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Total Fiasco: Germans are the Poorest, Cypriots the Second Richest in The Eurozone

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Wolf Richter   www.testosteronepit.com   www.amazon.com/author/wolfrichter

In March, six years after inception, the first ECB-organized Eurozone-wide household-wealth survey results were trickling out. But when the Bundesbank refused to publish the German data, insiders leaked the reason: too explosive for the current debt crisis and bailout environment because Italian households were far wealthier than German households. Shocking! And a red herring. The truth turned out to be far more shocking.

Now the ECB has finally published the all-country report—and it’s far worse than feared. Italian median household wealth was indeed over three times larger than Germany’s. But that wasn’t the problem. The problem was Cyprus.

Cypriot households (CY), as measured by both their median and average wealth, were the second richest in the Eurozone. Median household wealth—half the households had more, half less—of €266,900 was over five times Germany’s puny median of €51,400. Average household wealth reached a phenomenal €670,900 (that’s $872,000!), 3.4 times Germany’s €195,200, and just shy of Luxembourg’s €710,100. Rarefied levels of wealth achievable only by small countries with huge and murky banking centers, or lots of oil. Few countries in the world are in that elite club.

And Germans (DE), based on median household wealth, were the poorest in the Eurozone.

It wasn’t that Cypriot households earned a lot of money—they earned the same as German households! They just knew how to hang on to it. At least until their bubble blew up. What’s particularly galling for our hardworking Teutonic heroes is that since Reunification their real incomes have declined while that of their southern neighbors has soared, and their wealth was eaten up by taxes, high housing costs, and other expenses.

The comparisons are sobering. German household wealth amounted to less than half the Eurozone median of €109,000 and was even below that of former east-bloc countries, the poorest of which was Slovakia at €61,200. West Germans were better off, barely, at €68,000. East Germans were steeped in poverty at €21,000. Their comrades in Slovakia were three times richer. Even the maligned lazy corrupt Greeks were worth €101,900.

Or were in 2010, when the surveys were taken. It was the beginning of the surge of the German stock market, and the beginning of a rise in property values that had languished for years. By now, wealthier German households, those who own property and stocks, are significantly better off than they were in 2010, and they have since pulled up the average. Median household wealth, however—almost none of them own property or stocks—has certainly been left behind, again.

Alas, in Cyprus, the stock market, down 98% from its peak in 2007, has become inconsequential; real estate values, after a mind-boggling bubble, have been plunging for over two years; and billions in bank deposits have evaporated. So, some of the wealth was ephemeral, but Cypriot households are in all likelihood still, even today, wealthier than our Teutonic heroes.

Spanish household wealth has also been caught in a downward spiral of devastating unemployment and an exploding housing bubble—Spanish households lead the survey with a homeownership rate of 83%. In 2010, homeowners valued their homes at bubble prices still lingering in their minds. By now, much of the home equity Spaniards were clinging to in their minds has dissipated—with dramatic impact on household wealth.

That German households are now officially, and for all to see, the poorest in the Eurozone is causing front-page gloating. Yet, that these poor households are expected to carry the lion’s share of bailing out their far richer neighbors would only be a problem in Germany. Central bank sources told the FAZ that the Bundesbank and the ECB, to avoid stirring up a storm at an inconvenient time, kept this explosive wealth data secret until after the Cyprus bailout had been decided. But the data also explains the political motivation for the haircuts of account holders in Cypriot banks.

State-owned statisticians immediately scurried about Germany to explain away and rationalize the wealth difference. They dragged out homeownership rates—Germany at 44% was at the bottom—and the large publicly owned housing stock with its subsidized rents; it was public wealth, rather than private, but would end up in the same pot, or something. And they pointed at the average household size in Germany of 2.04, the lowest in the Eurozone, versus 2.76 in Cyprus, etc. etc.

But in the end, it was an ugly picture of wealth inequality in the Eurozone, where German households were the big losers. Chancellor Angela Merkel, however, remained unscathed and immensely popular though this wealth fiasco happened in part under her watch—testimony to her skills as the ultimate political animal.  

In Spain, not a day goes by without a new political scandal. Just the last few days, King Juan Carlos’ daughter, La Infanta Cristina, was charged with aiding and abetting her husband in his myriad scams to embezzle money from the public purse. Now ties to a known drug trafficker hit the governing party. Read.... Spain’s Descent Into Banana Republicanism

 

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Thu, 04/11/2013 - 09:59 | 3436036 QQQBall
QQQBall's picture

First the Income Statement, then the Balance Sheet... So it has been, so it is and so it will be...

