In news from Reuters this morning, the euro took another hit over fears Europe’s debt crisis may further harm banks. Southern Europe, it turns out, may not be the only part of the EU with red ink problems. With equities seemingly growing more unstable, many banks and investors are turning to safe valued propositions.
On the local front here in Trier, Germany, growth in new and old sectors seems inevitable. German banks, as much as any other EU financial sector, have been hurt by the situation on Wall Street. Now, the crisis with Greece, Portugal, Spain, Romania, and other EU members further taxes the EU’s most powerful banking system. However, despite the euro’s problems, investment here seems focused on viable sectors – maybe the only ones under these market conditions. The missing key for global economic recovery is community, where the people reside.
Ancient Values and Emerging Stability
My father used to say; “There is only one investment which will never lose value of the long term, land and property, they do not make any more of it.” Despite the debacle on Wall Street with the sub-prime lending skulduggery, land and houses still remain the safest investments over the term. This is true anywhere, but especially here in Germany. The system here is actually quite different from that in the United States. In the US, especially during the sub-prime shenanigans, the worst credit risks could buy far more house than they could afford, with little or no equity. Not so here.
Even without Wall Street “gambling” practices, as described by Lynn Tilton of Patriarch Partners in New York, the system in the US has always been about saying yes, with down payments as low as 5 percent, even less, required to secure financing. In Germany, veritable 100 percent financing is virtually non-existent. Sort of the way it used to be everywhere. Banks invest in a more “sure” collateral situation. 30 percent down payment or equity, even more, is very common. What does this achieve? That goes without saying.
With the fears of “risk” investment growing here, there are so few for investors to achieve an ROI, let along growth from. At least in the short term that is. Land, housing, and other tangible commodities are the only viable place to put investment. We just spoke with Volksbank Trier the day before yesterday, and these sentiments were at least mirrored. The bank’s position, like almost every other German bank, was readily apparent – Wall Street and global investment trends these last three years hurt Volksbank and others. The wise investor these days should heed the words of Andrew Carnegie:
“Ninety percent of all millionaires become so through owning real estate. More money has been made in real estate than in all industrial investments combined. The wise young man or wage earner of today invests his money in real estate.”
However, despite the tightening of funds across the board, executives expressed some eagerness to enter into assured agreements. An indicator perhaps, that Volksbank and others will put money, for a term, in a relatively stable housing market. It makes sense. Volksbank’s Karl A. Heinz, and the other bank directors have been on the edge of community collaboration for some time now.
Germany’s Green Thumb
In news from nearby Bitburg, solar innovators Phoenix Solar AG announced the building of two solar energy parks for SWT Stadtwerke Trier. The parks will have a combined capacity of 7.8 megawatts, adding the the Trier network’s net green energy output. Phoenix won the bid for construction of plants in Bitberg and Fell, right down the street from our offices.
Both plants combined are expected to produce in the neighborhood of 8.2 million kilowatt-hours of solar electricity a year to the Trier region. Dr. Olaf Hornfeck, SWT’s Managing Director, had this to say about the project:
“Through these two new large-scale photovoltaic plants, SWT Stadtwerke Trier will continue to expand the decentralized production of energy in the Trier region. All in all, we will then be operating nine power plants generating local green electricity. By investing almost EUR 60 million over the last three years we have been able to treble the share of renewable energy production in the region.”
Green energy, and sustainable business in Germany, for those who do not know this system, is about as sure a thing as it gets. Germany’s position on sustainable energy is pretty much set in stone, as it should be. Energy reliance and efficiency wise, Germany and other EU members are light years ahead of the United States. Investing in these businesses is nearly as viable as financing ancient tangibles like land and house. More importantly though, Volksbank Trier and others seem committed to an old value system branching out from local community. As for Phoenix Solar, their transparency is right up front profitable as you can see here.
In our discussions with Lynn Tilton, a woman many consider the new voice of Wall Street investment, these ideas begin to reflect her investment strategy and small town – small business investment model. Trier, Germany and 10 thousand communities like it, are the spring from which investors and consumers will grow out of this worldwide money madness. I am not the only one to preach this sort of dogma either. The image from Volksbank above reflects this sentiment for key investors here, better than I can. The way out of this mess is together – there is no alternative. Local and community means all of us working where we live for the greater world community.
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