Still No Bottom in Sight

Falling stock markets aren't news anymore, but maybe the relatively quiet, ongoing downward trend ought to be

One can only hope that as you're reading this, the markets are edging back up. Last week, though, was a miserable one around the world and Germany was no exception. A 5 percent drop over the week for the DAX, Germany's leading index, is in itself hardly dramatic but its closing at just over 4300 points marked an 8-month low. As The Observer reported over the weekend, many experts warn that the ever-elusive bottom may still be a long, long way off.

Anis Faraj, for example, equity strategist for the Japanese bank Nomura, holds that, despite the tumbles since the spring of 2000 which only accelerated after September 11 last year, US markets are still overvalued by 25 to 30 percent. And whether its the US economy that plays tail to the global economy's dog or the other way around, they're hitched where it counts.

In Germany, as in the US and most European economies, the dead weight dragging down averages most severely remains the high tech sector, particularly telecommunications. The Neuer Markt, Germany's rough equivalent of the NASDAQ, flirted last week with the record low it set immediately after 9/11. Deutsche Telekom broke through a nasty psychological barrier on Friday when its share price fell below the 10 euro mark, dipping as low as 9.79 euros.

Back in November 1996, a major ad campaign heralded the introduction of the T-Aktie as "the people's shares" in the former telecom monopoly run by the government. And indeed, the people snapped them up at what would now be 14.32 euros a pop. As Germans gleefully threw themselves into the worldwide "irrational exuberance" party, shares in DT hit a high of 104 euros in March 2000.

Then, just as the bubble began its rapid deflation, European telecoms invested billions -- 51 billion euros in Germany alone -- in UMTS licenses, racking up huge debts merely for the permission to offer third-generation mobile telephony services that may never take off after all. DT, for example, is now struggling to crawl out of the 60 billion euro hole its dug for itself.

France Telekom is in deep, too, which is probably why it's making a show of its disagreements with Gerhard Schmid, boss of Germany's Mobilcom in which FT holds a 28.5 percent stake. If FT drops that stake, it can also drop payments for Mobilcom's UMTS license. And unless another major telecom takes its place (as Hutchison-Whampoa might), 2000 Mobilcom employees will be out of a job.

Ultimately, a rise in the number of jobless is the effect of the markets' tumbling that matters most. The hypesters responsible for the overevaluation of those markets in the first place and the crony capitalists, whose antics John Barker describes so well in Telepolis, have a lot to answer for. Who wants to bet they ever will?

Elsewhere

"President George W. Bush's grandfather, Prescott Bush, made considerable profits off Auschwitz slave labor. In fact, President Bush himself is an heir to these profits from the Holocaust which were placed in a blind trust in 1980 by his father, former president George Herbert Walker Bush. Toby Rogers outlines a potential scandal that "may dwarf" Enron in Clamor Magazine.

Europe can absorb a Pim Fortuyn, a Jörg Haider, even a Jean-Marie Le Pen -- but a German equivalent would spell disaster for the continent, argues John B. Judis in The New Republic.

On a far lighter note, EPN World Reporter summarizes an oddly nationalist yet ultimately harmless clash between Der Spiegel and The Spectator.