WHY CONCERN OVER THE SAVINGS RATE IS A FRACE:

Why Don't Germans Invest in Stocks?: When it comes to investing, the German people are about as conservative as they come (Julie Cruz, 10/01/10, Business Week)

When it comes to investing, many Germans are uncomfortable taking risks. Only 6 percent directly owned stocks in the first half of 2010, according to Deutsches Aktien­institut (DAI), a shareholder lobby association, whereas stock ownership for the French is 15 percent and 10 percent for the Britons. Only 9.4 percent of the German population owned shares of mutual funds in the first half of 2010, vs. 44 percent of households in the U.S. in 2009. At the end of 2009 stock investments represented 3.9 percent of the financial assets of German households, the lowest level since at least 1991. Instead of stocks, Germans have 28 percent of their assets invested in life insurance products, 18 percent in cash and short-term deposits, and 20 percent in bank deposits.

Some of Germans' reluctance to sink their money into equities is a result of the structure of the retail banking system, which is dominated by locally owned savings banks and cooperative lenders. As a result, investment advice tends to be more conservative than in other Western economies.

Not conservative but foolish.

Posted by Orrin Judd at October 2, 2010 7:18 AM