Innovax, Av. William Fraisse 10, 1006 Lausanne,

April | 03


Divorce rates are progressing worldwide while marriage rates are dropping, giving way to cohabitation. Cohabitation is supported by legislation giving the members of a cohabiting couple the same rights as those of a married couple. This, in turn, has led to an increasing number of children born out of wedlock with present figures above 40% and likely to reach 50%.

In Europe there is a geographic divide with countries in the North having high divorce rates while countries in the South have low divorce rates.

Divorce is more common for professional women as they have more opportunities to meet other men that they may prefer to their husband, and are less likely to have children. They are more likely to put in doubt the value of the marriage, particularly if they are in a high income bracket.

Several factors impact the decision to divorce. These include the marital status of the parents – having divorced parents favors divorce, the age at which the partners married, the length of the marriage, their level of education, religious beliefs, their culture, alcoholism, the onset of diseases. There appears to be more divorces in periods of prosperity when women feel they can more easily get financial support or earn a better income themselves.

Key moments for divorces are after the third year of marriage, after the partners are 40 years old when women are looking for younger partners and relationships in which sex is a major component and, increasingly, at retirement.

A result of divorces is children being brought up in mono-parental families led by a woman. Mono-parental families led by men are extremely rare.

Fifteen percent of children in Europe grow up in a mono-parental family.

Divorce is a disaster in many ways: financially with a sharp drop in net worth, social support leading to health problems and children tend to have poorer results at school.

For young children, the divorce of their parents is incomprehensible. There is also a loyalty conflict that should not exist and that parents should dispel by showing that the parents have divorced, but the family still exists.



‘A society is in decay, final or transitional, when common sense really becomes uncommon.’


The economy – major areas of expenses and investments


The European population decline will have both pull the economy in opposite directions and create a number of threats and opportunities.

The impact will not be homogeneously felt throughout Europe as the decrease in population is very uneven across the continent with countries in Central / Eastern Europe, such as Romania, having the sharpest decline and several rural areas nearly abandoned.

This creates opportunities for land acquisition at low prices for agricultural production or to establish villages for retirees from richer developed countries who will thus have a higher buying power.

There are, however, a number of commonalities among the various European countries.

One of these is the increase in health care costs.

Half the health care costs are spent on persons over 60 years of age and persons over the age of 65 account for one third of the hospital stays. This translates in the fact that health care expenditures in the EU represent 7.1% of GDP and should reach 8% in 2050. Long-term care represents 40% of those costs.

There are investment opportunities in assisted domestic living – smart homes that allow the elderly who are not invalid to continue to have a relatively independent life through the provision of a number of technological innovations that allow him to live in a safe and comfortable environment while being monitored.

Domestic services such as housecleaning and cooking will offer investment opportunities in countries where private services are allowed and profitable.

Assisted domestic living is centered on the use of smart devices. Examples are telehealth, telemedicine and mobile health services the development of which offers important investment opportunities.


Europe has immense needs in rebuilding, maintaining or building infrastructure. Part of those needs stem from the need to address an ageing population. Total infrastructure investments required have been estimated at 3.6% of GDP.

One of the main efforts will be in favor of domestic assisted living – i.e. maintaining older persons at home rather than sending them to expensive retirement homes.

This would require investments in remote monitoring including smart wearable devices, alert and intervention systems. For such systems to function, connectivity through satellite services is essential.

Adjustment of urban facilities will also be required – such as longer pedestrian lights in street crossings, increased number of public transport as elderly people drive less, larger number of bus stops to reduce the walking distance between each, frequent benches and public toilets, etc.

Isolation of the elderly is an important issue, and cities may have to be re-planned to be more compact. Public meeting spaces will have to be built to facilitate contact between the elderly.

Infrastructure investment funds, particularly those targeting social infrastructures could be a good buy. However, government actions such as changes in regulations, already complex and not very transparent, or additional taxes could reduce returns on such funds. Time for the implementation of the projects might also be drawn out for a number of reasons that are difficult to foresee.


Presently the state pension systems in Europe are on a pay-as-you-go basis, meaning that today’s contributors pay the pensions of the retired workers. In a situation where there are not enough payers, the system will collapse.

Under the present system, people taking their pension receive either a pension related to the earnings at a certain period of their life or a flat rate.

In the Swedish Notional Defined Contributions scheme, the contributions are earmarked for a specific person and are not part of a pool that serves to pay present pensioners. At retirement, these funds are used to purchase an annuity. This system could be introduced in other countries.

In search of yields, pension managers may be encouraged to make riskier investments.

There are several solutions to the increased burden of retirements:

– Allow for a stagnation of the top salaries

– Increase the contribution of the top salaries


Immigrants and their families require education, health services, housing and food. While the positive contribution of immigrants to the economy cannot be denied, there is an initial cost in allowing the immigrants to settle, train or retrain.

