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Germans and their frugal, saving ways

Tess Vigeland: So here's one thing the credit reporting agencies could care less about: Your savings. Even if you have one hundred million bajillion bucks in the bank, doesn't matter. But if you do, good on ya! Maybe you're German.

While the European debt crisis smacks around the likes of Greece, Spain and Portugal, Germany boasts low unemployment and an 11 percent savings rate.
Ours, by the way, is around 4 percent.

Caitlan Carroll reports from Berlin.


Caitlan Carroll: Most countries have different words for debt and guilt. Not Germany.

Stefan Schmidt: The German word for debt is "schulden," and "I feel guilty" is "Ich fühle mich schuldig."

Berliner Stefan Schmidt is giving me a vocabulary lesson at a local beer garden. He pays for his pint in cash and hardly ever uses his credit card for daily purchases.

Schmidt: It just doesn't make sense, like all the interest you have to pay.

To understand this caution, you need to look at Germany's history, says Carl-Ludwig Holtfrerich, who's a retired professor of economics at the Free University in Berlin.

Carl-Ludwig Holtfrerich: In countries like Italy, Spain, Portugal, credit played a huge role to finance commerce. In Germany, that never happened. You know, Germany was a poor country until the last third of the 19th century.

He says some European countries are just more comfortable with credit. Take Italy: It built cities like Venice and Genoa through borrowing. But Germany's had some tough experiences with credit. During World War I and II, citizens lent money to the government in the form of war bonds. And then the currency lost its value; a disaster for the lenders.

Holtfrerich: Hyper-inflation wiped out all of those debts of the government. Or looked at it from the other side, the credit and savings of the citizens.

And three generations later, that fear of inflation and debt still lingers.

At their home in Berlin, journalist Heike Vowinkel and her husband watch over their two sons.

Sound of children playing

Vowinkel looks on and reflects on her own childhood.

Heike Vowinkel: I'm afraid I was quite, how do you say, stingy?

Carroll: As a child?

Vowinkel: Yes, as a child.

Vowinkel says her parents and grandparents tried to save wherever they could. So she wore hand-me-downs from her sister. And as a teenager, she worked at a local factory to save money for driving lessons. Now that her oldest boy is six, Vowinkel wants to pass on some of that thrift.

Vowinkel: I try to tell him that things cost money and that he has to care after his things, because if they are destroyed, I can't buy them just like this.

Germany's banks are in on this game too. Every year around October, the country celebrates World Saving's Day. Children bring their savings to the bank and get toys or balloons in return. There's face-painting and games.

It's good to encourage saving, but Carl-Ludwig Holtfrerich says there are sometimes unintended consequences from Germany saving too much.

Holtfrerich: If the Germans don't consume but save, somebody has to put that credit or capital to use.

"Somebody," like those other Eurozone countries now in trouble for buying too much on credit. Germany's Olympian savings skills made all that runaway credit available in the first place. German frugality and Greek-style free-spending both have their place in the global economy, but Team Europe needs to find a balance, if it's to compete effectively.

In Berlin, I'm Caitlan Carroll for Marketplace.

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