Our studio guest this week: Norbert Walter.

He's chief economist at Deutsche Bank. DW-TV: Mr Walter, it's always good to see you. IG Metal believes the recession will begin to subside this summer. You share that? Norbert Walter: If we are quite specific, if we are talking about the speed of franking, this might indeed decline and considerably so. And we may enter a chance to have stagnation in the second half of the year, so Huber might be right. DW-TV: As far as talking about improvement, do you think we're going to have to wait until 2010? Norbert Walter: First, people in this country feel recession in terms of measuring bankruptcies, number of bankruptcies and unemployment. And they will have the maximum only in 2010, and probably the second half of 2010 only. So the feeling about the situation won't improve before then. DW-TV: Let me get your feeling about what IG Metal is calling in terms of an industry stimulus fund. I think it's a 100 billion euros they would like to see appropriated for for business. If something similar has been done for the banks in this country, what do you say to doing something for business? Norbert Walter: Coming from a bank, and claiming that this should not happen, it desn't sound too convincing. So it must be somebody else arguing that the systemic relevance of a bank for the payment system of the country is more important than a certain firm producing cars. DW-TV: Well, tell me as an economist what you think about that idea. Norbert Walter: The economist clearly states that there are systemically relevant banks and they should be supported. Lehmann should not have collapsed as we now know, with hindsight, but I guess we can indeed survive without one or the other label in car manufacturing. DW-TV: The GDP for Germany, you say we're looking at a shrinkage of about five percent this year. Commerzbank just came out and said they expect retraction of seven percent this year. We get the feeling here that we actually have to deal with a little bit of more worsening before we're going to get better, not just stagnation. Norbert Walter: My number that I put out already in November was minus four, then I decided that the depth of the decline in winter was too strong and minus five would be more appropriate. I guess still minus five can hold. DW-TV: Let's move over to the Atlantic. What do you think about the United States public-private plan now in dealing with these toxic assets that the banks are holding on to? Norbert Walter: First of all, the amount that is planned to be invested is big and impressive. ( DW-TV: A trillion dollars, yes.) A very good sign. Secondly, I understand that the taxpayer and the government representatives want to indicate that if things go well, the taxpayer should benefit as well and not only private shareholders. That's the good element of the package. The difficult element is, will the private sector have the risk appetite to bite this bullet? And I sincerely hope Timothy Geitner is right. If not, we will have to look at it again. DW-TV: Let's talk a little bit about the banks while I've got you here. You know, the latest surveys show that people now rank bankers with criminals as far as respect is concerned. Is there any way to change that and to rebuild the trust that has been lost? Norbert Walter: Yes. People need money, people need banks, therefore the only solution to this deep and very dramatic problem is the bankers work very hard, and with each and every client and in a positive way, and rebuild trust from the base, from the roots. That will be difficult, and it will take years, but it will be possible. DW-TV: OK. Mr Walter, as always, thanks for talking with us. (Interview: Brent Goff)

DW-World | March 24, 2009

Tags:. .norbert. .huber. .subside. .bankruptcies. .unemployment