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I now count three explanations for Germany's weak internal demand:
  • stagnant wages leading to less available income
  • stagnant real estate prices leading to less available debt
  • stagnant population growth and ageing leading to a higher propensity to save
The last explanation has been forwarded by Edward Hugh and Claus Vistesen. Of course, an ageing population that does not grow might also be expected to cause stagnant real estate prices.

As consumer confidence has been relatively high throughout 2007, the demographic thesis has lost a bit in power.

by nanne (zwaerdenmaecker@gmail.com) on Mon Dec 3rd, 2007 at 10:03:40 AM EST

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