BERLIN, Germany – The takeover war between Volkswagen and Porsche is playing out almost like a Shakespearean Drama. At the heart are two of Germany’s most well known and yet most reclusive industrial families - the Porsches and the Piechs, who incidentally belong to the same family line.

It began with Ferdinand Porsche, the German engineering genius who constructed the first Volkswagen, known at first as the KdF car, and then later as the VW Beetle. Porsche had several children, but two would come to define the family rift we are all now seeing.

Ferry Porsche would go on to manage the Porsche Engineer Bureau and oversee the construction of Porsche’s first own sports car, while Louise Porsche went on to marry Anton Piech and keep a high stake in the then fledgling Volkswagen Auto Company.

Fast forward to today and the main players are cousins Wolfgang Porsche, Ferry' son, who heads the supervisory board of Porsche SE, and Ferdinand Piech, Louise's son, who is at the helm of the Volkswagen board. Both men are involved in both companies, but Piech has been busy building the VW Empire while Wolfgang Porsche oversaw the rise of the tiny sports car maker to one of the most efficient car manufacturers in the world.

Then came Wendelin Wiediking, CEO of Porsche, who had the idea of attempting a hostile takeover. The tiny Porsche would try to take a majority stake in Volkswagen, the largest car company in Europe. Just to put this in perspective, Volkswagen turns out more vehicles a week than Porsche does in a whole year.

The deal failed and Porsche was left with massive debt of more than $10 billion, and now is when Ferdinand Piech saw his chance.

Piech gathered his friends in German politics and applied pressure on his cousin Wolfgang Porsche. After a long battle, Wolfgang conceded defeat. Porsche will probably merge with VW, thus losing much of its famed independence.

There is however some consolation in all this for Wolfgang Porsche. While he lost his top manager Wendelin Wiedeking and has allowed his company to fall into the fangs of Volkswagen, under the new management structure the Porsche and Piech families would hold more than 50 per cent of Volkswagen AG - and thus become more powerful and richer than ever before. Making this possibly one of the most profitable family feuds of all time.

DRESDEN, Germany – It was one of those cold days when the weather can’t seem to decide whether it should be raining or snowing, cold wet and gray.

We had just arrived at the Dresden factory of memory chip maker Qimonda, a company that filed for bankruptcy, and we found almost the entire workforce outside the gate protesting, doing what they can to fight for the survival of their company.

Many of the workers are highly skilled employees from abroad. American Michelle Prevot is one of them. After finishing her PhD in Germany she decided she wanted to stay, and Qimonda seemed just right.

Memory chip production was good business and the area around Dresden is one of the largest clusters for the industry in all of Europe. The capital of the German state of Saxony, it is known as "Silicon Saxony" to Germans.

Prevot says she never thought things could get this bad: “I never would have imagined something like this could happen,” she tells us as she keeps wiping rain and snow from her glasses, “we don’t know if we will have jobs next month.”

Qimonda is not the only chipmaker in trouble. Other major companies like Infineon, Qimonda’s parent company, and Advanced Mico Devices are feeling the financial crisis as well - and that is threatening the very existence of "Silicon Saxony."

To understand what this means you have to go back all the way to German reunification in 1990.

Within a few years of East and West Germany coming back together, pretty much the entire industry in what used the be the communist East collapsed and vanished, leading to massive unemployment.

Things were different around Dresden in Saxony. The state government had a plan to build up high-tech industry in the area. They had a skilled work force - Dresden had been home to "Robotron" the communist computer maker that was building outdated 1980s American PCs - and they also had access to subsidies from the German government. 

Within 10 years Dresden had emerged in its "Silicon Saxony," incarnations with a massive semi-conductor industry employing some 44,000 people. It remains a shining light in the former communist East, which has never fully caught up to the West in industrial production or job creation.

Now all that is under threat.

In press releases Qimonda blames its bankruptcy on the financial crisis and drastically falling prices for DRAM memory chips, due to stiff competition from Asia.

The local Dresden government tells us that Asian chipmakers receive far greater subsidies from their governments than European companies and that is what makes them more competitive.

But even the business mayor of Dresden admits that his town is already bracing for the worst in case Qimonda shuts down and all 3,200 employees lose their jobs.

“We are looking to build up new sectors with other high technologies, so we can mitigate the problem,” says Dirk Hilbert, the business mayor of Dresden.

In the meantime, Dresden's mayor, Saxony’s state governor and the German federal government say they are still fighting to save Qimonda by looking for investors together with the company’s insolvency administrator, which has until the end of March to get fresh capital to continue production.

At Qimonda, the workers protesting outside the gate are hoping for the best, but bracing for the worst. Steve Langdon, an engineer from England, says he had no idea what might happen

“Where will I be in a year? Ask me in a year, I really can’t tell you. But I don’t want another job, I want to work here, I like it here,” he says.

For now all he and the others can do is wait and show the world they want their company to stay alive by protesting outside the gates no matter how bad the weather.

BERLIN, Germany - For a while, the German government thought the international financial crisis wouldn't really affect the country. After all, there was never a real housing bubble here, Germans save money rather then go into debt and, unlike many other western European countries and the United States, Germany still has a huge industrial sector.

But now Germany's economy has officially taken a nose dive into recession - and many Germans are wondering what's hit them.

The answer is simple. When the world's economies decline, the world's largest exporting nation is bound to suffer.

The auto sector, Germany's largest and most competitive industry is already feeling the pain. BMW, Opel, VW, and Mercedes have all announced they will halt production temporarily or have already done so because they can't sell enough cars.

Make no mistake; Germans aren't the most important consumers for German cars, the world is. In fact the average age of cars on German roads has drastically increased over the past five years, showing that German consumers are not buying.

Now that the world seems to have stopped buying as well, the automobile industry is looking at massive layoffs and temp workers are the first to suffer. Many have already had their contracts cancelled.

The same holds true in the German microchip industry, where manufacturers like Infineon and Qimonda have begun to lay off temp workers.

But to understand the full magnitude of what is going on you have to understand the sheer size of the German export economy. In the past four years, Germany has been the leading export nation of the world with a trade surplus larger than China's. Germans can export almost anything.

I was in the forests around Berlin the other day and talked to forest owners and lumberjacks. It turns out they were exporting much of their timber to the U.S. as construction wood and now also have to lay off workers since the American housing bubble has burst.

One forest owner told me how a chartered cargo ship with German wood was on its way to the U.S when the contract was cancelled and the vessel had to turn back. "The crisis hit us very suddenly and very hard," is something I have been hearing a lot.

And of course, even in the case of lumber, there are whole industries connected. Only a short drive outside the forest we found one of the world's largest makers of laminate wood floors and wooden panels. Of course the company was exporting almost their whole production to the U.S. Now they will have to lay off about 10 percent of their workforce.

The story of the German recession is not one of consumers closing their wallets; the wallets of German consumers have been closed for a long time. Rather it's a story of people fearing for their jobs and the threat of mass unemployment.

For a long time German politicians said they didn't think that would happen. Now they have become pretty quiet.