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I spent last summer in Dresden, the capitol of Saxony, and saw no evidence of a racist underground. Everyone I talked with seemed normal enough, and without exception, all were ashamed of the Nazi period.

In Dresden I went to language school with Indians, Arabs, Poles, Russians, Japanese, etc. etc. and no one that I knew ever complained of any discrimination or racism of any kind directed at them.

Neo-nazis in Germany have the same (or worse) reputation that they have in the states, i.e. low class hateful losers with too much time on their hands. Every country has a few such people...