This offers opportunities for companies specializing in services to migrants, from housing to training.


Countries with a reduced population will be unable to raise major armies and will therefore increasingly rely on cyber sabotage or interference, and guided or nuclear weapons as a dissuasive means.

This should be beneficial for companies developing sophisticated guided weaponry systems.

The economy – major areas of income


A smaller population implies lower tax receipts and immigrants tend to pay lower taxes as they have lower income, in particular because in most cases, the women do not work.

As the available manpower shrinks, salaries should rise and inflation may pick up, at least on goods manufactured in Europe, unless borders are opened to allow massive immigration flows.

The entry of immigrants into the employment market will put pressure on salaries by increasing the availability of the labor force particularly with the low-qualified part of the labor force and with certain types of professionals if the migrants arrive fully qualified. This may, however, increase the profits of corporations and entrepreneurs as they reduce their costs particularly in highly labor-intensive activities.

Should immigration be restricted, there will be an increase in labor costs, with a loss of competitivity in international markets.

Migrants also remit funds abroad, thus spending on consumer goods or contribution to savings is reduced as compared to that of the national workforce.

Another flow of funds out of Europe would be due to pensioners from advanced economies might move massively to countries with lower costs of living, leading to capital outflows. Central European countries would be a clear European option but there are also non-European countries such as in South-East Asia or Central / South America.

Savings and interest rates

The direction of interest rates is uncertain and tied to the behavior of the future retirees.

Working adults may increase their savings rate during their working life followed by drawing down at retirement. This will have an impact on interest rates, first decreasing them, then increasing them.

Should interest rates remain low, there will be a housing boom as consumers would want to benefit from low rates on mortgages.

However, financial institutions and pension would struggle to make profits in periods of low interest rates and this situation would further endanger pension funds and even the entire financial system leading to a persistent deflation.


Innovation is a key driver for wealth creation and while it has been generally accepted that innovation is essentially the premise of younger people, this appears to be no longer the case with older persons starting a new career as entrepreneurs at retirement.

Therefore the assumption that the economy will lack the input of the innovative entrepreneurs may not be correct after all.

The economy – sovereign debt

In many European countries, the public economy is very largely financed by debt which translates into pushing the brunt of the deficits to the following generation or generations with the risk that as debt accumulates, countries may end up defaulting.

Since the 2008 economic crisis, a number of European countries have issued debts with very long maturities, called ‘Methuselah’ bonds, structured to attract investors with interest rates slightly higher than the rest of the offerings on the market. Belgium, Eire, France, Italy and Spain have been issuers of these long-termed bonds.

Over the long term, countries may have to resort to creative approaches to reduce a debt that may turn out to be unbearable.

The silver economy

‘The silver economy’ is the term used to describe the new markets created to cater to the needs of an aging population.

The size of the European market is of Euros 450 billion representing 25% of GDP and is growing at the annual rate of 4%. It is expected to have a major repercussion on the employment market with predictions ranging from a loss of 2 million jobs to the creation of 4 million jobs.

The sectors that will be impacted positively are recreational activities including tourism, as well as the following industries: cosmetics, food supplements, producers of glasses / contact lenses, pharmaceutical products and biotechnology,

Products for the Muslim Population

In view of the large number of Muslim migrants, usually with families larger than the European average, and with their numbers expected to grow to reach 14% of the entire European population by 2050, there is a large demand for products specifically addressing their religious growth.

This includes special clothing, in particular for women, but also particular foodstuffs such as Halal meat, products approved by religious prescriptions, and Islamic financial products.


Investment recommendations

Land and real estate in Central and Eastern Europe

Creation of retirement villages in Central and Eastern Europe for retirees from the more advanced European economies

Companies offering assisted domestic living systems

Companies offering domestic services such as housecleaning and cooking

Companies offering services to migrants

Companies producing advanced weapon systems

Companies offering recreational activities and tourism targeting seniors

Manufacturers of anti-aging cosmetics

Manufacturers of food supplements targeting the seniors

Manufacturers of reading and hearing aids

Pharmaceutical and biotechnology companies developing life-extension products

Manufacturers of products and services specifically targeting the Muslim population.


Our financial analysts can be conducted for detailed discussions about more specific investment recommendations.


Innovax, Av. William Fraisse 10, 1006 Lausanne,

Michael Akerib Yerevan

Europe is committing a slow suicide. It no longer believes in its right of existence. The long build-up of European culture seems to have hit a wall. Our children and grandchildren will soon be taught at school that they should be ashamed of being European.

Europe’s slow suicide

By Michael Akerib, Owner of Innovax Rector, Swiss UMEF University

‘I felt that Europe, in its state of derangement, had passed its own death sentence – our sacred home of Europe, both the cradle and the Parthenon of Western civilization.’