Thu, 04/11/2013 - 08:27 | 3435696 Peter Pan
Peter Pan's picture

These statistics are worth zilch except as a snap shot  for some point in time which is now gone and irrelevant.

Since then the property values of Greeks, Cypriots and others have suffered immensely while German property values have increased.

Thu, 04/11/2013 - 04:15 | 3435465 The Reich
The Reich's picture

Germany - the lost decades (since 1982)

Thu, 04/11/2013 - 03:56 | 3435455 ParisianThinker
ParisianThinker's picture

Don't get too comfortable with your wealth in the Western World. The US is pressuring Europe to develop a Banking Union. They want to make sure they can collect since the Fed printed all the money to bank out their banks. The Bank crisis will be based on bail-ins everywhere in the Western world. 

Where can an AMERICAN open a bank account in a strong, regional bank in Hong Kong which did not participate in deriviates? Otherwise, no exit.

Thu, 04/11/2013 - 08:17 | 3435673 SoundMoney45
SoundMoney45's picture

A strong fractional reserve bank.  That is funny!

Thu, 04/11/2013 - 05:26 | 3435512 Sandmann
Sandmann's picture

Banks do not want US Citizens - too much hastle with W-4 and compliance

Thu, 04/11/2013 - 01:24 | 3435344 walküre
walküre's picture

The cat is out of the bag. Cyprus is being asked to liquidate their gold holdings to raise funds.

Are they THAT stupid?

Thu, 04/11/2013 - 07:46 | 3435624 Zwelgje
Zwelgje's picture

yes.

Thu, 04/11/2013 - 00:59 | 3435316 Sandmann
Sandmann's picture

When Obama copies the German Tax Code Americans will start being a lot more discreet

Wed, 04/10/2013 - 19:35 | 3434293 JR
JR's picture

The timing of this revelation is suspect...

because it just so happens that world banker propaganda needs a little support material after the Troika's performance in Cyprus. What better news could they possibly release than that Cypriots are basking in wealth while their northern European counterparts are struggling to pay their bailout bills?

The Troika has known all along what the relative health of each European nation’s economy is, including Germany's and Cyprus's, and their relative household incomes, as well. (Zero Hedge bloggers from Germany consistently have pointed out German's low wages; and now we're to assume the ECB didn't know? Come on!) But taking a break from demonizing Germans, it now fits the Troika’s message to imply that hard-working Germans are being taken advantage of when countries in the South do not accept their austerity pill.

Everybody knows that Cyprus is a country used consistently by Europeans to live out their retirement years bringing with them the monies and pensions that they have earned in hard work, perhaps from other countries such as Britain and Russia and Greece.

And Troika’s trick is simply to fly in and clean them out.

Wed, 04/10/2013 - 23:42 | 3435185 Imminent Crucible
Imminent Crucible's picture

The data comes from the ECB, which makes it highly suspect. Everything the ECB does is a political machination. Take all of this with a grain of salt.  Epsom salts.

And Richter? Isn't that a German name? Should have recused himself.

Wed, 04/10/2013 - 20:41 | 3434540 Ned Zeppelin
Ned Zeppelin's picture

+ 500 euros

Wed, 04/10/2013 - 18:17 | 3434038 Grimbert
Grimbert's picture

The wealth one is meaningless. the Cypriots have a British mentality when it comes to home ownership (They were British until 50 years ago). On an individual basis borrowing money to buy a house makes sense because after 25 years it is yours, so you no longer have to pay any money to anyone. The alternative is to rent which never stops, and at any time you can sell the house to get a bigger or smaller one and cash in. 

Germans don't think that way because their houses have been stolen from them when borders have changed and suddenly become Soviet or Polish. 25 years is a long time if you live in central European border areas.

So countries whose borders change don't invest in property, but countries whose borders don't change, do.

Thu, 04/11/2013 - 11:53 | 3436698 ReactionToClose...
ReactionToClosedMinds's picture

you know, I have done biz in Central/East Euroland ..... but never had a firm grasp of the 'mindset' re: 'homeownership' .... any of us would do the same thing .... real estate is a terrific investment on a real non-inflation adjusted basis assuming some kind of reasonable growth, etc. ...... until it is no longer 'yours' ..... then what do you do?  good post & thks

Wed, 04/10/2013 - 19:01 | 3434183 Grimbert
Grimbert's picture

:( my first -1 in 3 years.

