Britannia Radio

The main report below  is extremely worrying. German collapses have a  
record of being most unpleasant for the rest of us.  As A.E-P  
indicates here the SDP is being significantly outflanked to the left  
by a strong marxist movement.  Elsewhere we read of challenges from  
the right wing to the CDU/CSU grouping.   People forget that the Nazi  
party was a response to economic collapse and a growing marxist threat.

I also give extracts from the third as its figures differ somewhat  
and it is well to be reminded that forecasting in these circumstances  
is hardly an exact science!

[I will post today’s surprise news on the British economy separately]

xxxxxxxxxxxx cs
===============================
TELEGRAPH                24.3.09
German economy to contract 7pc this year
Germany faces the sharpest economic downturn of any major country in  
the Western world as unemployment rockets to 5m.

    By Ambrose Evans-Pritchard

The country may be on the cusp of a Japanese-style "Lost Decade",  
according to a clutch of grim forecasts by leading banks and economic  
institutes.

Commerzbank said output is likely to contract by 6pc to 7pc this year  
as the global recession wreaks havoc on German industrial exports.  
Foreign industrial orders have fallen by 37pc over the last year.

"The recent collapse in orders compels us to make a massive downward  
revision to our economic outlook. January orders and production data  
plunged at a dramatic pace that has no precedent in Germany's post- 
World War Two history," said Jörg Kramer, the bank's chief economist.

The country's leading think tanks have been scrambling to adjust as  
it becomes ever clearer that the country went off a cliff over the  
winter. The IMK Institute has slashed its forecast to minus 5pc this  
year. The RWI Institute warned that unemployment could reach 5m by  
the end of 2010 as the delayed time-bomb of mass lay-offs finally  
detonates.

The mounting social damage is likely to have a transforming effect on  
the German political landscape when election are held this Autumn.  
The neo-Marxist Left Party, which proposes nationalisation of huge  
chunks of the economy, is already angling for 30pc of the vote in  
Thuringia's regional elections in June as it tears into the Social  
Democrat flank.

Mr Kramer said Germany is suffering the brunt of the global slump  
because 40pc of GDP stems from exports. It is heavily reliant on  
machine tools and engineering that is leveraged to the global  
industrial cycle. "There will be no upward movement next year that  
deserves to be called an upturn," he said.

The only other G10 country likely to face the same sort of  
destruction this year is Japan (-7pc), another industrial export  
power. The bank expects Italy to contract by 4.5pc this year, the US  
by 4pc, Britain by 3.9pc, and France by 3.5pc.

Axel Weber, the Bundesbank chief, signalled on Monday that European  
Central Bank is ready to cut interest rates again. "Rates are at  
1.5pc in the euro area and heading down," he said.

Mr Weber defended the ECB against a chorus of criticism that it has  
misread the threat of global deflation and held monetary policy too  
tight, amplifying the downturn. "We have put in as much monetary  
stimulus in a short period of time as the central banks in the US and  
UK," he said.

He said it was unfair to contrast the meagre stimulus packages in  
Europe with spending blitz in other parts of the world, insisting  
that generous unemployment pay in most eurozone states acts as an  
automatic "stabiliser".

There is little doubt however that hawkish policies in Europe have  
pushed the euro to levels that are taking a toll on manufacturing  
industry. Eurozone exports fell 24pc in January from a year earlier.

Charles Dumas, global strategist at Lombard Street Research, said  
Europe's leadership class have ensured "likely disaster" for EMU by  
assuming for so long that they could continue to rely on "predatory  
export-led growth" by feeding off world demand rather adopting  
radical stimulus measures of their own.

"It looks as if surplus countries, particularly those of north- 
central Europe clustered around Germany, imagine they can wait for  
recovery and then enjoy export-led growth again," he said.

Mr Dumas said that Europe was paying a high price for refusing to  
signal its disdain over quantitative easing in the US, Britain, and a  
growing number other countries. "The higher euro is a disaster for  
the overvalued countries of Club Med as well as Germany. Italy is  
overvalued by almost 50pc and is completely sunk in current  
conditions," he said.

Luxembourg's premier Jean-Claude Juncker, head of the Eurogroup of  
finance ministers, said the EU had plans to rescue any eurozone state  
in serious trouble "within hours" but insisted that no such need  
would ever arise.  [Well,; that’s alright then ! -cs]
===============================
EU OBSERVER                24.3.09
World trade set for largest contraction since WWII        [Extracts only]
    ANDREW WILLIS

  BRUSSELS - The volume of world trade is predicted to plunge by nine  
pecent this year, according to a World Trade Organisation annual  
report due out on Wednesday (25 March), in the largest contraction  
since World War II.
WTO director-general Pascal Lamy said the new forecast highlighted  
the need to kick-start world trade, with the 9 percent dip to help  
cause a one to two percent contraction in the world economy overall  
this year - the first time since the 1930s.

[- - - - - - - - -]
Pressure is also increasing for a resumption of the Doha development  
round of trade talks that broke down last year.

The trade contraction in developed countries such as Germany, the  
world's largest exporter by volume, will be severe says the report,  
with WTO economists forecasting a 10 percent fall in exports.

Developing countries will see a smaller fall in the range of two to  
three percent, but their heavy reliance on exports for growth make  
this figure no less alarming.

[- - - - - - - - -]

The promises of European leaders contrast sharply with the severity  
of the current situation, particularly in the automobile sector.

The European Automobile Manufacturers Association (ACEA) reports that  
passenger car registrations were down 18 percent in Europe in  
February 2009, compared to the previous year. The sector is a huge  
provider of jobs in Europe.

The WTO's report highlights the need to unblock the banking sector as  
a crucial first step in tackling the problem.

Under normal recessionary conditions, consumer reticence to spend is  
transferred into a larger pool of savings that in turn can be lent  
out to businesses that are keen to invest in future production.

However, current uncertainty over assets held by banks, means this  
process is not taking place.

The annual report also emphasises the unprecedented global nature of  
the fall in consumer demand that has effected all regions of the  
world, but suggests that some initial signs of recovery may be  
visible in parts of Asia.