Studio guest: Hans-Peter Burghof, banking expert and finance professor from Hohenheim University

MADE IN GERMANY talks with Hans-Peter Burghof about the future of the financial markets DW-TV: Mr. Burghof, we can try to be positive all we want to, but fact remains the banks are not lending money to each other. Hans-Peter Burghof: It's still the same thing. They're not lending money. There's a crisis. We're not sure which bets are still on the market and might punish one of the market particpants. And the banks themselves don't know. DW-TV: The banks themselves don't know and that makes it incredibly difficult to predict what we're going to see in 2009. Do you have the feeling we're in some big fog, some kind of big pea-soup? Hans-Petrer Burghof: I think it's something like a nautilus year. It's going underwater. We know it's going down, but we don't know how far or how deep because we simply can't see it. There are so many negative processes going on at the same time. And we don't know how these processes work together - to put us further down or maybe help us out of it. DW-TV: You say there are so many processes working together now, and we don't know how the dynamics are going to play out. People like you are here to explain that to us. If you can't explain it to me, how can the average consumer have any faith right now in the economy? Hans-Peter Burghof: The truth is there's always a way out of a crisis. You never know where it will be, you have to look for it. But there's no such thing as total security in life - it's something people must learn. Governments who promise something like total security - and I'm sure that the American government does it for its middle class and the upper class, and the German government does it for almost everybody - these governments are promising something that they can't deliver in the end. DW-TV: Are you saying that these stimulus packages, for example, are just a lot of hot air? Hans-Peter Burghof: No, it's more than that. It's a little help, and we need a little help in this situation because we can't get great help. DW-TV: But we're talking about hundreds of billions of dollars here. That's not "little". Hans-Peter Burghof: That's true, but the losses from this crisis are much higher. We're talking about losses on a scale of not millions or billions but trillions. So that's tremendously higher. DW-TV: How are we supposed to read the fact that the following is happening; we've got these stimulus packlages in Japan, Europe and the US; we've got interest rates being cut by central banks across the world; all these things are there to push the economy, and yet the economy is not jump-starting. Hans-Peter Burghof: How should it? It's a help just to keep a certain level and to reduce the fall we have. Maybe we could go down by 10%, and instead we are going down by 3 or 4 %. The government has to do all it can. On the other hand; all these measures cost money. Somebody has to pay for that. DW-TV: The taxpayer has to pay for that. Hans-Peter Burghof: The taxpayer of this generation, the next generation - the rich and the poor. There's lots of conflicts in the future, and some of these conflicts might be very expensive. DW-TV: There are analysts saying there will be more stimulus packages in 2009. My question is: how much can the governments afford to do that? How much can Germany or the United States afford? Because at some point there's isn't any more money, Hans-Peter Burghof: There's enough money. The problem is state debt cannot be raised to a level which reduces the possibility of the government being able to act to such a degree where the state is no longer able to cope with the problems of the future. That's our main problem. If you first enhance the level of state interference in the economy, we won't get very efficient in the future. So we'll pay a high price for solving the problem at the moment. DW-TV: The auto industry has been very loud, very vocal. It's getting help. What's your sense about this? Is it the only industry that really needs help from the government, or do you expect others to pipe up and say "hey, give us some money"? Hans-Peter Burghof: This is something like bailout-blackmailing. One industry after the other will come and say "look, we've got the same problem; why don't you help us"? ... I'm afraid it wasn't a good idea to help the car industry in this way. DW-TV: We'll have to see if the bailout-blackmail continues in 2009. Mr. Burghof, thanks very much. Interview: Brent Geoff

DW-World | January 6, 2009

Tags:. .nautilus. .dwtv. .fog. .underwater. .lending