Stefan Zweig

‘The ageing of populations has touched several populations in history: Greece, Rome and Venice are the most famous examples. Every time, this has led to the death of that particular population.’

Alfred Sauvy

A brief history

The original European population was Homo antecessor and Heidelberg followed by Neanderthals eventually replaced by the Homo sapiens migrants. There seems thus to be an original bias in favor of Europeans as the Heidelberg man had a larger brain than the original Asian population. It is our ancestors who invented agriculture.

Migration is a phenomenon as old as humanity and is a well-proven strategy to have better opportunities for both the migrants and their children as well as for escaping natural catastrophes or political oppression. There have also been cases of forced migration, and the slave trade has been one of them.

The Dark Ages saw a general decline in Europe – of population, but also of trade, and conversely, an increase in immigration and epidemics. However, in the later period, and until the thirteenth century, the population tripled, reaching 60 million.

Europe had a period of intense technological progress in the first millennium, sometimes based on original Chinese inventions and sometimes on inventions that had originated during the period of the Roman Empire, then forgotten and rediscovered. Black Death, in the 13th and 14th century led to a population decline.

The 15th century saw the beginning of the Age of Discovery during which European explorers and sea captains sought new trade routes and new lands. Improved ships and firepower allowed them to succeed in acquiring precious metals such as gold and silver as well as spices, but also food and oil. It boosted several industries such as shipbuilding and fisheries.

Straddling the 18th and 19th centuries, Malthus (1766 – 1834) published his Essay on the Principles of Population, putting forward the argument that the exhaustion of limited resources such as land and food would limit population growth. Hence, population growth will be limited, he thought, by famines.

He has been proven wrong due to technology, the import of foodstuff from the new lands, immigration of Europeans towards other countries and early forms of family planning.

The Industrial Revolution, which started at the same time as Malthus published his book, saw the European population grow by 100 million in a century, to reach 266 million by 1850. Technology no doubt contributed greatly by decreasing poverty and thus allowed more money to be used for bringing up the children. Population growth continued to reach 487 million by 1920. Urban centers, whether London or Paris, grew at an even faster rate.

European population growth took place in spite of an important child mortality,, with half the children dying before the age of 5 when those with the poorest parents will be placed to work in factories in conditions unimaginable today.

Causes of death of the population generally are dysentery, influenza, plague, smallpox and typhus.

Even though worldwide population grew to reach 900 million by 1800 with both Europe’s and China’s population doubling, mostly due to a slight increase in the birth rates, by 1850, Europe’s population overtook that of China in a demographic and economic breakthrough that has been called The Great Divergence.

The contribution of Europe and the Americas to world output increased to reach 51%, with a corresponding decrease of China’s share. Europe’s Industrial Revolution was the fruit of slave labor, unfair trade practices, and cheap energy from coal.

The impact of the Industrial Revolution also touched agriculture and allowed an increase in productivity and therefore an improved nutrition for the entire population. Families were able to finance and provide financing for the new industries.

Child mortality decreased due to the reduction in infectious diseases. Families reduced the number of births. Reduced smoking, improved nutrition and increased exercise contributed greatly in improving longevity. So did the frequent use of soap and the boiling of water.

Europe will thus took advantage of the demographic dividend.

The increased number of the working-age population led to an immigration boom to the American continent where labor was scarce. In fact, 60 million Europeans immigrated to the American and African continents as well as to Australasia in the 19th century. This allowed Europeans to control increasingly large amounts of land, with a peak of 84% of the world’s land in 1914.

The twentieth century

The 20th century saw the world’s population soar from 1.6 billion to 6 billion, infant mortality drop by between 70% and 80%, and life expectancy double to reach 60.

Since the medical industry was focusing on adults rather than children, it is the adults who saw their diseases being successfully controlled – dysentery, malaria, scurvy, syphilis, among others. Vaccination was also a major step in reducing mortality.

Simultaneously, a number of public health improvements took place particularly with regards to milk and water supply, the poisoning of rats, slum clearing and swamp draining.

The end result was the near eradication of death from infectious diseases, allowing a doubling of life expectancy.

Europe witnessed a fast growing economy from 1945 to 1973, making it the second fastest growing zone after Japan, by whatever economic measure.

1973 brutally ended that period. Production in many industries fell considerably, jobs moved from industry to services, high unemployment followed. Average salaries decreased.

Very large migratory movements occurred in the 20th century, essentially due to wars and to the decolonization process and the consequent break up of certain countries such as India.


The European Union is today the world’s largest single market and its currency, the Euro, the world’s second biggest currency. The level of unemployment which peaked at 12% in 2013 is now back to 9.5%. However, 40% of the jobs are not permanent positions and nearly 20% are part-time positions. Youth unemployment remains a major problem. This is partly due to the fact that legislation protects people who have jobs and therefore corporations are afraid to hire.

