Made in Germany: The Business Magazine

Wolfgang Gerke is financial market expert.DW-TV: And with the holiday season still in full swing, there should still be plenty of tourists heading to Cyprus in the coming weeks - but what then? For more we're joined by Wolfgang Gerke, finance expert and president of the Bavarian Financial Center in Munich. What's your assessment, how serious is the situation for Cyprus really? Wolfgang Gerke: If it were only Cyprus, there wouldn't be any problem. I think that Cyprus is seen too negatively. We have the experience with Greece. But the problem is solvable. I am more impressed by the problems in Spain and Italy. That's too much for Europe. Cyprus will be no problem. DW-TV: So why are financial markets so worried about Cyprus? Wolfgang Gerke: They fear the domino effect. They don't fear Cyprus. They fear that other countries will have the same problems as Greece and one has to accept that this is part of the policy at the moment and something we have to look for. DW-TV: So it's the fear of contagion. For many weeks the three US-based ratings agencies have come under fire because they kept downgrading European nations - now, Standard and Poors has also downgraded the US for the first time. Was this downgrade justified? Wolfgang Gerke: Yes. It comes too late! It isn't justified that President Obama now says it isn't acceptable, that Standard and Poors is against him. No, the other! Moody's and Fitch should follow! For the politicians it might be helpful: They see that they have to do something. They are against themselves, Republicans and Democrats, they don't find the solution for the US and only for their party, and that's the wrong way. DW-TV: So you think it's justified - but how will it affect the American economy and the world economy? What does it mean for the global economy when the world's most powerful country loses its Triple-A rating - what message does this send? Wolfgang Gerke: It's a very positive message: we see that there is something to be done. We all knew about the debt crisis happening in the US and we didn't need Standard and Poors. Now it's official. Maybe that's the last call to do something. DW-TV: There's no easy way out, it seems. Would you recommend a haircut? Wolfgang Gerke: Yes, but it comes too late. There's been so much taken from the taxpayer - to help Greece, to help Ireland, Portugal, perhaps Cyprus. That's not the right way. We should have taken Greece out of the Euro. We should have given it its money. But another way. Greece got the money to help the European banks and to pay to these banks. I would say even today that we need a haircut. DW-TV: We can't turn back the clocks. What happened happened. The eurozone has launched a bunch of rescue and stability measures. Is there anything similar the US could do to get their problems under control? Wolfgang Gerke: No, they haven't the chance, they have no Germany beside them and they have to solve their problems themselves. In the past they did it. To weaken the dollar. This isn't a possibility. They are paying so much for the military and they have so low taxes for people earning a lot so the US have the possibility to solve their problems. But they have to do it! They don't produce a long-term policy. DW-TV: What do politicians on both sides of the Atlantic have to do to calm markets? Wolfgang Gerke: They musn't act against the market, they must accept the market and don't produce for the future so high inflation rates. We have to fear the inflation rates of the future. DW-TV: Wolfgang Gerke, thanks for being here with us today.