The Dutch are renowned for their prudent saving habits. Therefore it is interesting to note that accounting and financial advice firm PriceWaterhouse Coopers concludes from a financial study http://www.pwc.com/extweb/home.nsf/docid/5A0574A9E7FF497580256EE80027EFB9 that since January 2008, the Dutch lost a total of 325 billion euro in assets (=US$432 billion) due to the financial crisis. The main reason is, that the value of stocks dropped by an average 53% percent, i.e. the value of stocks was approximately halved.
The total capital represented by stocks owned, pension fund assets and homes owned alltogether dropped in value by 13%, an amount equal to 56% of Dutch GDP. At ppp, that amount is roughly US$350 billion, or about $480 billion at official exchange rates. Not bad going (sic.) for a country of 16.5 million people (The Netherlands has a GDP similar to Pennsylvania's). Price Waterhouse Cooper estimated that consumer spending will fall by 4 billion euro (=US$5.3 billion), which is equal to 1% of Dutch GDP, or equal to an absolute decline in consumer spending of 300 euro (=US$398) per person per year.
Dutch households who invested in stocks, lost a total of 125 billion euro (US$166 billion). Pension investments lost 200 billion euro (US$266 billion) in value. The average Dutch household has lost 26,000 euro (US$35,540) per household member, according to PriceCooper Waterhouse estimates. The 50 plussers have a special problem, because their retirement money is suddenly worth a lot less and many are unable to acquire the funds to compensate for this. (Amsterdam Metro, 14 April 2009, p. 9).
In a previous job, I had a colleague who said he never saved up funds for his retirement, but spent his money instead on traveling to faraway places. He had a point; had he invested in stocks, then all the money he used to travel with would now be wiped out. How can you be a responsible saver, if your savings get wiped out?
That is not to say that the stockmarket couldn't bounce back; with such huge fluctuations, enormous amounts of money can potentially be made by the astute investor, in fact if I had traded in stocks in recent months instead of writing stupid emails, I would have increased my capital by 50% at least. My intuitional investor hunches turned out absolutely correct, but, saying this is like talking about the fish that got away. At the moment though it looks like I will die in poverty. Well, that is as good a reason as any, to try something different.
What is particularly fascinating in all this is, how the financial crisis strikes hammer blows at the traditional solid bourgeois ethics of property ownership and the value of hard work. "All that is solid melts into air, all that is holy is profaned, and man is at last compelled to face with sober senses his real condition of life and his relations with his kind."
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Jurriaan
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Received on Tue Apr 14 16:31:56 2009
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