Aid Package
October 30, 2008
Seasonally adjusted unemployment data to be released on Thursday, Oct. 30, is expected to show the numbers of out-of-work Germans slipped by another 10,000 this month, leaving unemployment at 7.6 percent.
Unemployment already fell 29,000 in September. But economists see dark clouds on the horizon. They believe the labor market has yet to factor in the global economic downturn, and that it still reflects the strong economic growth rate from the start of the year.
Growth package planned
In a bid to boost the nation's economy, the coalition government plans to pump between up to 25 billion euros ($33 billion) into the economy, largely in infrastructure projects, according to the head of the German Social Democratic Party's parliamentary group, Peter Struck.
The German cabinet will vote on the growth package on Wednesday, Nov. 5. Speaking to the Berliner Zeitung, Struck said funding is certain for building restoration funds by 2015, traffic projects, and a limited-time reintroduction of depreciation possibilities for companies.
The Ministry of Labor also suggested means for securing jobs. The plans mean taking on more debt, Struck told the Berliner Zeitung. Future generations would be getting something out of it; Struck said: "If we spend money for renovating schools and kindergartens, that is investment in the future."
Banks expected to ask for help
Meanwhile, Finance Minister Peer Steinbrueck told the Financial Times Deutschland that a certain number of German banks will apply for state aid in the coming days in the wake of the global financial crisis -- including some who had said they would not need it.
"In the next four to five days a string of financial institutions will ask for our help," Steinbrueck told the Financial Times Deutschland.
According to the FTD, which cited other sources close to the government, major German banks planned to ask as a bloc for support from a financial market stabilisation authority that was created by lawmakers on October 17.
The authority can guarantee interbank loans and recapitalize banks with funds of up to 480 billion euros as part of a vast sector rescue plan unveiled three weeks ago.
Private banks have until now been reticent to ask for state aid thus far. But the Sueddeutsche Zeitung newspaper wrote on Thursday that private banks were preparing a joint request.
Deutsche Bank profitable -- sort of
Deutsche Bank Chief Josef Ackermann had previously gotten a lot of press for comments he made saying the he would be "ashamed" to take state aid; on Thursday, the bank clarified that it still saw no need for a capital injection.
"I repeat: We do not need capital," Deutsche Bank CFO Stefan Krause told a telephone conference, according to AFP news service.
On Thursday, Deutsche Bank was able to report profits for the third quarter thanks to new accounting rules, but they were well down from a year earlier amid the ongoing banking-sector crisis.
Net profit in the three months to the end of September came in at 414 million euros, down from 1.63 billion euros a year earlier.
Cut on taxes for clean cars
In addition, in a move to help out the suffering automobile industry, the German government plans to eliminate taxes on new cars with low greenhouse gas emissions for the first two years of ownership, Environment Minister Sigmar Gabriel said on Thursday.
"We want to introduce an automobile tax exemption for cars that are particularly clean," Gabriel told ARD public television.
"That is the proposal that the finance minister will present. But we still need the approval of the federal states."
Older cars would not be affected by the new exemption, which Gabriel said the cabinet planned to approve next Wednesday and roll out on January 1.