r/europe • u/paneuropeanism_ Europe • 13h ago

News Von der Leyen: €300 billion in European savings flown overseas every year, primarily to the US, will be invested in Europe from now on. All 27 EU states agreed to establish the S&I Union, a step toward the full Capital Market Union

https://streamable.com/4h43qk
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u/Einszwo12 Germany 13h ago

Higher roi.

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u/badaharami Belgium 12h ago edited 11h ago

I mean when most people invest money they don't think first about "Oh I should think about my country's and continent's economy." They care about their own ROI first. And whatever you say US companies do have a much higher yield when it comes to ROI. Especially US tech companies. That's what capitalism does.

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u/gotzapai Transylvania 11h ago

Yes, it's in the name: CAPITALism.

We, the EU give the capital (€) to them so no wonder they can use the power of money to make more money LOL

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u/Dd_8630 United Kingdom 5h ago

I mean when most people invest money they don't think first about "Oh I should think about my country's and continent's economy."

They absolutely do. Millions of people make choices about where their pensions, ISAs, and other investments get used. Many people choose environmental funds, or funds that stay in their own country.

People absolutely do sacrifice return for other interests.

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u/CuriousButNotJewish 4h ago

Environmental funds are still a very niche kind of ETF.

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u/niteninja1 4h ago

the vast vast majority dont though

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u/badaharami Belgium 3h ago

Lol if that was true Ursula wouldn't be here asking EU citizens to invest within Europe.

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u/Sxualhrssmntpanda 2h ago

Please tell us more about this mysterious "capitalism"!

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u/badaharami Belgium 2h ago

Go back to school then.

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u/Neat-Following6273 13h ago

But to some degree, it is a self fulfilling prophecy. There was higher ROI, because so much more money was being shoved there every year, this further increasing the price of the assets. 

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u/Einszwo12 Germany 13h ago

Yes and no. The European fragmentation and regulation will always be a barrier to achieve a market size anywhere near the US despite the GDP being at 70% of the US. TO A CERTAIN EXTENT it was smart to take the ROI. However you need to still be able to support and push local investments.

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u/shovepiggyshove_ 13h ago

Let's hope this solves the other part of the equation, or at least makes it into something more tangible

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u/Einszwo12 Germany 13h ago

In my view our priorities had to change and have changed (future generations can decide if this should have happened sooner). A trade war from the west, war from the east, energy trouble and a china having to rethink their growth strategy given real estate and banking fears means you have to strengthen short term instead of thinking long term ROI.

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u/AlarmingAerie 12h ago

I would disagree. Highest ROI is almost always where there are relatively less worker rights. And in addition it has to be safe for capital. U.S ticks both of these boxes. Getting investors money and accelerating growth is the result.

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u/[deleted] 12h ago

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u/AlarmingAerie 9h ago

Great addition to our theory. I wonder why we are both controversial comments. There is no world where capital can compete in regulated environment where regulations increase costs in every step vs unregulated. (Exceptions exist of course, some sectors are not as sensitive to these).

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u/the_poope Denmark 13h ago

Yes, to sime degree. The S&P 500 is quite overvalued at an average PE of ~30, twice that of the highest cap market of the rest of the World.

But that aside: People putting their savings in the YS market helps more US startups get funding and it help US corps gather funding for acquisitions of startups and overseas companies, consolidating US ownership of a lot a businesses.

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u/Feuerphoenix 13h ago

with a bigger market comes more economy of scale and better ROI. I think this is a good step to the right direction

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u/SimpleMoonFarmer 11h ago

China was smaller than the EU, but it was growing faster.

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u/Feuerphoenix 11h ago

ok buddy, and why is that relevant?

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u/SimpleMoonFarmer 10h ago

It's not scale.

It's politicians.
🇨🇳 They can help to develop the economy.
🇺🇸 They can step aside and let the economy do its thing (or help lobbies).
🇪🇺 They can be leeches, regulate, and prevent anything from happening.

Even if the EU occasionally gives one step in the right direction, it is too little too late, and it can only be that given the mindset, culture, institutions, etc.

The EU shaped its institutions, and now its institutions shape the EU.

The EU needs radical change, a revolution, and it can never happen until the culture changes and its citizens demand it. There are no signs of that happening this century.

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u/Feuerphoenix 10h ago

Aha, sure buddy. What would You Change if you won the Revolution and could Change the System as you would see fit?

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u/Edexote 13h ago

And simpler rules. Here we different rules for each member state.

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u/canyouhearme 12h ago

Almost like a ..... common market ?

Thing is, we know it doesn't work - that we just get more regulation and the EU falling further behind. If you want investment in europe you just have to make europe a good place to invest. However what they will do is ladle more bureaucracy on top of more bureaucracy - and things will move slower and slower - accelerating backwards relative to the rest of the world.

Reform was needed a decade ago, and its even more needed today. But they just haven't learnt.

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u/Qzy 2h ago

Due to lower regulations.

We love to invest in big American ROI companies who love to set the world on fire. And then we wonder why its all going to shit.

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u/Einszwo12 Germany 1h ago

💯 % European.

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u/Thisconnect Polan can into ESA 12h ago

by violating laws and abusing workers mostly.

There hasn't been any actually new ideas that are not just exploitation since, smartphones?

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u/Einszwo12 Germany 12h ago

Ethical investment is a whole different can of worms.

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u/Thisconnect Polan can into ESA 12h ago

What im saying is growth is over. You can no longer pretend earth is infinite

You can see it in the insanity of AI bubble, tech is too desperate for new idea. Historically lean software companies are now taking bilions of debt to do capital expenditure on things that have no other uses.

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u/Einszwo12 Germany 12h ago

That’s a very different statement compared to your first one. I’d be a little more careful here as you 1) suggest AI isn’t the newest investment and relevant and 2) you know better than the industry leaders in big tech who - I would think - have more inside scope

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u/Thisconnect Polan can into ESA 12h ago

Its the same industry leaders who lead us into ever crisis ever.

Its funny they are still used as authority. And that was in days where there was atleast some government regulation not the circlejerk of today

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u/Einszwo12 Germany 12h ago

Big tech Leaders lead us into crisis? I can’t follow you I’m afraid - last big one were the banks my friend :). Also not sure why you are ranting against missing US regulation while living here where there are quite a few safeguards?

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u/Minduse 12h ago

ROI increases with purchase volume -> more people want to buy, better ROI. If we moved all EU money from USA to EU market, USA stocks would drop in value, while EU stocks would rise. This may even lead to more retail investors investing in EU as well.

This may actually lead to more accurate evaluations; for example, ASML is more important than NVIDIA or TSCM, yet it's sits at part of the evaluation.

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u/Einszwo12 Germany 12h ago

I struggle with that assessment. While the investment would result in higher share prices and as you mention in higher evaluations however that in itself does not create a higher turnover or profit for these companies. Global investment in the US capital market is a result
of higher growth, flexibility and resource availability and scaling. ASML is already the highest market cap of European tech companies and sits in the supply chain before ASML. That comparison can’t be 1-1?

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u/Minduse 3h ago

I took a bad example as ASML is indeed overvalued compared to others in chain. I did not see how much it grew. But there are companies like snowflake, atlassian etc, that has high valuation almost no profit. 

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u/Einszwo12 Germany 1h ago

Yeah I’d tend to agree more with that. 👍