Where is Germany (...and Europe) going to?

[victor]

Since Henry posted the comment about Bill Gross I've been surfing pimco's website.

All the comments are high quality.

This is one I liked very much:

http://europe.pimco.com/LeftNav/Regional+Market+Commentary/European+Perspectives/2005/European+Perspectives+Oct+05.htm

Best regards.

[HenryTo]

In the U.S., 80% of millionaires are entreprenuers, while the remaining 20% are generally doctors, lawyers, and executives in major corporations. Starting your own business is encouraged - but that's mostly because the U.S. has a sufficiently big market to cater to most interests and hobbies - along with the business-friendly laws to boot.

Take this website, for example. There are 300 million potential subscribers domestically - not to mention the many potential international subscribers that are interested in the U.S. financial markets, such as yourself. I just cannot start such a website if I was in Germany, for example, or even in the UK primarily because of the lack of markets. I can try to become a very small niche (by focusing on the UK or German markets) catering to the world's customers, but this is a pretty risky endeavor.

Home ownership in U.S. is about 68% of all households, while home ownership in Germany is only 44%. Yet, mortgage debt as a % of GDP in the U.S. is only 10% higher than Germany's - 64% vs. 54%. Italy and France have been outperforming Germany, but mortgage debt as a % of GDP in Italy is only 13% while in France is only 25%.

Germany usually does very well in a global upswing, mainly because of its reliance on exports. But once this global upswing turns down, then the upward momentum of Germany's economy could quickly turn south. IMHO, Germany is one big cyclical stock.

[Goodfella]

SAP Deutshe Bank both based in munich and the best in their sectors.

The reason other western economies are outperforming Germany is because their is no housing bubble. Germans rent their property and dont take on debt. sensible

[victor]

One more thing.

The problems detailed in Pimco article explains our mentality quite well.
Why do we have a huge social welfare system?
Because we love security (or better stability) and we hate risks.

Will you leave a good actuary job and risk your future in order to start a website? Well, man, maybe you will in the USA, but not here in Europe.


All my comments are my point of view. I'm not Mr Europe, so I will be glad if any other european reader is so polite to crush all my opinions. This is a discussion forum, isn't it?

[victor]

I think I get your point of view, here is what I see:
While in your country the brighest people is developing start ups which may become global leaders in a near future (think of all internet related bussines a few years ago: google, dell, e-bay, ...), here in Continental Europe I see very talented people who aspire just to, say, be director of Google Europe, Dell Europe or E-bay Europe.

Thanks to our mentality, I believe Europe can produce the highest quality gadgets in the world (well, take Japan too). BMW is not the best example, they have good marketing and good reputation but they’re not the best car markers around (I and my service station know this first hand). But german Daimler or french PSA manufacture excellent cars.

Another example: SAP.
Here is a joke that says that if Bill Gates instead of making software, someday he decides to make cars he would last just one week, “Brake critical error: Continue? - Ignore? - Retry?”. Check how many times a day you press “Ctrl+Alt+Del”.
This kind of things don’t use to happen when you work with SAP.

One last example: The stock market in Spain.
Question: How many of the 20 biggests Spanish companies are born from an entrepreneur?
Answer: Just one. Inditex (= Zara retail stores). The others are former privatised monopolies, banks, and real estate.

Conclusion: We know how to do it well, but we lack the entrepreneurship spirit. Our future is not as bright as our bright people are.

[HenryTo]

Thank you Victor, for posting that.

Germany is a global manufacturing power. German-made vehicles for example, are the envy of the world, especially by American auto manufactuers.

But then one has to wonder: Is this such a great thing? Because of the fact that Germany is a manufacturing power, and because the German labor force is so engaged in manufacturing, it also becomes a much more cyclical economy - totally dependent on exports and thus the spending patterns of other countries.

People then compare BMW with GM and cite this as evidence that the U.S. is going down the tubes. But consider this: While some of the best talent in Germany works at BMW, that is not the case here in the U.S. The best and brightest are working at places like Google, Microsoft, Yahoo, Goldman Sachs, Morgan Stanley, etc., and they are dominant in ways (on a global basis) that would have made John D. Rockefeller and Robert Woodruff proud.