International Monetary Fund, have also led to more savings and less spending momentum;
- to the increased propensity to save after analyzes of some experts also contributes that the Germans, like others also, demographically older and therefore operate more precaution . That has the interest rates have tended to zero for years, says economics professor Carl Christian von Weizsäcker.
All this is enough to explain why rates tend to zero or below. It does not need Euro or Draghi. Interest rates are historically low elsewhere.
Much of what has dropped interest rates is interpreted, if at all, as more or less a direct result of the financial crisis and its subsequent shocks and political aftermath a la Trump and Johnson. Since then, companies, as in similar crises earlier, have become wary of larger investments. Thrift is considered a requirement. Even if in fact the old debts are still high.
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If Germany's savers get even less interest than others, this also has to do with the fact that investors in such turbulent global times are looking more than usual for the safest possible investments - which include German government bonds. Or gold, which has also had a run in recent weeks. No coincidence. Most people do not care if they still pay. The main thing, the money seems safe. The logical flip side: for German savers there are then also less interest - and now tends to be negative.
How little the interest-rate drama has to do with Mr Draghi or the euro, or the lack of a culture of stability in scapegoats, can be studied very well today with the example of Switzerland - a country that has neither the euro nor Italo bankers or high state deficits and that certainly a tendency for stability is said. Since the interest rate on government bonds has been below zero for years and currently even at minus one percent. Because the Swiss suddenly became a Hallodri? Or Mr. Draghi has secret agents there?
Nonsense. Because in Switzerland, all the points just work that have dropped interest rates everywhere for years. And more so than elsewhere, because Swiss bonds are just as safe investments as German - and for years all Panikanleger buy the things. So mistaken that the venerable central bank helped to stop the run with even lower interest rates.
It has something of populism to make the Germans know they would get interest on their savings, if only the Draghi did not exist. The Swiss drama gives an idea of what would be happening in Germany in the days of Trump and Johnson, if Mr Draghi and the euro did not exist. Then many more investors would flee into German government bonds. And the Bundesbank could not help but lower interest rates below zero, just like its Swiss counterparts. Without that Mr. Schleweis could make the Italian responsible.
If it is true that a large part of the interest rate shock is the late consequence of the great financial and banking crisis, then the rumble of our Spargroschen Trump even has a certain audacity. Just like the statement by the Deutsche Bank boss this week that "the low interest rates are ruining our financial system". Then it must be correct: the excesses of the financial system have ruined interest rates. And so have Deutsche Bank and Sparkassen contributed properly.