Studio Guest: Wolfgang Gerke, Financial Market Expert

Our interview this week is with Wolfgang Gerke from the Bavarian Finance Centre in Munich. DW-TV: Mr Gerke, so many subsidies for Nokia - and all for nothing. Does the Nokia case imply, subsidies are a waste of money? Wolfgang Gerke: Subsidies for Nokia are a waste of money. Nokia doesn't need subidies, Nokia is earning a lot of money, and there are other investments that would be much better than investments in Nokia. So we shouldn't be astonished that Nokia is leaving Germany and going to Romania, if there are more subsidies, and therefore we have to change international policy and invest in people and not in companies. DW-TV: Let's talk about another urgent topic these days: the world's markets - what's going on there? Wolfgang Gerke: For me it's astonishing that it's taken the market such a long time to react. The financial crisis began last year, especially in August last year, but the stock market didn't react very much in December the stock market was quite strong. Therefore for me the fact isn't astonishing, it's the date that's astonishing, I thought it should have happened much earlier... DW-TV: So how do you explain such hefty losses all of a sudden? Why now? Wolfgang Gerke: Now, we are coming back to normal stock market situations, before we didn't see the risks, we only saw the returns, therefore this way into normality may be a dramatic way and you can't say why it's happening today, tomorrow or next week, but you have to say it will take us all of the year 2008, the crisis in the financial market is such a strong crisis and there was so much money wrongly invested in the US that this will not be a question of just some weeks. DW-TV: A grim picture for 2008, what exactly do we have to brace ourselves for? Wolfgang Gerke: There are many banks with many risks in their portfolios, they will not be able to give small and medium-sized companies the same credit as before, so they will take higher interest rates or they will not give the credit, that has implications for the investment strategies of these companies, implications for the labour market, for consumer behaviour, so I'm quite pessimistic for this year, but there is good news too, on the stock market, everything comes back, it needs some time, the DAX some years ago was 2,300 so we shouldn't be astonished if the DAX is 5,500 in some weeks' time. DW-TV: So with this good news, what's your brief advice to investors? Wolfgang Gerke: At the moment don't invest in shares, especially if you're doing it with credit, be careful, wait a moment, there's never the right moment, but at the moment it isn't right. Interview: Monica Jones

DW-World | January 22, 2008

Tags:. .everything. .doesnt. .fact. .august. .nothing