Many Europeans have doubts and even negative attitudes towards the European Union, viewing it as a bureaucratic organization to which they do not relate. The numerous rules and regulations are viewed as an infringement on freedoms.

There is also the issue of the refugees to which the EU does not seem able to give a coherent response.

Decolonization and economic expansion in Britain and France brought to their shores migrants from the former colonies with major population flows from 1960 to 1973, reaching up to 6% of the European workforce. It was a very different population from today’s migrants.

Unemployment, large wage differentials between Europe and developing countries and inside their own country, are the driving factors of today’s immigration flow. However, increasing salaries in developing countries appears to be counterproductive as it allows individuals and families to be able to afford a safer crossing into a host country.

Today there is an estimated 250 million migrants, of which only 10% are women, including both legal and illegal migrants, representing 3% of the world’s population.

Immigration from Africa to Europe is not likely to shrink, in particular due to wars and climatic warming, to the delight of corporations but to the watchful eyes of governments that have to bear the cost of social services.

2015 saw over one million immigrants arrive in Germany. The total number of legal migrants in the EU is of 11 million and there is an unknown number of illegal migrants.

Many immigrants do not integrate and live in ghettos, uninterested by education and therefore limiting their access to employment with a carry-over effect of up to three generations. However, this is definitely not the case for all immigrants. Over a third of them have a college education and many of them have an entrepreneurial spirit.

Immigrants have been blamed by working class people of having taken their jobs, when in fact this is due to the transfer of production units to Asia. The labor pool has become global and a new category of workers retain a base in their home country which they leave a few months per year to work abroad and return with their savings.

A more serious issue has been the fear of loss of national identity. Systems and procedures to halt migration can be put in place and there are presently discussions in the EU to decide which, if any, are to be adopted, in particular concerning refugees and asylum-seeker. The United Nations refugee agency numbers them, across the world as being 10 million. Some have been admitted legally, others have reached Europe’s shores by raft.

In view of the diverging points of view of the various member states of the EU, taking a decision is not easy and has led to major tensions in the Union.

Immigration has been considered a problem to which the state should offer solutions. Nowadays, there seems to be some agreement among the Member States’ governments in order to jointly deal with questions concerning immigration and asylum: the impossibility of tackling this problem independently. At the same time, the peculiarities of each State in relation to this phenomenon and the perceptions and national normative references regarding the content of the immigration process complicate the attainment of clear and binding agreements.

The future

The future is unpredictable, but trends can be detected and projections made.

With the present fertility rates, Europe’s population in 2060 will represent only 5% of the world’s. The continent’s GDP will have dropped significantly. It will also be the world’s oldest region with a median age of 45.

Immigration cannot be viewed as a reasonable solution as it would require allowing 13 million migrants per year if one is to keep the ratio of 4 to 5 active persons for each pensioner.

It seems we can safely say that Europe is dying by suicide both through the sharp decline in demography and through its attitude to the rest of the world, almost excusing itself for its very existence.

The massive entry of foreigners, in particular from the Middle East and Africa, is changing the ethnic composition and the culture of the continent in ways that were not predicted as assimilation has been the key word over the last fifty years. However, it has not happened. The hybrid culture that many intellectuals believed in has also not happened.

Instead, we are witnessing a rise in the number of Moslems entering the country and maintaining their own way of life and wishing to Islamize Europe.

The Islamization of Europe is unlikely to happen in the immediate future as the number of Moslems is not sufficient and unlikely to grow out of proportion. Further, the third generation is generally not sufficiently religious.

The death of Europe?

Europeans generally have lost faith in their political institutions and Europe seems to have gone into a decaying process like previous old civilizations before our time. One of the most important issues has become the change in Europe’s ethnic composition.

The divide has been between those praising European culture, identity and liberal values, and wishing to maintain it, on the one hand and those praising diversity on the other hand. The position of this last group is based, among other thoughts on the fact that there is no country in the world that has a homogeneous population and identity due to the various migrations that have occurred over centuries. Diversity assumes that immigrants will want to blend and not maintain their own ethnic profiles.  There is also the issue of access to jobs and to public services.

The confrontation between the two has led those in favor of diversity to accuse the others of racism.

What is certain is that the liberal values so dear to the Europeans are severely put into question. Movements closely recalling fascism are gaining ground and democratic forces seem reluctant to fight for their own values.

Europe is committing a slow suicide. It no longer believes in its right of existence. The long build-up of European culture seems to have hit a wall. Our children and grandchildren will soon be taught at school that they should be ashamed of being European.

Michael Akerib   

Innovax, Av. William Fraisse 10, 1006 Lausanne,