At the time the Berlin Wall came down, the general market sentiment was that everyone would want to get money into East Germany on the ground floor. The basic assumption was that large capital flows into Eastern Europe would most directly benefit the Deutsche mark. After a
while, the realization set in that it was going to take a lot longer to absorb East Germany into a unified
Germany.
How does that shift in attitude come about? Kohl makes a statement; Baker makes a comment; statistics reveal very high East German unemployment. The East Germans, who have lived all their life under a
socialist system, begin saying, "We don't want to work as hard as those West Germans, and by Hie way, how
come the state is not paying for our medical bills anymore?" The investment community begins to realize that the rebuilding of Eastern Europe is going to be a long haul. As this thinking becomes more prevalent, people
start moving capital out of the Deutsche mark.