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To: smolejv@gmx.net who wrote (50167)	5/19/2004 5:21:26 AM
From: elmatador	Read Replies (1) \| Respond to of 74559

von Pierer is not joking, he goes to the guys and say: We have jobs for you for 40-hour week but no 35-hour jobs. Like in WWII. If you don;t agree we send the jobs to Eastern front.

To: smolejv@gmx.net who wrote (50167)	5/19/2004 5:30:32 AM
From: elmatador	Read Replies (1) \| Respond to of 74559

Germany is on course for insolvency: Financial Times. Looks like Germany doing an Argentina, DJ. Germany's debt trap news.ft.com Published: May 17 2004 5:00 \| Last Updated: May 17 2004 5:00 Each year since the beginning of the downturn in 2001, Hans Eichel, Germany's finance minister, has persistently overestimated the rate of economic growth and underestimated the size of public sector deficits. The latest official estimate is for a €61bn shortfall in tax revenues until 2007. Public finances are a mess, and neither the government nor the opposition has a coherent strategy to fix the problem. Gerhard Schröder, the chancellor, rightly rejected Mr Eichel's proposed remedy, a big value added tax rise. At a time when the economy is severely constrained by weak domestic demand, high consumption taxes are about the most counter-productive policy imaginable. The present economic recovery is driven entirely by exports. There are fundamentally two reasons for the perilous state of public finances. Neither is fixable in the short term. The first is the public finance system itself. The proportion of discretionary spending in relation to total public sector spending has fallen persistently, thanks to off-budget programmes including those to finance unification. Mr Eichel has too little room to manoeuvre to deliver budgets that comply with the eurozone's stability and growth pact. The country is set to breach the deficit ceiling of 3 per cent of gross domestic product in 2005 for the fourth year running. The second - and probably more important - reason is the persistent fall in economic growth rates. Germany's council of economic advisers estimates the potential annual economic growth rate at about 1.5 per cent. Some estimates put it at 1 per cent. Behind the decline in potential growth are rising real interest rates as a result of economic and monetary union and falling productivity growth in some sectors. Economic growth this year is forecast to return to close to potential. This would normally be expected to improve the budget deficit. But the rate of potential growth itself means this is not happening. An average of about 2 per cent is needed if the public sector and the country's welfare systems are to be sustainable in the long run. Low potential growth rates and the future obligations of German's unfunded pension systems have dramatic consequences for the public finances. The correct response would be a programme of product and labour markets reforms to raise growth and reforms to reduce the growth rates needed to achieve long-term sustainability of public finances. One urgent measure would be to scrap early retirement schemes, a key factor that knocked the pension system off-balance. After last year's controversial welfare reforms Mr Schröder has made a more activist industrial policy to create national industrial champions his economic policy priority. He also wants to change the stability pact to legitimise Germany's deficits. Neither will change the fact that, with present policies and public finance structures, Germany is on course for insolvency.