Germany's Official Recession a Part of Global Depression
It is an election year in Germany; the government and a good part of the establishment are showing a stronger than usual tendency to cover up the real economic situation. But too many facts are slipping through the censors of the official statistics, to make the concoction of rosy propaganda an easy job.
The unemployment situation is especially problematic for Chancellor Gerhard Schroeder, who pledged, in his 1998 election campaign, that he would cut joblessness (then officially at nearly 4 million) by half. But in February 2002, the national jobless figure stood at 4.32 million.
Other indicators are alarming:
- In the three months since November 2001, national unemployment has increased by a net 700,000.
- One-third of all companies plan to reduce their workforce this year, according to a survey by the industrial chamber of the south German state of Bavaria. The survey, based on data provided by some 3,500 Bavarian firms, is especially suggestive, because for years, Bavaria has had the lowest jobless rate in the country.
- Germany's Federal Statistics Office on Feb. 27 made it official that the economy has "definitely entered a recession"--actually, an acknowledgment that Germany has fallen into depression. The report for the fourth quarter of 2001 shows a drop of 0.3% in GDP, compared to third-quarter 2001. Even the most pessimistic among the pro-government analysts had forecast only a 0.2% drop. But, removing the inflated data for the speculative financial markets and the "new economy" in general, one finds in the report that construction dropped by 4.5% in the fourth quarter, and the production of machines and industrial facilities fell by a resounding 10.6%.
- Faked unemployment statistics: The German government has just tried to reform the unemployment statistics, introducing a new category of "people not seriously looking for a new job." Into this dismissive category would have gone "up to 1.5 million Germans" who have no work; that way, "real" unemployment would have been reduced by almost a third, to 2.8 million. The manipulation was too obvious, however, and a national outcry has stopped the scheme until after the election.
Happy Birthday to Germany's Nemax?
The "New Market," the symbol of Germany's commitment to enter the "New Economy" era, will turn 5 on March 10. The same date marks the two-year anniversary of the "New Market's" historic peak: It hit a market value of 234 billion euros on March 10, 2000. But what came next was nothing but disaster. Today, only 43 billion euros in market capitalization remain, in spite of the fact that more than 100 companies have been added to the "New Market" in the meantime.
The Nemax-50 index, reaching 9,210 points, crashed below 700 points in September 2001, and since then has "recovered" to slightly above 1,000. About 50 companies have disappeared since February 2001, most of them having gone bankrupt. The companies that stayed alive have, on average, lost 90% of their stock price since March 2000. But there exist dozens of "New Market" companies which have plunged to 1% or less of their peak value of two years ago.
Dozens of such companies will be thrown out in the weeks ahead, because they have fallen into the category of "pennystocks"--that is, their stock price has been below 1 euro for several months. Even among the 50 top "New Market" companies that make up the "Nemax-50" index, two-thirds are still generating losses--and haven't made a profit in their entire history. The standard characterization of the "New Market" in the German and Switzerland media today (for example, Neue Zuercher Zeitung) is that of a "giant money extinction machine."
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