Just love this article from a few days ago in the Financial Times. Who knows which side is right? It is unclear who knows what. We are at sea.

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http://www.ft.com/intl/cms/s/0/ed569f44-1b66-11e1-85f8-00144feabdc0.html#axzz1fNBJPCYU

‘Crisis, what crisis?’ ask German consumers

By Quentin Peel in Berlin [The Financial Times]

It is the season of Christmas markets in Germany, with town squares the length of the land packed with stalls selling their traditional seasonal wares, from gingerbread cakes to hot spiced Glühwein, wooden toys and sparkling decorations.

There may be a crisis in the eurozone, but the shopkeepers and stallholders on German streets are expecting another bumper season. The financial markets are in disarray, but consumer confidence in Germany is up.

That was the gist of the report from the Consumer Research Society (GfK) in Nuremberg this week. Their consumer climate index rose from 5.3 to 5.4 in November, and they expect another increase to 5.6 in December – the highest level since last May. Average spending per person on Christmas presents will be €241, they say, just a fraction below the level last year.

The mood in Germany today seems quite different to that in most of the rest of Europe. The grim warnings of imminent apocalypse that pervade the pronouncements of politicians and pundits in London and Paris, Rome and Madrid, are barely to be heard in Munich or Berlin.

It is not as if people are not anxious. Germany would not be Germany without a healthy dose of angst. They are worried about the euro, and the safety of their savings. They are worried about government debt and the return of inflation. But they simply do not share the view that the eurozone is in imminent danger of collapse.

The biggest German story of the past three weeks has not been about the plight of the common currency, but something quite different: the discovery of a neo-Nazi terror cell, responsible for a string of racial killings over the past decade. The fact that the killers were never exposed by the security services until they were caught in a clumsy bank raid has revived old fears that the investigators are “blind in the right eye”.

So, is Germany in denial about the dangers of the eurozone crisis, or is there something more profound about the phlegmatic response of ordinary consumers?

Part of the answer is clearly that the German economy has been doing very nicely while the eurozone periphery has slumped into recession. Economic growth in 2011 will be close to 3 per cent, although it will slow to around 1 per cent next year. More relevant to consumers, employment is up and the total out of work is down to 2.7m – the lowest for 20 years.

Wednesday’s figures from the Federal Labour Office showed seasonally-adjusted unemployment down another 20,000 – compared with a drop of just 5,000 expected by economic analysts – leaving the jobless rate at 6.9 per cent.

As for German exports, the real motor of Europe’s largest economy, they grew by a remarkable 12 per cent this year. Anton Börner, president of the foreign trade association, says he is “cautiously optimistic” they will be up by at least 6 per cent in 2012, in spite of the weakening global outlook.

“Stormy times on the financial markets are accompanied by remarkably calm waters in the real economy,” he says.

The other part of the answer to Germany’s refusal to panic is the widespread conviction – shared by Angela Merkel, the chancellor, and Wolfgang Schäuble, her finance minister – that short-term fixes, huge central bank intervention in the bond markets, or the issuing of jointly-backed eurobonds for debt-strapped eurozone governments, are not the right answer.

Ms Merkel’s insistence that the crisis can only be answered with long-term solutions – reducing excess debt and changing the treaties of the European Union to enforce ruthless borrowing restrictions in future – strikes a chord with German voters.

Germans are anxious about the debt-fuelled behaviour of their eurozone partners. They don’t want to dominate them, but they do want to export their own “stability culture”. They are also suspicious of the motives of those crying wolf.

The conservative Frankfurter Allgemeine newspaper declared in a commentary on Wednesday: “The financial markets are dominated by an Anglo-Saxon way of thinking, which says all the problems caused by excessive state borrowing can be met with money from the central bank – not least to the benefit of the finance houses.”

The answer to such “short-term and short-sighted excuses” was to improve the discipline of monetary union and regain trust in the markets – “even if it takes a bit longer,” the newspaper concluded.

The headline summed up what many Germans think: “No Panic”.