The German financial system has always been in the firing line. Particularly abroad, it was seen by many as lagging hopelessly behind. The financial crisis, which blew some major German banks out of the water, is seen as confirmation. And there is now talk at home about the purported failure of the banks and “unprecedented” measures are being heralded.  /Only available in German

The global economy appears to be clawing its way out of the fiercest recession in decades. Numerous green shoots of recovery suggest that the second quarter of this year will mark the turn of the cycle. The forces behind this turnaround have been evident for some time: Fiscal injections, aggressive monetary policies, huge bank rescue packages and, on top of all that, an unprecedented slide in commodity prices which has pushed inflation down and boosted real private household incomes in many countries.

The free fall in the economy appears to have been halted. The indicators are starting to turn, optimism is returning. This is nowhere more evident than on the stock markets. In view of the massive monetary and fiscal policy boost, this is not surprising. But self-satisfaction would be misguided. There is a host of risks which could wipe out the tender green shoots of recovery. The greatest risk is still the condition of the financial sector. /Only available in German

The stock markets currently have a spring in their step. How encouraging! But do the current market gains really herald an improved economic outlook or are we merely seeing a short-lived interim rally? One swallow does not make a summer. /Only available in German

Nobody can accuse us Germans of failing to focus on problems. This is evident right now: we are being bombarded with grave announcements of an ever steeper slide in the economy. Economists are outbidding each other with downbeat forecasts. As far as the economy was concerned the year was dried and dusted, and we should count ourselves lucky if things pick up again in 2010. Businesses and private households needed to be informed as it had not yet fully dawned on them that a crisis was in full swing. /Only available in German

The financial crisis has plunged Europe, and the rest of the world, into what looks to be the most savage recession since 1929. The focus at present is understandably still very much on short-term crisis management. The greatest task right now is to find the right balance between the state and the financial markets, guaranteeing stability while strengthening the forces of market growth in the long term.

The economic data in recent weeks have painted a fairly devastating picture. Many commentators are reminded of the horror scenario of the Great Depression. The swiftness of the slump in the economy outstrips even the severest recessions in previous years. It is imperative now to tackle the crisis resolutely and implement further corrections in the financial sector. Once the financial crisis has been curbed, the world economy will be able to bounce back strongly./ Only available in German

In an interview with Focus Money Michael Heise answers questions on the length of the recession in Germany, the comeback of the booming emerging markets and the risks of protectionism and deflation. / Only available in German

In an interview with Hamburger Abendblatt Michael Heise cites three factors arguing in favor of an early recovery in the economy: low interest rates, the stimulus packages around the globe and the fall in energy and commodity prices. / Only available in German

We head into 2009 in the middle of a recession. Tension is high. On the one hand there is hope that 2009 will herald a turnaround, the new US president will have an impact and the financial crisis will at last be overcome, on the other we encounter fears that we are in for the worst recession in the post-war period which drives up unemployment and further exacerbates the problems in the financial sector. / Only available in German

In a dramatic move the US Federal Reserve has lowered interest rates down to zero percent. But low interest rates alone are not enough to get the economy moving again. In Germany consumer loans will not be available free of charge, even if the ECB lowers its key rate further. This is likely to be the case in January, with a reduction from the present 2.5 % to 1.75 %. / Only available in German.

In the current crisis government rescue packages and central bank rate cuts are helpful but they cannot replace the need for deleveraging in the banking system. At least parts of the banking sector had decoupled from the real economy. In a sense, this process will result in the focus of business shifting away from ever more sophisticated ways of shunting risk around the financial cosmos, and toward the more traditional banking practice of acquiring, holding and monitoring risks. If the adjustment proceeds quickly, the flow of credit from the financial sector to the real economy will not be impeded for long. However, apart from this deleveraging process within the financial sector, there remains another question: Are not sectors of the real economy sorely in need of some balance-sheet repair? In countries that have experienced a credit boom, such as the U.S., the U.K., Spain and many eastern European countries, both adjustments are necessary--and painful. The longer the reduction of debt is postponed the more brutal the final reckoning. Trying to grow out of the problems – or, put differently, growing into the high debt levels – would mean repeating the “Japanese problem” of the 1990s.

Following the abrupt slide in October, things have let up a bit, helped by the central banks and the government rescue packages. The banks now need to reduce risks swiftly and trim their balance sheets. Despite the global interest rate cuts we will see a sharp but short recession, but we are not drifting into a long, drawn-out slump. The decline in commodity prices and very low interest rates are grounds for optimism. The US economy will emerge from its trough in the 2nd quarter 2009. / Only available in German.

Interest rate cuts or an expansive fiscal policy will not suffice to trigger a turnaround – not least the Japanese experience demonstrated that. New confidence will come from the reduction of risks in the financial sector and an enhanced capitalization of banks. Good progress has been made on this front in recent weeks, but consolidation is also needed in the corporate and private household sectors. Once initial successes become evident in the form of a return to improved capital ratios, tension will ease. And should we then also see falling energy and commodity prices massively ease pressure on the cost side, the outlook is by no means as bleak as the current crisis mood would suggest. / Only available in German.

The financial market crisis will resurrect the question as to the legitimacy and integrity of market-regulated systems. It is undisputed that the market economy also experiences crisis periods – no less than eight in the last 35 years. The current crisis will eventually be overcome – giving rise to a new regulatory framework and sweeping changes in market structures. / Only available in German.

Bank lending in Germany is set to fall. Since early October it has become even more difficult for the banks to refinance themselves on the short-term credit markets. On the stock markets we are currently seeing a self-reinforcing downward spiral. Stabilizing elements, such as the drop in commodity prices and low interest rates, are simply being ignored. / Only available in German.

As a business location Germany has made up appreciable ground in recent years. Among Germany‘s strengths is doubtless its backbone of Mittelstand (SME) companies and a high degree of innovative power. There is room for improvement in investment activity and in education policy. Its excellent infrastructure and central position within the European Union are also a boon. Despite the current downturn the German economy is in solid shape, the economic policy backdrop has improved further of late. / Only available in German.

Uncertainty on the financial markets is on the wane, the nadir of the financial crisis will be reached in the next few months. Despite the current turmoil a credit crunch is not on the cards. In the USA the government’s rescue package is casting a pall, but the US economy is tougher than one thinks and should record growth of 1.9 % in 2009. The world economy should see growth of 2.7 % next year: soaring commodity prices have eased, central banks will keep interest rates low, corporate profits are healthy. / Only available in German.

The current economic situation in Germany should not be labeled as a recession – capacity utilization is still above-average – but rather as a weakening or a slowdown. Nor is it likely that we are heading for a recession: prices for oil, industrial raw materials and food have eased, the euro’s stellar rise against the dollar looks to be over. In addition, wages have not risen so strongly, enabling central banks to keep interest rates low. Moreover, global economic growth these days stems from several regions. / Only available in German.

The positive trend in the German economy seen since early 2005 ground to a halt in mid-2008. The cause was the financial market crisis coupled with a surge in many commodity and food prices. To this extent the falling oil price could provide a decisive boost for the re-acceleration of the German economy. Private consumption should benefit from falling oil prices, while investment activity will probably not tail off sharply in the months ahead. The prospect of a continuation of the upswing hinges not least on economic policy. A reduction in taxes and levies, particularly for low and middle earners, could give a boost to private consumption. It is also essential that the reform momentum on the labor market seen in recent years is maintained. / Only available in German.