Financial Crisis will not have large impact on Germany and Berlin Real Estate

The financial crisis in the United States continues to dominate the headlines in Germany on Wednesday, with news that the government in Washington would provide a bailout package to insurance giant AIG after its near collapse. Earlier this week, after the US government refused to come to the rescue of investment banking firm Lehman Brothers, many had wondered whether Washington might also take a hands-off approach to AIG.

Although the market meltdown in the US is likely to have some impact on Germany, most editorialists on Wednesday urge calm — with one major paper even stating that the national economy will continue to grow. Most are united in their view that, once the dust settles, financial markets will be a lot more transparent after this fiasco…

The business daily Financial Times Deutschland writes:

“The earthquake on Wall Street may have the walls shaking at some European financial institutions, but there is no acute threat of collapse here. So far, there is no evidence that the finance crisis is having any real impact on the German economy. Credit continues to flow; and the loss of capital has not been extraordinary. Nor have companies and consumers been forced to lower their consumption. So the good news is that Germany and Europe are not having economic trouble because of the finance crisis. The bad news, however, is that they still have an economic problem.”

The center-right Frankfurter Allgemeine Zeitung uses the German economy as its jumping off point, noting that the latest crisis is likely to fuel calls for the government to create a spending program aimed at boosting growth as Berlin begins debating the federal budget.

“At the start of the federal budget debate, Finance Minister Peer Steinbrück is walking a tightrope — he has to address the growing risks without painting too dark a picture. He has so far rejected a economic stimulus package despite support for one in some corners of his party. In fact, there are no reasons to justify a package. The German economy is in better shape than that of the US, Britain or Spain, which had their roots in the burst real estate bubble. Even if the forecast for next year is now worse than it was a shot time ago, the German economy will still continue to grow. Past experience shows that stimulus packages just create more debt.”

source: http://www.spiegel.de/international/business/0,1518,578780,00.html.