People and Politics Forum 03.10.2008

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Emergency Manager - Finance Minister Peer Steinbrück and the Banking Crisis

These days Germany's finance minister Steinbrück has been rushing from one crisis meeting to another as the worldwide financial meltdown hits Europe - and Germany. A dramatic rescue action by the government and private banking houses may have saved the Hypo Real Estate group from collapse. In contrast to the panicked reactions of many bankers and brokers, Steinbrück seems calm and collected, although the crisis has torn huge holes in his budget.

Our Question is:

"How safe is our money?"

Reda Boudouaya, Algeria, writes:

"Of course I’m worried about the money in my bank account. The government has to be harsher on banks and regulate their policies. A lot of people here lost all their money through Khalifa-Bank."

Martin Burmeister, Venezuela:

"In some respects yes — not because of the financial crisis, but because of the climbing inflation rates, which in future will rather increase than decrease due to the billions of dollars being pumped into the system. This will also reduce the purchasing power of the initial capital, which will lose value because of the low interest rates for so-called ‘safe‘ investments like savings accounts, fixed deposits, bonds and federal loans, and lead to riskier investments promising a higher yield."

Harald Schmitz, Brazil:

"As long as Wallstreet continues to gamble away money and the American government neglects control over banks, and as long as banks don’t in turn investigate the credit histories of their own customers, everyone on this planet has to be worried about his or her money. $700 billion can’t help that. It’s about time that this predatory form of capitalism is stopped."

Werner Horbaty, Nicaragua:

"We definitely have to be worried about stocks and loans during this finance crisis. Here in Nicaragua, where our former President Dr. Arnoldo Alemán Lacayo was in office for five years and, as journalists say, allegedly has filched $100 million during that time, I can say this: People who are illiterate or have little education think a hundred million dollars is what someone earns in 2 or 3 months and then spends in a year. But we know better: a dental assistant or waiter in Europe would make that much in 2,000 years! When you look at it that way, it’s a lot of money — especially in a place like here, where a lower-middleclass family has to get by with $350 a month. It’s a paradox! So who should be worried about his or her money? Only God and the banks know who!"

Gerhard Seeger, Philippines:

"In a crisis of this magnitude, the government has no other choice but to take taxpayers’ money and save what’s left to be saved, in order to prevent the crisis from spreading further. Am I worried? Not directly — I’m happy my bank account is with a German bank and not here in the Philippines. If it were here, I would certainly be anxious. I didn’t think FDP’s Guido Westerwelle’s comments blaming the government for a lack of supervision were appropriate — the FDP always fights against federal regulation in business. It seems like the party’s "white collar" voters aren’t to be blamed, because they were only poorly controlled."

René Junghans, Brazil:

"The panic-mongering in Germany right now is over-exaggerated. The Americans gambled heavily, but the US has lived like this for decades and we already knew the bubble would have to burst sometime. Even though banks in other countries and on other continents will also suffer, in part due to the greediness of human nature, it doesn’t mean that Germany is also heading into an irreversible financial disaster. In Germany, the banks are stable and the financial system is safer and more transparent — I mean, German savings deposits are totally safe. Even here in Brazil the credit crisis has become a reality because stocks are tanking (thank god I don’t have any!), but I still wouldn’t take my money out of the bank because savings and government loans are stable. I trust the system. I even deposited more money into my account earlier this month, just as I do every month. Unnecessary panic causes stress and ulcers. Let the Americans deal with their own mess — life will go on for the rest of the world, and it’s too short and beautiful to lose sleep over this. When you are sensible with your money and avoid speculations, you can go to bed at peace with yourself and the world and sleep well!"

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