Data Points to Downturn in Germany, With a Ripple Effect Feared

By CARTER DOUGHERTY Published: August 26, 2008

Adam Berry/Bloomberg News
Shoppers at a Filippa K clothing store in Berlin

Highlights

"FRANKFURT: The odds of a mild recession in Germany rose significantly Tuesday, 8/26/08. "

"German Statistical Office: said that private consumption shrank 0.5 percent in the second quarter, the third consecutive contraction. (lowest level since a downturn in 1993.)"

"Julian Callow, chief Europe economist at Barclays Capital in London: said that the reading raised recession warnings for the entire euro zone. “This is a bombshell,” “because in one fell swoop it went down far more than we would have expected.”"

"German Ifo index: compiled by the Ifo Institute in Munich, showed the lowest reading for business confidence in the last three years. A crucial component of the index, which measures expectations for the future, showed a level not seen since Germany tumbled into recession in the early 1990s, after reunification."

"Euro fell to $1.465 against the dollar: On Tuesday 8/26/08 the Euro fell to its lowest point since February, while oil prices were around $116, far off their summer peaks."

Comments

Why Germany: in a Subprime Solutions Blog - because it is my belief that we are in the first phase of a world wide deflationary cycle. Look for more of the same to continue to appear in Europe and Asia.

World Wide Slow Down: It is clear that Europe is beginning to catch the business slow down virus. It is now beginning to show up in it's numbers.

CRB Cash Commodity Index: is bouncing off the resistance at the 500 point level but look for it to continue downward in a saw tooth pattern into Fall and Winter of 2008.

Interest Rates: Global slow down will be putting downward pressure on interest rates World Wide and in a perverse sort of way result in stabilizing the dollar with a slight upward bias.

Jim