Quotes of the Day

Like Abbott and Costello's "Who's on first?" routine, the coalition agreement unveiled last week by German Chancellor Gerhard Schröder and Green partner Joschka Fischer seems confused about basic issues, and destined to end where it began. But economists aren't laughing, because the E.U.'s biggest economy is also among its sickest: 3.94 million unemployed workers are draining government coffers, the GDP will grow only .5-.75% this year and the budget deficit will bust the E.U.'s 3% limit. Business leaders blame high taxes, expensive welfare programs and rigid labor laws, but the government seems to have learned nothing. "The [plan's] only really specific measures are tax increases," says Commerzbank economist Ralph Solveen. The agreement would cut barely €3 billion of Germany's nearly €150 billion in state subsidies while extending taxes on energy, consumer goods, corporations and capital gains. True, cutting benefits during tough times is a gloomy task, and the coalition did pledge to embrace the Hartz Commission's modest reforms, but the government seems powerless to cut unemployment. "That's only going to happen by cutting labor costs and making it easier to hire and fire," says Solveen, "but with this plan nothing will happen in the next four years." The question is when Germans will do their own Abbott and Costello routine: asking not what is wrong, but who.

POWER
Last One Out, Kill The Lights
Europe's body electric is back in native hands, but is that anything to sing about? Following AEP and Duke Energy, TXU became the latest U.S. energy firm to turn its back on Europe last week, withdrawing a $700 million lifeline and signaling that it may sell the division, which has over 5.7 million customers. But who would want it? Firms in Germany, France and the U.K. have serious energy gluts, a relic of frenzied plant building during the heady Enron days. In Britain, where supply now exceeds peak demand by 25-30%, power prices have plunged 40% in the last 18 months and generators routinely spend $63 to produce a unit of energy that sells for $26. One potential buyer for TXU Europe is Germany's E.On, but its U.K. subsidiary has already started shutting down plants. Another is France's EdF, which loves devouring foreign targets, but last week the E.U. cried foul and ordered it to repay j900 million in unfair government aid. In other words, TXU might need bankruptcy lawyers more than buyers.

THE BOURSE
Back in Black?
Ecstasy finally mixed last week with investors' now-traditional agony. Markets had the biggest four-day rise in a decade, surging over 10% on encouraging earnings. But like the days of irrational exuberance, it soon ended. Sure, banks earned more, but only by increasing consumer debt — raising larger economic doubts. Yes, Finland's Nokia showed that mobiles can still make money; but Motorola didn't. And while shares in German software-maker sap rocketed 32%, investors worried about companies cutting costs rather than raising sales. Volatility is the new buzzword: yet London's market ended the week up 5%, Germany's up 7%, and New York's up 6%. In short, stocks may have found their bottom. The bad news? They may go back for another visit.

INDICATORS
Boeing Gets Bounced
For the first time ever, Airbus is set to deliver more new planes than Boeing next year, as the European company won a massive order for 120 A319 jets from easyJet. Analysts fear that Airbus slashed prices dangerously low to entice easyJet, but the deal should help the company avoid the massive job cuts plaguing Boeing while providing its first access to Europe's coveted discount-airline market.

Meeting Of The Minds
Imperial College London must have expected big things when they made Richard Sykes a rector. As CEO of Glaxo Wellcome, he helped create the world's second-largest drug company by merging with SmithKline Beecham. His follow-up? Last week he announced plans to merge Imperial College with University College London, creating a huge new institution that would dwarf Britain's other leading universities.

Feta Accompli?
In the latest decision to give geographic protection to food, the European Commission ruled that the label feta can only be used on cheese from Greece — outraging the non-Greek producers who make three quarters of the world's feta. Danish firms vowed to fight the decision, but Italians may also want to point out that the word feta is originally from Latin, not Greek.

BOTTOM LINES
"I know very well that the Stability Pact is stupid."
Romano Prodi, European Commission President, admitting that E.U. deficit limits are too rigid

"Of all the places to be marooned by a strike I guess this is the best."
Emma Marsh, tourist in Venice, after her flight home was canceled when unions launched Italy's second general strike this year

"Sentencing Andersen at this point is akin to sentencing someone you've already executed."
Jonathan Hamilton, editor of Public Accounting Report, on last week's sentence of Andersen Accounting to five years' probation and a $500,000 fine

• BLAINE GRETEMAN
• The newest bid to ease Germany's ills still misses the point