Last month I visited Berlin again.  I loved it.  Great energy.  Previously, I’d spent
several days wondering through Berlin in February 1990 and April 1993 and in
February of 2006, I spent an evening in walking around the
newly constructed capital buildings, the National Art Gallery and Alexanderturm with my kids.  But this time, I really got to begin to see the changes that the new German capital has
brought (Berlin was narrowly elected to become the German Capital again in
1991 (replacing provincial Bonn am Rhein). A little background on Berlin:

Berlin is like no other European City.  It is the big Apple of Europe.  Every
nationality is represented; it’s a 24-hour city, and there is opportunity for growth
around every corner.  I still don’t know of another European city with more
open land in the middle of the city.  And Berliners just aren’t’ the same as other
Germans.  There’s a hearty laugh, which seems out of place in the country I
know quite well.

Berlin rose in power in the 19th century. With a population of 200,000 at the
turn of the century, Berlin became a metropolis of nearly 3 Million people by the
turn of the century.  It was greatly strengthened by the advent of the railroads,
as it was the chief city tying together Silesia, Pommern and East Prussia.
John Mauldin’s weekly column (www.frontlinethoughts.com) analyzes the
growth potential of geographies in more precision than this one, but my singular
takeaway from my recent time in Berlin last month, is that the European
Union needs more integration, not less.  The tremendous stability of life in
Western and Central Europe is impressive.  Economic stability, even in the
midst of eroding fundamentals and a decline in the standard of living, is still
stability.  Stable environments rarely fall apart.  As my Google friend Bjoern
who’s relocated back to his native Berlin (having cycled from Dublin home),
and does video-conferencing with his colleagues in Mountain View every day
remarked, “there’s a crowd of fans for every world cup game, because they all
live here (in Berlin on the Bergmannstrasse).

Down this one street over a few hundred yards there are: Mexican, Argentine,
Brazilian, Italian, Spanish, American, French, Thai, Vietnamese, Turkish, Greek
and maybe German food.  A cheer always went up from when a World Cup team scored.
Berlin and Budapest are the former capitals of the German and Austro-Hungarian
Empires.  I’m intrigued by what the energy and change of these cities means for
the future of Europe.

A few more observations: we are in a transition period. The new economy
and new century is emerging. The cold war is over, the War on Drugs is
dying, the War on Terrorism is becoming less shrill, global connectivity is
empowering business models and Brussels is trying to support a new class
of entrepreneurs. 

Speaking of which, Prague and Budapest now have a cost of living that’s approaching western levels (or at least the prices in Mississippi and other low-cost western areas. Case in point, The Rudas Turkish Bath in Budapest used to cost 30 Forints when I visited it in 1990; today the entrance price was 2800 Forints. See, it doesn’t take all that long for people to adapt to capitalism and let market forces work they’re way through the system.

And did you know, (as I just learned from my friend Steve Carlson in Budapest,
that the EU is funding Eight VC start-ups to fund Entrepreneurs in Hungary?
There is a lot of new things going on, and I don’t think that the US media is
picking up on the underlying currents or changing tides.

My takeaway is the great retrenching of the western economies is here. As
we emerge into the 2020s, the industrial society of our youth as the East-West
conflict will be an artifact in the history books as well as the catacombs of our
own memories.  A new society and set of values is developing, and we over 30
are not even aware of it.  I’ll follow up on this thought in a new blog or article
soon.

Oh, and forget about worrying about the Russians. We used to worry that the
Russians are coming, but according to my travel buddy Igor, the Russians are
already here, in the Bay Area and everywhere we went in Europe be it Munich,
Berlin, Stockholm or Stenungsbaden.

In investments as in life, the challenges of tomorrow will usually be the things
we haven’t thought of yet. There’s nothing like gaining a bit of perspective
by viewing things from different angles. My recent strolls through Berlin and
Budapest did just that.

Barnes Capital is a Registered Investment Advisor located at in downtown Lafayette. With RB Capital Management, Barnes Capital develops custom tailored portfolios for its clients. Specialized in retirement income portfolios, financial planning in an integral part of our process. Call 925-284-3503.

This entry was posted on Wednesday, July 14th, 2010 at 2:46 pm and is filed under The Social Fabric. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.