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Germany Navigates Course Through Economic Slump

German economic minister Karl-Theodor zu Guttenberg speaks with Paul Solman about the country's view on economic stimulus measures and how Europe is handling the global financial crisis.

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  • JIM LEHRER:

    The European view on the economy comes from the economics minister of Germany. Our economics correspondent, Paul Solman, had one of his "making sense" conversations with him earlier this week.

  • PAUL SOLMAN:

    Thirty-seven-year-old Karl-Theodor zu Guttenberg, the conservative economics minister of Europe's largest economy, came to America this week to meet with the Obama economic team.

    The U.S. has been pressing Germany to step up its stimulus spending to spur the world economy in advance of the G-20 meeting next month. But zu Guttenberg's boss, German Chancellor Angela Merkel, and Germany's main partner, France, have been pushing back hard, urging all Europe to unite behind a plan calling for less stimulus, more regulation.

    The global crash has hammered Germany hard. The so-called "workshop of the world," long dependent on exports, is in shell shock. Long known for its fears of inflation, however, Germany is worried about overspending, on companies like Opel, for example, owned by General Motors.

    With some 28,000 German employees, Opel is seeking a domestic bailout, while the American mother ship tries to stay afloat. Thus, zu Guttenberg met with, among others, G.M. boss Rick Wagoner.

    Known at home as "up-and-coming" and a "high flyer," he's a politician with a pedigree dating back to the 12th century. Baron zu Guttenberg lives in the family castle. His grandfather and great-granduncle were part of the plot to kill Hitler. The latter, pictured here, was tortured and executed for his role.

    Guttenberg's wife, a countess, is a direct descendent of the father of modern Germany, Otto von Bismarck. We sat down with the minister on Tuesday.

  • PAUL SOLMAN:

    Welcome.

    KARL-THEODOR ZU GUTTENBERG, Germany's economic minister: Thank you very much.

  • PAUL SOLMAN:

    How bad are things in German?

  • KARL-THEODOR ZU GUTTENBERG:

    Things are serious. The situation has still not reached the bottom yet. We await the bottom for the second half of the year and hopefully a rising element afterwards.

  • PAUL SOLMAN:

    How bad might it get?

  • KARL-THEODOR ZU GUTTENBERG:

    I don't think it might get dramatic, but it will get bad.

  • PAUL SOLMAN:

    Not '30s, not 1930s?

  • KARL-THEODOR ZU GUTTENBERG:

    No, I don't see the ghost of the '30s spooking around. One is protectionism; the other one is the danger of inflation. If that happens without any counteraction at the very moment, then we may see the '30s again. But I think we have took some measures nationally, internationally that could lead us out of the way here.

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