Wed, 04/10/2013 - 20:51 | 3434577 MythicalFish
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Must have been a down-voting algo going berserk, keep up the good posts buddy

Wed, 04/10/2013 - 17:03 | 3433688 e-recep
e-recep's picture

i find the income per capita figures meaningless. the income is never distributed evenly. and the distribution pattern always differs from one country to the other.

Wed, 04/10/2013 - 16:55 | 3433646 StarTedStackin'
StarTedStackin''s picture

The EuroZone is much like the Obowel Movement in that they reward failure and penalize success......

Wed, 04/10/2013 - 16:13 | 3433363 CTG_Sweden
CTG_Sweden's picture

 

 

These figures are probably true although I guess that the Cypriots have lost a significant portion of their money recently.

 

Sweden is the per capita largest net contributor to the European Union, yet, the net Swedish median household wealth was SEK 903,000 (€ 108,014) and the net Swedish average wealth was 1,221,000 (€ 146,053) in 2007, see

 

http://www.scb.se/Pages/TableAndChart____195809.aspx

 

The principal reason why Sweden is considered as a “rich” country is that a high workforce participation rate among women in Sweden exaggerates the Swedish GDP per capita figure compared to other European countries. Kids in kindergarten increase the GDP figure unlike children at home, for instance.

 

As regards Germany, I suspect the fact that people don´t retire as early as in many other EU countries exaggerates their wealth.

Wed, 04/10/2013 - 16:04 | 3433301 Kiss My Iceland...
Kiss My Icelandic Ass's picture

"Cypriots the Second Richest in The Eurozone "

 

Not any more .

Sat, 04/13/2013 - 21:07 | 3445644 bilejones
bilejones's picture

They never were.

The numbers are ludicrous.

 

Look at the CIA factbook gdp/capita income numbers.

Wed, 04/10/2013 - 16:04 | 3433298 JOYFUL
JOYFUL's picture

There's simply no way that Wolf & George, amongst others, could go so quickly off the deep end as has seemed to have occurred in the last week...summthins up...

this is spoof material we're getting lately...and a new crop of obvious comment planters along with it...somebody tuning up for the big game?

Wed, 04/10/2013 - 14:40 | 3432649 bornlastnight
bornlastnight's picture

I would just love to see how the United States would stack up using the same data.

Yeah, I know...it's Euros, not buckaroos.

Wed, 04/10/2013 - 14:14 | 3432428 LawsofPhysics
LawsofPhysics's picture

"Total fiatsco" - fixed.  Accountability and trust motherfuckers.

Wed, 04/10/2013 - 14:14 | 3432419 Joe A
Joe A's picture

Oops. Greek government secretly made a report on how much Germany owes Greece in war reparations. The report 'leaked' and now there is a fuss: http://www.telegraph.co.uk/finance/financialcrisis/9981837/Vast-Greek-wa...

Wed, 04/10/2013 - 14:21 | 3432383 THE DORK OF CORK
THE DORK OF CORK's picture

Surly these are claims on wealth ?

Not wealth.

 

PIig people have had to cut down on their consumption because their cash flow has died.

 

If I have 100,000 in the post office earning 3%  = 3,000 Euros.

I own my house (rather then a German renting)....a home is not a financial asset - its a utility.

+ part time rather then pre 2007 full time job.........

Am I rich ?

 

Germans remain in employment for the most part building the high quality junk for the rest of us.

Their cash flow remains static at least.

Their consumption has remained higher then the others.

 

PS 

I imagine there is much less social capital in PIigland.

Given that these states are not functioning very well the population must hold insurance. (I imagine Italians hold a shit load of gold)

 

Wed, 04/10/2013 - 13:28 | 3432193 Joe A
Joe A's picture

Here is a link to an article in the Telegraph on how Helmut Kohl had to act like a dictator in order to push through the Euro. All this of course to avoid war. We are of course now all soooooo much better off.

Wed, 04/10/2013 - 13:41 | 3432247 Bearwagon
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This goddamned prick acted like dictator in nearly every aspect, too ... or how else should one explain, why there was not popular vote on the reunification, despite the "Grundgesetz" demanding exactly that?

