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Fri May 6, 2016, 08:26 AM

Wrath of Draghi Hits Germans who Refuse to Blow their Savings

Wrath of Draghi Hits Germans who Refuse to Blow their Savings
by Don Quijones • May 5, 2016

Just shocking that Germans dislike stocks, with the DAX down 21%
By Don Quijones, Spain & Mexico, editor at WOLF STREET.

Since promising to save the euro at any price, ECB president Mario Draghi has thrown just about everything he can at Europe’s crisis-ridden economy. That includes the mother of all financial anomalies, negative interest rates. Yet despite all the trillions of euros of his alphabet-soup creations — QE, LTRO, TRTRO I, TRTRO II… — the European economy is still frail, growth is lackluster, public debt is out of control, and unemployment remains worryingly buoyant.

As for the region’s banks, the less said, the better.

Not to worry. As Draghi said in a speech to Asian government officials and business leaders on Monday, there’s still a great deal more that can be done to punish Europe’s hordes of savers, the central banker’s scapegoat du jour for all that ails Europe’s debt-laden economy.


Inevitably, whenever Draghi talks about “savings,” he has a particular kind of savings in mind: German savings. If Germans spent money on imported products rather than saving their money, they wouldn’t have an account surplus — which has been “above 5% of GDP for almost a decade,” he complained — and would thus save the world.

While Draghi bemoans Europe’s savings glut, reality is that household savings have been on a sharp downward trajectory ever since the creation of the single currency. Even in Germany, the personal savings ratio has slipped from 12% at the beginning of the crisis to 10% today. A similar trend has occurred in Japan, the U.S and just about every other so-called developed economy since the beginning of this century. ...............(more)


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