Never say the Germans lack a sense of humour. They like to call Frankfurt “Mainhattan” (a pun on the River Main on whose banks it stands). What makes that funny — well, almost — is the yawning gulf between Germany’s financial capital and its American counterpart on the Hudson.

New York has had its troubles just lately. Quite apart from 9/11, there’s no guarantee that the slide on the American stock market is over, and Wall Street’s finest have been shedding jobs the way Christmas trees shed needles. But the mood there remains defiantly optimistic. And with some reason.

Monetary policy is in the hands of Alan Greenspan’s Fed, which has aggressively cut interest rates since the bubble began to deflate. And fiscal policy, not to mention foreign policy, is in the hands of the Republican party. Say what you like about George W Bush’s tax cut: it’s popular on Wall Street.

The mood in Mainhattan, by contrast, verges on the suicidal. When I was in Frankfurt last month my German publishers were stony faced. “We’re for sale,” they confessed. Normally at the Frankfurt book fair German publishers talk about buying other people’s books. The only books being talked about this year were the ones the publishers themselves would be writing after being made redundant.

The crisis in German publishing is part of a wider crisis in the German media. The big newspapers are being hammered by the collapse of classified advertising revenue. And that is just a symptom of the malaise throughout the German economy.

It seems like only the other day that the new Labour guru Will Hutton was urging Tony Blair and Gordon Brown to copy the German model of a “social market” economy. Hutton’s book was called The State We’re In. A book about the German economy today would have to be called The State They’re In.

A sure sign that things are going wrong in Germany is when people start using the “W” word — as in “Weimar”. Only last week the former finance minister Oskar Lafontaine likened Chancellor Gerhard Schröder to Heinrich Brüning, the chancellor whose economic policies in the early 1930s are often blamed by historians for wrecking the Weimar Republic.

“It is as if Heinrich Brüning has risen again,” Lafontaine said. “He caused mass unemployment with his savings measures and prepared the ground for Hitler.” Lafontaine was alluding to Schröder’s decision to cut spending and raise taxes at a time of rising unemployment — the same masochistic and ultimately self-destructive tactic adopted by Brüning.

True, there is no love lost between Lafontaine and Schröder, who are old and bitter political rivals. But the Weimar parallel is being drawn by historians, too. In the words of Arnulf Baring: “Today’s crisis can be compared to the end of the Weimar Republic . . . the symptoms of economic and political disaster are the same.”

To the many pundits who predicted that the reunification of Germany would create a superpower at the heart of Europe this has all come as a shock. The reality seems to be that since acquiring East Germany the federal republic has become the sick man of Europe — bigger, yes, but weaker.

Certainly, the economic crisis in Germany today is nowhere near as bad as that of 1929-1932. And the political consequences will not, repeat not, be a surge of neo-Nazism — though a swing to the (parliamentary) right is under way. But what is undeniable is that government policy is pro-cyclical — tightening fiscal and monetary policy when it should be relaxing it, just as Brüning’s was in 1930.

So just how bad is Germany’s economic crisis? According to the International Monetary Fund only two of the world’s developed economies have performed worse than Germany’s in the past decade: those of Japan and Switzerland. Since 1994 per capita gross domestic product in Britain grew at an average annual rate of 2.4%; the German figure was 1.5%.

Unemployment in Germany is 8.3% and 5.2% here. It is forecast to rise to 4.3m — one in 10 of the workforce — and will almost certainly worsen. Germany has just come out of recession but growth was just 0.25% in the last quarter.