Thu, 04/11/2013 - 05:24 | 3435510 Sandmann
Sandmann's picture

The Grundgesetz required a NEW Constitution voted by Germans inplace of that imposed by the British-Americans-French in 1949......that was a bridge too far for the Allies let alone Kohl

Wed, 04/10/2013 - 13:54 | 3432331 Joe A
Joe A's picture

Not to mention how he and his side kick Hans-Dietrich Genscher were instrumental in the breakup of Yugoslavia and the civil war that followed. He was after all, creating "his" Europe.

Wed, 04/10/2013 - 13:17 | 3432138 Sandmann
Sandmann's picture

Absolute crap. This is fraudulent presentation. Germans do not own real-estate in the same way that Southern Europeans do. Germans also tend to invest in Pfandbriefe and fixed interest paper unlike Southern Europeans. Wealthier Germans hold their assets outside Germany - in Luxmbourg or in Spanish villas or through their businesses especially in the form of KG and GmbH & Co KG.

Germans are far wealthier than Cypriots as you would expect when Cypriots have a per capita income of $26,900 vs German PPP basis of $39,000 with the difference being  800,000 persons versus 80,000,000

This exercise is so contrived and fraudulent as to be meaningless twaddle

Wed, 04/10/2013 - 23:13 | 3435087 Stuck on Zero
Stuck on Zero's picture

Germans have cradle to grave health care, free education through university level, huge retirements, 8 weeks vacation, 35 hour work weeks, and rent control that give them multi-million dollar apartments for a few hundred dollars a month.  Those are nice perks.

I wonder how Americans stack up.  We pay shitloads of taxes and get nothinh back from the government.

 

 

Thu, 04/11/2013 - 11:52 | 3436693 jhm
jhm's picture

You obviously have no idea. From my salary i do pay 8,2% health insurance, 9,45% pension insurance, 1,5% unemployment insurance, 1,3% nusring care insurance, income tax, solidarity tax (for rebuilding former east Germany) and so on. More than one third of my income is for taxation alone. To study one has to usually take on a large state loan without wich only really rich families can support their kids to study. A tiny room to rent in a *good* university city starts at about 500 €uros per month payment if one is lucky, and most students i know have parnets who support them *plus* have to work three part time jobs at least to survive. Retirements for most normal working people in their 40's today will be meagerly just above the social secutrity level at about 800, 900 €uros, and with the wages being stuck since 20 years it is nearly impossible for people with a normal income to ever build up any savings at all, let alone pay any mortgages on a house of their own. The rent one does pay usually eats up one third at least of ones income, usually even more, and the standard vacation time is three weeks of working days without weekends and not more. In Berlin, one of the yet cheapest cities rent-wise in Germany one does pay 1500 to 1800 €uros rent per month without utilitiy charges to live in a medium apartment in the inner city, and the apartments are not Million-dollar premises.

The majority of people in Germany live on a net income of far under 2000€, pay more one third of that for rent, at least one third for food and the rest to pay back their debts. People are indebted to their throats to keep their living standard and pretend to still be middle-class. That is the sad truth.

You have no idea of reality, wages, working hours and living-costs in Germany, that one is for sure.

Thu, 04/11/2013 - 10:11 | 3436087 OldE_Ant
OldE_Ant's picture

At my lab I see more Germans being hired.  They already occupy ALL top spots at our lab taking home a combined 1.5-2M US out of a yearly budget of about $20M (not bad when our lab has over 300 employees).

Some time ago a complaint was lodged with an even higher up manager in our 'umbrella' of managers and an edict was put down - no more Germans in top level positions.  So they promoted a single American who was out in less than 12 months.  What did they replace him with, a German of course.  Oh a German woman, who happened to be hired with her husband.   They together pull down $300K in salary and cost the lab a cool $400K/yr at least when all bennies, health, etc. are factored in.  Both of them don't know shit, and couldn't do a days real work if their life depended on it.  They constantly belittle their subordinates.

What is sick is that the same lab in Europe will NOT hire anyone who is not a resident of a European country.   I've been thinking its about time we tell the Germans here in the US 'Nein" and start opening up those top level positions to Americans.   Send the fucking rejects back to their own country where they will be treated as they deserve.

These same Germans don't have to pay one Euro to get their Ph.D.s yet us Americans have to not not only pay for ours but compete with them for jobs as well (and be excluded in other countries).  To top this off they look down their 'superior noses' at us to boot.    We have two major pieces of equipment at this lab we paid over $5M for that were 'made in Germany'.  Neither of these pieces of crap work to specification and we've spent a lot of extra money just trying to deal with this problem hardware.  Yet the money went out anyway.  Why?  Because the Germans at the top don't want to make their fellow German Dumkaufs at home look bad.

