Usually, Germany's lenten carnival season means nonstop parties and good-natured cheer. This year, however, joking and laughing has turned into derision and scoffs. In the parades that wound their way through the Rhineland last week, papier-mache floats ridiculed Gerhard Schroeder and his ministers. Such is the national mood that genteel Dusseldorfers didn't bat an eye at an 15-foot chancellor with his privates on display. The tabloid Bild was dead serious when it described the whole country as "a ship of fools." For a 13-page report on the state of the union, appearing the day before carnival, newsweekly Der Spiegel's cover proclaimed "Germany: A Joke."

Germans have long been famous for lamenting, whining and hyperbolizing over their plight, real or imagined. Angst and anxiety are indeed national pastimes. But the present bout of despair seems to be going from bad to worse. Only 20 percent of Germans think they'll be better off in five years, according to one recent poll--qualifying them as the most pessimistic citizens in the entire European Union. In the eyes of the country's media, nothing is going right. To the tone-setting Der Spiegel, Germans have turned into "a people of losers, incapable of progress, governed by bunglers." Conservative daily Die Welt last week diagnosed "a German depression." Even serious analysts are joining the choir. Foreseeing "the likely failure of comprehensive economic reform," a somber recent report by normally upbeat Deutsche Bank concludes: "Germany is fading."

There are plenty of good reasons why Germans are getting down on themselves. Consider last week's string of bad news. On Monday, newspapers reported that Germany--once Europe's richest country and the envy of all--had officially fallen below the EU average in per capita GDP. On Tuesday, the closely watched IFO business confidence index turned sharply south after a hopeful nine-month rise, reflecting companies' increased worries about the soaring euro as well as doubts about the government's commitment to reform. On Thursday, the European Education Survey placed the skills of once-smart German students near the bottom of the EU league. To add insult to injury, the EU Commission in Brussels recently told Germans they would have to replace their "Made in Germany" trademark--once, like the already abolished Deutsche mark, a tower of national pride--with a more nondescript "Made in Europe." Aua, as the Germans say.

Confidence in Schroeder's ability to solve these problems does not run high. His government's modest efforts at reform have bogged down in Parliament; his Social Democrats are in open revolt, to the point that last month he stepped down as party leader. Indeed, things have gotten so bad that many Germans find government programs downright laughable. The latest butt of jokes has been Toll Collect, a planned nationwide, satellite-based system to calculate highway fees for cargo trucks. Last week, the Transportation Ministry was considering writing off 3 billion euro in government and corporate investment because the complex project, already delayed for two years, was riddled with bugs and technical failures. The country's other high-tech pride and joy, the 17-year-old Transrapid magnetic levitation train, is in no better shape. It seems to have gotten the kiss of death last month when China, its only customer so far, decided against building a line from Shanghai to Beijing. In today's dismal climate, it's hard not to see these setbacks as metaphors.

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There is a bright side. The bad mood means that Germans are finally being forced to confront the mess they're in, says Stefanie Wahl, senior researcher at the Institute for Social and Economic Research in Bonn. The vast majority is furious about the first small reforms in social programs that have grown too expensive, such as the new 10 euro quarterly fee patients must now pay when they visit the doctor. Yet this is only the start; tougher measures will inevitably follow. Still, it's unclear whether even the most draconian reforms can get Germany back on track--or whether Germans will summon up the fortitude to try. "It's five past twelve on the clock," says Wahl. "The years when we could have reformed without very big pain are over. Now begins our decline."

Germany's mood has grown so grim, in fact, that it's become part of the problem. "As long as we have this very high level of pessimism, the economy cannot recover," says Thomas Petersen of the Allenbach polling institute. Future economic growth, he adds, almost perfectly correlates with polls on the national mood; by his calculations, the current lack of optimism will translate to GDP growth in 2004 of only 0.7 percent. That's better than last year's actual 0.1 percent decline--but far lower than the government's more generous growth forecast for this year of a 1.5 percent gain.

What all this portends for Germans' sense of self-esteem is not promising. For decades, the German national myth has been based on the idea of a phoenix rising out of the ashes--their terrible history redeemed by economic success, a model democracy and an enviable welfare state. Now all three have lost their shine. The carnival hangover looks set to last.

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