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Using many credit cards does not mean debt. I have a lot of cards, because they come with a lot of benefits such as insurances, free cash withdrawals in foreign countries, frequent flyer miles, hotel chain status but I am debt free.
Actually debt only makes sense if the return of what people are investing is higher than the interest. This is the case for student loans, because they come with a high return (well paid job), and this is usually the case for property, but not the case for short term consumption. If we talk about debt, we cannot say if its good or bad if we do not distinguish between what the debt is used for.
Germans somehow are very much against using credit cards, without any rational point. I am discussing with many people over and over again and usually they tell me, it is more safe, because credit cards can be abused (which is not the case - loose money and it is gone, loose credit card and you usually get everything back), they tell me they would have a better overview of their monthly spending if they only use cash (which is not the case - credit card gives a statement every month, while cash is just gone).
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The PPP concept is absolutely theoretical. It's extremely flawed, because this concept supposed a basket of goods that is valid for all countries around the world. But such a basket of goods doesn't exist. Each country has different consumer preferences. And those PPP adjustment also don't consider quality differences. The average cheese in Germany is far inferior to the average cheese in France and the average window in the U.S. is far inferior to the average window in Germany.
The whole GDP concept is quite questionable.
Well, it is not about cheese. We have to select items that everybody uses. Such as property, cars, fuel, energy, basic food,... If people eat cheese somewhere or not doesn't matter. And with an average American salary one can usually afford a bigger property, a bigger car.
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Of course health care, higher education or child care is not free in Germany. It's paid by taxes. But overall public spending in Germany is not that high as some people allege. It's about 44% in Germany compared to about 38% in the U.S. (as a percentage of GDP). I think for the difference of "just" 6 percentage points you get a lot of "free" services in Germany (health care, child care, pensions, higher education).
Well tax freedom day is somewhere in April in the U.S. and somewhere in July in Germany, that means that Germans work only for the government for more than 50% of the year.
What we should talk about in this discussion is net real wages and nothing else.
The subprime crisis had for epicenter the USA, and the next crisis is likely to be the USA student loan crisis. This is not a coincidence.
Living with 5/10 different credit cards is really a thing that is found much more often in the USA than elsewhere in the world.
The subprime crisis was worldwide. It had the USA as epicenter because that's where the biggest players and the biggest market was. But it wasn't a US-only thing.
The subprime crisis was worldwide because European and Asian banks bought these risky loans from US banks. It is the millions of Americans who have lost their homes, not the Europeans.
European households have not been affected at all. On the other hand, it cost us to bail out our banks. The relationship to credit is really uncomplexed in the USA.
For example, in France banks will never give a mortgage to a guy who is already indebted to more than 30% of his total income. And it's the same with the level of rents, it is necessary to have 3 times the amount of the rent in salary .
The subprime crisis was worldwide because European and Asian banks bought these risky loans from US banks. It is the millions of Americans who have lost their homes, not the Europeans.
European households have not been affected at all. On the other hand, it cost us to bail out our banks. The relationship to credit is really uncomplexed in the USA.
For example, in France banks will never give a mortgage to a guy who is already indebted to more than 30% of his total income. And it's the same with the level of rents, it is necessary to have 3 times the amount of the rent in salary .
France does not = Europe. As someone located in Bordeaux, I'm surprised you haven't heard about the Spanish real estate crisis, among others.........
The subprime crisis was worldwide because European and Asian banks bought these risky loans from US banks. It is the millions of Americans who have lost their homes, not the Europeans.
European households have not been affected at all. On the other hand, it cost us to bail out our banks. The relationship to credit is really uncomplexed in the USA.
For example, in France banks will never give a mortgage to a guy who is already indebted to more than 30% of his total income. And it's the same with the level of rents, it is necessary to have 3 times the amount of the rent in salary .
Indeed especially German public banks (run by politicians) invested in junk bonds because they found it a clever idea to boost their yield and profits when the big guys such as Goldman were already selling those junk because they knew that must cause some problems pretty soon.
However, I can not believe that banks in France do not give a mortgage if one is in debt for "more than 30% of his total income". How is that total income calculated? yearly? Usually banks in Europe require around 20-30% of equity in any building they should finance. Execeptions apply for example in the Netherlands, where residential buildings can be financed by even more than 100% in some cases.
Douglas Dakota : Sorry I made some vocabulary errors.
I was talking about current home loans that an individual can subscribe. To be eligible you must have a minimum net contribution of 10% with notaries fees (example 10 000 euros and 6000 euros of notaries fees on a home loans of 100 000 euros) and the monthly payments do not exceed 30% of your monthly net income available deduction of any other credit (consumption, car etc.).
CBMD : I grant you spain has followed the same path but in a different way since it is mainly constructions without real customer that have grown from ground. I visited Spain in 2007 just before the crisis and it was not uncommon to see 40/50 construction cranes lined up along the roads. Today there are only phantom cities. But the situation in Spain is perhaps more an exception than is France in Europe. At this time Spain build more than the rest of the world combined.
Last edited by Bordeaux33; 11-29-2016 at 11:52 AM..
I watched some grocery hauling videos on youtube and it's really cheap. They are shopping at Lidl or Aldi, i guess similar to Walmart but smaller shops. Rent looks like a bargain!!
The rents in Berlin are atypical for Germany; cheaper than most cities. Still, rents there are cheaper than in US cities experiencing a tech or other industry boom, but apartments are smaller, except for the shrinking apartment size in those US boom cities (and NYC). And renting a house? Much rarer than in the US.
What I'm wondering, is this: groceries are cheap in the US, if you don't mind non-organic, and foods that have GMO elements in it, including the dairy products (cows are fed GMO corn). Groceries get very expensive if you want to avoid pesticides and other chemicals, and GMO corn (etc.) in your food. The US uses some pesticides that have been banned in Europe, so vegetables can't be assumed to be safe.
At ordinary grocery stores and co-ops in Germany, is the cheap food safe? What do you get for your grocery euro: organic food (I assume GMO foods are banned), or not? Is there much of a market for organically-grown food?
Last edited by Ruth4Truth; 11-29-2016 at 12:25 PM..
I watched some grocery hauling videos on youtube and it's really cheap. They are shopping at Lidl or Aldi, i guess similar to Walmart but smaller shops. Rent looks like a bargain!!
Aldi is currently entering the SoCal market, has about 30 stores now, more coming. Building two distribution centers.
Lidl, not yet opened on the east coast, have already announced Texas, Ca can't be far behind.
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