In 1999, chancellor Gordon Brown inaugurated a $1.6 billion program of "upgrading British science" and commercializing its products. This was on top of $1 billion invested between 1998-2002. The budgets of Medical Research Council and Biotechnology and Biological Sciences Research Council were quadrupled overnight.

The University Challenge Fund was set to provide $100 million in seed money to cover costs related to hiring of managerial skills, securing intellectual property, constructing a prototype or preparing a business plan. Another $30 million went to start-up funding of high-tech, high-risk companies in UK.

According to United Nations Development Programme (UNDP), top 29 industrialized nations invest in R&D more than $600 billion a year. The bulk of this capital is provided by private sector. In United Kingdom, for instance, government funds are dwarfed by private financing, according to British Venture Capital Association. More than $80 billion have been ploughed into 23,000 companies since 1983, about half of them in hi-tech sector. Three million people are employed in these firms. Investments surged by 36 percent in 2001 to $18 billion.

But this British exuberance is a global exception.

Even - white hot - life sciences field suffered an 11 percent drop in venture capital investments last year, reports MoneyTree Survey. According to Ernst & Young 2002 Alberta Technology Report released on Wednesday, Canadian hi-tech sector is languishing with less than $3 billion invested in 2002 in seed capital - this despite generous matching funds and tax credits proffered by many of provinces as well as federal government.

In Israel, venture capital plunged to $600 million last year - one fifth its level in 2000. Aware of this cataclysmic reversal in investor sentiment, Israeli government set up 24 hi-tech incubators. But these are able merely to partly cater to pecuniary needs of less than 20 percent of projects submitted.

Commerzbank, Germany's fourth largest lender, saw its shares decimated by more than 80 percent to a 19-year low, having increased its loan-loss provisions to cover flood-submerged east German debts. Faced with a precipitous drop in net profit, it reacted reflexively by sacking yet more staff. The shares of many other German banks trade below book value.

Dresdner Bank - Germany's third largest private establishment - already trimmed an unprecedented one fifth of its workforce this year alone. Other leading German banks - such as Deutsche Bank and Hypovereinsbank - resorted to panic selling of equity portfolios, real-estate, non-core activities, and securitized assets to patch up their ailing income statements. Deutsche Bank, for instance, unloaded its US leasing and custody businesses.

On September 19, Moody's changed its outlook for Germany's largest banks from "stable" to "negative". In a scathing remark, it said:

"The rating agency stated several times already that current difficult economic conditions that are hurting banking business in Germany come on top of legacy of past strategies that were less focused on strengthening banks' recurring earning power. Indeed, German private-sector banks, as a group, remain among lowest-performing large European banks."

Last week, Fitch Ratings, international agency, followed suit and downgraded long-term , short- term, and individual ratings of Dresdner Bank and of Bayerische Hypo- und Vereinsbank (HVB).

These were only last in a series of negative outlooks pertaining to German insurers and banks. It is ironic that Fitch cited "bear equity markets (that) have taken their toll not only on trading results but also on sales to private customers, fund management business and on corporate finance."

Germans used to be immune to stock exchange and its lures until they were caught in frenzied global equities bubble. Moody's observes wryly that "a material and stable retail franchise in its home market, even if more modestly profitable, can and does represent a reliable line of defence against temporary difficulties in financial and wholesale markets."

The technology-laden and scandal-ridden Neuer Markt - Europe's answer to America's NASDAQ - as well as SMAX exchange for small-caps were shut down last week, former having lost a staggering 96 percent of its value since March 2000. This compared to Britain's AIM, which lost "only" half its worth. Even Britain's infamous FTSE-TechMARK faded by a "mere" 88 percent.

Only 1 company floated on Neuer Markt this year - compared to more than 130 two years ago. In an unprecedented show of "no-confidence", more than 40 companies withdrew their listings last year. The Duetsche Boerse promised to create two new classes of shares on Frankfurt Stock Exchange. It belatedly vowed to introduce more transparency and openness to foreign investors.

Banks have been accused by irate customers of helping to list inappropriate firms and providing fraudulent advisory services. Court cases are pending against likes of Commerzbank. These proceedings may dash bank's hopes to move from retail into private banking.

To further compound matters, Germany is in throes of a tsunami of corporate insolvencies. This long-overdue restructuring, though beneficial in long run, couldn't have transpired at a worse time, as far as banks go. Massive provisions and write-downs have voraciously consumed their capital base even as operating profits have plummeted. This double whammy more than eroded benefits of their painful cost-cutting measures.

German banks - not unlike Japanese ones - maintain incestuous relationships with their clients. When it finally collapsed in April, Philip Holzmann AG owed billions to Deutsche Bank with whom it had a cordial working relationship for more than a century. But bank also owned 19.6 percent of ailing construction behemoth and chaired its supervisory board - relics of previous shambolic rescue packages.

Germany competes with Austria in over-branching, with Japan in souring assets, and with Russia in overhead. According to German daily, Frankfurter Allgemeine Zeitung, cost to income ratio of German banks is 90 percent. Mass bankruptcies and consolidation - voluntary or enforced - are unavoidable, especially in cooperative, mortgage, and savings banks sectors, concludes paper. The process is a decade-old. More than 1500 banks vanished from German landscape in this period. Another 2500 remain making Germany still one of most over-banked countries in world.