Week of truth

The latest fallout from the financial market crisis in the U.S. further accelerated the global stock market slide on Monday. Experts from economic institutes and financial companies in Germany forecast impact on German economy. If the dollar continues to fall, there will be job losses in industry, estimates Jurgen Thumann, President of the Federation of German Industries (BDI), and warned of the consequences for the economy.

After the emergency sale of the U.S. bank Bear Stearns and the interest rate cut in the U.S., the Asian stock markets initially went into a tizzy on Monday. In Germany, the DAX also fell by more than four percent on Monday. And this week may still hold new surprises in store. Several major U.S. banks present their quarterly figures, and according to rumors, they are poor. The chief economist of the Allianz Group, Heise, referring to the distress sale of the U.S. investment bank Bear Stearns, said: "We must expect a sustained shakeout and consolidation to take place in the financial system."In order to overcome the crisis, he said, it was important for the state to coordinate a rescue package for the second-rate US real estate loans, if possible without using taxpayers' money.

German industry under dru This latest crisis in the U.S. also further weakened the dollar. On Monday, the euro crossed the $1.59 mark for the first time. Oil price hit record high and gold price climbed above $1032. "It is the mix of dollar weakness, rising oil prices, slowing U.S. economy and financial crisis that is increasingly troubling companies."Jurgen Thumann, President of the Federation of German Industries (BDI), explains the impact of the U.S. crisis on Germany.The competitiveness of companies is suffering, especially in mechanical engineering, the automotive industry and aerospace. "Earnings are coming under prere," he lamented. The BDI does not expect much relief from the European Central Bank. "The ECB's hands are tied because of the increased price risks," it said. One must avoid therefore everything, which fuels the inflation. Tariff partners and politicians also have a responsibility here, he says. The Essen-based Rheinisch-Westfalische Institut fur Wirtschaftsforschung (RWI) also sees the weakness of the dollar as the biggest problem for the German economy. RWI head of economic research Roland Dohrn said: "If exchange rates do not change dramatically again soon, we can ame that the industry will again be threatened with redundancies or relocations of operations."At the moment, companies are still living off full order books," he said. However, it is now difficult to acquire new orders.

Privatize state banks In light of the international financial crisis, CDU economic expert Michael Fuchs calls for reform of the state banks. Speaking on RBB-Inforadio on Tuesday, the member of the Bundestag said that in Germany, public-sector institutions have been much harder hit by the crisis than private banks. Showing that the system is questionable. He added that one must also ask "whether it is absolutely necessary for the state to become involved in these banks". Fuchs added: "Apparently, the private sector can do a better job. And consequences should definitely be drawn from this at the end of the crisis."He therefore advocated the withdrawal of the state from the state banks and their privatization. "Then things are going better there," Fuchs said. It is "not acceptable that the taxpayer has to pay for the gambling in these banks with his money".

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