I saw this story in my local paper about Germans and their aversion to credit cards which I think says a lot about the current situation in the Eurozone. Two things to take from this article. One is that Germany has the lowest home ownership rate in Europe (40%). Those with the highest: Greece, Italy, and Spain (80%), and the UK (70%). The other is that they abhor credit and credit cards are rarely used there. Cash is king. They save, we spend.
June 27, 2012, AP
BERLIN – Head to the checkout at an Ikea in Stockholm to pay for your new leather corner sofa and with the swipe of a Visa card it’s yours. Don’t try that in Berlin — that’ll be euro1,699 ($2,080) up front please.
It’s that financial culture — a deep-seated aversion to debt and an emphasis on responsibility — that makes Chancellor Angela Merkel’s hardline approach to solving the European financial crisis so popular in Germany.
The attitude shows up in all walks of life, from the daily trip to the grocery store to putting a roof over your head.
The economy is so reliant on cash for transactions small and big, a way to ensure you don’t spend more than you have, that Germany pushed hard for the euro500 note to replace its popular 1,000 mark bill when it joined the common currency.
It’s one of the largest denomination notes being produced anywhere today, worth around $600, and is even known in neighboring France as “the German note.” While even discount supermarkets in Germany happily take the euro500, very few shops in France will accept the bill.
Even though Germany is Europe’s largest economy and one of its richest per head, it is last in home ownership with just over 40 percent. That compares to some 80 percent in troubled EU nations like Greece, Italy and Spain, and around 70 percent in Britain and the U.S., where owning your own home is part of the “American Dream.”
Germans tend to be instinctively averse to taking out a mortgage. And lenders often demand a 20 percent down payment on a house or substantial collateral. So a culture has sprung up of just renting and holding on to cash.
When mortgage debt shot up by more than 20 percent in the 27-nation European Union between 1998 and 2010 — and more than 35 percent in Britain and 60 percent in Ireland — Germany was the only EU nation to see it fall, with a drop of 5.4 percent in that time period, according to the European Mortgage Federation. …