The end of another long week I ended in Germany, and spent some time in Schröder's home state of Lower Saxony, visiting some long-standing business relationships in the area. In the course of business meetings, the topic of poltics is seldom mentioned explicitly. The risk of doing so is high for both parties. Political disagreements seldom affect the business itself, so by not mentioning the topic you can avoid the risk of ending up in a heated argument which might sour the relationship. My experience is that the more controversial a subject is, the more carefully it is approached (or not at all). It was therefore interesting to see the naked pessimism and the despairing comments about the new government. Bad-mouthing Schröder is apparently not a very controversial thing to do anymore and the people I spoke with all spontaneously aired their displeasure. Although the business community is hardly representative of the country as a whole, this was the first time I've heard such comments in Germany. It's not really news, but Schröder really is in trouble. The latest speculation in German newspapers is that he might not even last the winter in office. The showing of the SPD in the February elections in Hesse and Lower Saxony will be important in deciding the fate of this government. The current signs don't look good for Schröder.

The rampant pessimism about Germany's economic future bodes ill in the short-term. On the other hand, it is also a realistic assessment of the situation, and that is encouraging. Japan's problems have been exacerbated by institutionalized denial of the problems. Only by dribs and drabs have the problems been even acknowledged, and there's still a lot of acknowledging to do. In Germany at least, there is greater awareness of the predicament the country is in. That's the first step to recovery, as they say, but it's going to be a painful slog, and I am not sure the CDU/CSU and FDP politicians (the alternative to the current government) really grasp the severity of the problems. Even if they do, the question then still is whether they will want to prescribe the medicine necessary, or whether they'll just tinker at the margin.