Germans richer than ever – still many bankruptcies

Germans richer than ever - still many bankruptcies

At the same time, the wave of bankruptcies is not letting up: despite the good economic situation, more citizens will have to file for private insolvency again this year. This is what the federal association of german debt collectors (BDIU) in berlin reckons.

According to the bundesbank, private financial assets grew by a far above-average 149 billion euros to a record 4.715 billion euros. That is far more than double the german national debt of around 2 billion euros. The stable labor market ensured a high level of disposable income in 2011, the forecasters said, explaining the trend. Cash, securities, bank deposits, savings bonds or claims against insurance companies are paid as monetary assets. Foreign assets and tangible assets such as real estate are not included in the statistics.

At the same time, however, many germans are overindebted. According to the debt collection association, one in ten adults is unable to pay living costs and debt repayments from his or her income on a permanent basis. Association expects around 105,000 private bankruptcies this year. The previous high had been reached in 2010 with 108 798 falls, in 2011 it was 103 289. Private insolvency allows over-indebted consumers to get rid of the remaining debt within six years.

Once again, the wave of bankruptcies had no impact on the total domestic financial assets of the germans. With the exception of a few crisis-related dips – most recently after the lehman bankruptcy in 2008 – germans have been steadily accumulating more financial assets for decades. Shortly after reunification, the financial assets of private households were worth 1.751 billion euros; in 2005, the 4-trillion mark was broken. In 2010, assets increased by 154 billion euros, slightly more than in 2011.

Private individuals entrusted the lion’s share of their asset growth to banks, where deposits grew by 67 billion euros. Due to the uncertainties on the international stock markets, investors continued to favor daily fall deposits, which increased by 40 billion euros.

For the first time since the financial market crisis in the fall of 2008, however, the volume of term deposits also grew, by 18 billion euros. According to the bundesbank, this is due to the widening of the interest rate spread compared with daily deposits and the dwindling returns on fixed-interest securities. Equities were also more popular, with a plus of 14 billion euros, while investment certificates recorded a strong outflow of 15 billion euros.

Alongside the banks, the insurance companies are the main managers and thus also the beneficiaries of the bubbling private assets. With almost 1.4 billion euros in claims by the insured, a large part of the money is invested with them. Claims, especially on life insurance policies, grew by 48 billion euros in 2011.

Private debt increased at the same time as assets. It grew by 21 billion euros to 1.55 billion euros, mainly due to increased construction loans. However, the debt ratio as a percentage of gross national product fell by 1.6 points to 60.3 percent. In other words, private individuals as a whole were able to afford the additional debt.

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