By James Arnold BBC News Online business reporter

It's no accident that Schadenfreude is a German word.

Always keen to take a pop at an over-mighty neighbour, Europeans are doing their best to highlight Germany's current economic woes.

"Behind a healthy facade, Germany is crumbling," bellows Britain's Sunday Times; "Kirch's collapse causes an earthquake in Germany," crows France's La Tribune.

Certainly, reading the press - inside as well as outside Germany - gives the impresssion of a country in the throes of a recession of unparalleled ferocity, an impression reinforced this week by the messy disintegration of the Kirch media empire.

But that may not be entirely fair: even amid the gloomiest of the news, it may not be fanciful to detect the first glimmerings of recovery.

Portents of doom

Not that business news has been anything other than wholly dismal in the past few months.

Leo Kirch: Latest in a series of company flops

Germany is in recession, by any measure, and its economy has now underperformed the EU average for 10 straight years.

Unemployment, which Chancellor Gerhard Schroeder promised would be below 3.5 million in time for September's elections, is already over the 4 million mark.

Germany's jobless rate, at 8.1%, is the fifth highest in the EU, and is three times the level seen in the neighbouring Netherlands.

Company crunch

Even more crucially for most voters, something seems to be dangerously wrong with Germany's leading companies.

The failure of Kirch may only affect a couple of thousand jobs, but the company's iconic status as a global media giant - Germany's biggest private broadcaster, owner of TV rights to the World Cup, Formula One and so on - gives it a special poignancy.

Holzmann's demise could be good news for others

After all Kirch was just the sort of shiny, new economy company that dowdy Germany was supposed to aspire to.

In the meantime, plenty of dowdy companies have been going bust too, including construction giant Holzmann, paper producer Herlitz and aircraft builder Fairchild Dornier.

There were 32,000 insolvencies in Germany in 2001, 14% more than the year before.

According to analysis firm Creditreform, there could be 40,000 this year.

Red faces at the blue chips

Nor is it just the obvious basket cases: even Germany's solid blue-chips are going through tough times.

For months now, DaimlerChrysler, the transatlantic car making giant, has been trying to soothe discontented shareholders.

Mr Stoiber wants to kick the economy into shape

The firm has repeatedly cut profit forecasts, blaming the persistent underperformance of its US Chrysler division - a company that shareholders say Daimler Benz should never have bought.

Similar strategy muddle is ruffling feathers at Deutsche Telekom, which has fallen out of shareholder favour with stunning speed this year as its core markets are snaffled by competitors.

A decade ago, Deutsche Bank was Europe's largest bank and four of Europe's 10 biggest firms were German.

Now, Germany has no top-10 firms, and Deutsche Bank has fallen down the rankings as its rivals hurried to merge.

Turning nasty

For a variety of reasons, this has provoked considerable public upset.

Germany's all-powerful IG Metall trades union has launched a series of warning strikes, which threaten to snowball into a dangerously nationwide protest as the election looms.

Cheer up: the market's booming again

The closely watched Ifo index of business sentiment fell to a five-year low of 84.7 in October, but had bounced back to 91.8 by March.

Also pretty confident are financial investors, who have spurred a modest surge on the Frankfurt stock market this year.

After a pitiful performance in 2000-01, Frankfurt's blue-chip DAX index has gained by more than 10% in the past couple of months.

Unemployment, too, may have turned the corner.

For the first time in 15 months, the jobless level fell in March, amid predictions that it will continue to drop sharply into summer.

No meddling

The government has been understandably quick to claim credit for the unemployment turnaround.

But the truly heartening side of Germany's current situation is the fact that politicians and other busybodies actually have less involvement than usual.

How do you say "laissez faire" in German?

Ghoulish perhaps, but it is possible to see the current rash of corporate failures as evidence of a healthy change in German business culture.

For decades, big German banks - themselves far too close to the political establishment - feather-bedded big German corporations, allowing them to make all manner of disastrous and expensive business decisions.

These insolvencies are the result of banks pulling the plug, putting the interests of their private shareholders ahead of their political cronies.

Three years ago, Holzmann was bailed out at the insistence of Mr Schroeder, costing the German taxpayer 2.2bn euros (�1.3bn; $1.9bn).

This time around, political bleating is being ignored in favour of economic good sense.

Small compensation for Holzmann's 23,000 workers perhaps - but possibly excellent news for the 4 million queuing at dole offices around the country.