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Don't Believe the German GDP Figures

 I’m sorry I’m late with my letter today, but the lady in front of me in line at MacDonald’s (NYSE:MCD)  with the four screaming kids maxed out all four of her credit cards buying some hamburgers and happy toys. Her new SUV with the chrome wheels baked outside in the summer heat. Sign of the times. When I got back to the office, Egg McMuffin in hand, I was surprised when someone told me that the recession in Europe was over, that Germany has reported Q2 GDP of a positive 0.3%. What immediately came to mind was that their “Cash for Clunkers” program started much earlier and was much larger than ours, that they has fewer banks drinking the subprime Kool-Aid, and they saw a housing boom that was only a shadow of the mania that swept the US. Europe is also closer to Asia, does a lot more business there, and is being dragged up by the gangbusters Q2 growth in China. But when I looked at the figures closer, I found more fudges than one of Warren Buffet’s See’s Candies factories. The seasonal adjustment was big, there was more tweaking with the number of working days in the year, and if you strip these out, the number was still negative. The fact is, that heavily export dependent German GDP is down 5.9% YOY, with the euro zone shrinking at a 4.6% rate. It will take years to make this back. So don’t pour the schnapps just yet. I think I’ll go back to being a vegetarian.