There was a time I had a high respect for German engineering, as well as German intelligence.  Every day that respect turns to a form of hatred and desire to see the fuckers leave our country (we'd be FAR better off without them here).   They are going to leave anyway.  Not a single one of them seems to have any developed any affiliation for the country that is making them rich.  The same is true of almost every other foreigner I've seen.  They look down on the US and Americans yet come here take the best jobs (because they have friends in high places) rape the places for as much cash and technology as possible and then leave and form a new company doing exactly what they were doing here, for less of course all the while thumbing their noses at us 'dumb Americans'.

Thu, 04/11/2013 - 01:00 | 3435318 Sandmann
Sandmann's picture

Where are these rent-controlled multi-million dollar apartments ? I thought only New York had those

Thu, 04/11/2013 - 09:36 | 3435937 Stuck on Zero
Stuck on Zero's picture

It is not the younger generation that gets the advantage of the rent controlled units.

Wed, 04/10/2013 - 23:09 | 3435077 jayman21
jayman21's picture

I was thinking the same thing.  Did they not subtract debt or something stupid like that? 

Wed, 04/10/2013 - 17:17 | 3433783 swissaustrian
swissaustrian's picture

+1 The rich Germans have either offshored their wealth or even left the country altogether.

Lots of them are running arround here in Switzerland.

Wed, 04/10/2013 - 15:58 | 3433273 Ghordius
Ghordius's picture

good crap, nevertheless... ;-)

Wed, 04/10/2013 - 14:59 | 3432818 dogbreath
dogbreath's picture

Thats right, the greeks and cypriots aren't smart enough to hide their wealth like those sneaky germans

Wed, 04/10/2013 - 14:45 | 3432695 3x2
3x2's picture

Exactly. Invest in some tiny nation currently at the shit end of an artificial boom or invest in a nation with industry and a track record. Lesson here for '(bit)coin tossers' as well meethinks.

Wed, 04/10/2013 - 13:02 | 3432078 CheapBastard
Wed, 04/10/2013 - 15:21 | 3432991 Boris Alatovkrap
Boris Alatovkrap's picture

Mistake is leave camel in hands of hungry family. French president better to keep camel in tow back to Paris.

Wed, 04/10/2013 - 13:00 | 3432034 williambanzai7
williambanzai7's picture

Except, as we know, they are essentially bailing out their own TBTF institutions.

The same institutions that were all too happy to inflate bubbles in the periphery in the hunt for yield.

They can all stew together in their self made shit.

Joseph Bratwurst is just as stupid as Joe Six Pack.

Wed, 04/10/2013 - 19:14 | 3434219 Buck Johnson
Buck Johnson's picture

I totally agree, they should all stew together.  Maybe next time they will learn not to do this again.

Wed, 04/10/2013 - 14:43 | 3432663 bornlastnight
bornlastnight's picture

That's Mister Joe Six Pack to you, sir!

Wed, 04/10/2013 - 13:12 | 3432126 angel_of_joy
angel_of_joy's picture

Worse...

They still believe they're some sort of Ubermensch, even though almost a quarter of them are middle easterners and east europeans...

Wed, 04/10/2013 - 13:27 | 3432181 Sandmann
Sandmann's picture

Crap. You really must do some reading angel of joy, i suggest you try Mein Kampf since you clearly know zilch. In that book the "Uebermensch" was Jewish seeking advantage in a worldwide conspiracy against the German Volk, trying to ensnare them in Jewish Communism or Jewish Capitalism to make Germans slaves.

Hitler simply saw his role as to hinder the enslavement of the German Volk by the Communists or the Capitalists and to protect the German Nation and its blood loyalty from being ensnared in political and economic systems designed to further the interests of a transnational group - in this case Jewish interests.

Hitler wanted Germans to preserve themselves from ruination and enslavement. Turning this into crap about "Uebermenschen" is to confuse Nietzsche who used the terminology and Also Sprach Zarathustra with Germany when NIetzsche was referring to Humankind and  Superman in an era when God was dead.

You are so far off base as to be wacko

 

Wed, 04/10/2013 - 16:58 | 3433671 Andy Lewis
Andy Lewis's picture

Better to be a wacko than a piece of shit like you, Sandy..

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