BERLIN -- -- Lavish holiday gifts fly off the shelves: porcelain sets priced at $10,000 to $20,000, new cars, video cameras -- all are so much in demand that stores can't keep them in stock.

Merchants are ecstatic. Wholesalers can't keep up with demand. Manufacturers search desperately for ways to increase capacity.

The rest of the world may be in the throes of an economic downturn this Christmas season, but it is boomtime in the new, bigger Germany. The holiday season is going gangbusters here -- despite the Persian Gulf crisis, the weak world economy and doubts about the transformation of the ex-Communist East.

From Berlin's sumptuous KaDeWe, a department store whose gourmet food displays are a feast to the eye, to the family shops that line the pedestrian zones of Germany's cities and towns, merchants are crowing about crowds of customers shopping with a new confidence.

"It is incomparably, massively good," said Josef Teupe, general manager of the Karstadt department store on Duesseldorf's tony shopping boulevard. "We are seeing Christmas sales like we haven't in a decade. The customers have more money and they're in a mood to spend."

While retail analysts in the United States speak of what may be the sparsest holiday season since the 1974 recession, the German government's statistics office predicts the strongest economic boom since 1976.

"Last year, there was great insecurity about the opening of the borders to the East," Teupe said. "The future of the country was not clear. Now we have a new stability and continuity. The country is united, the elections are behind us, people are unburdened."

The cover of this week's issue of the German newsmagazine Stern shows a glamorous model dizzied by the fistful of jewels she holds against her delicately whitened cheek. The headline reads "The Sinfully Expensive Celebration: The Germans on a Shopping High."

The German Retailers Association has predicted record sales this holiday season. The group polled its members last weekend after "long Saturday," the year's only Saturday when German shops are permitted to stay open all day, and found 57 percent "very satisfied."

"People are proud to have achieved so much 45 years after the end of the war," said Rudolph Moshammer, whose men's shop on Munich's Maximilianstrasse is one of Europe's most expensive. Moshammer's Arab and American customers have vanished this season, but Germans are buying. "Many Germans believe that there are no problems, that everything is great for us while America and England and the whole East Bloc are suffering."

The troubles that have depressed most of the world have made little dent in western Germany. The gulf crisis remains as it has been since the Iraqi invasion in August: a minor item in the national media. The American recession is the stuff of sarcastic features that end TV newscasts. The food shortage in the Soviet Union is the inspiration for another expression of German affluence, a massive and wildly successful national charity drive.

Eastern Germany is of course different -- but not entirely. Unemployment continues to soar as old Communist industries collapse. Eastern Germans are bracing for staggering price increases on Jan. 1 -- rents will double, railroad fares will jump by half.

A poll released by ZDF television Monday found that while 69 percent of western Germans call their own economic situation "good," fully 60 percent of those in the east say theirs is "bad."

But families experiencing their first Christmas as westerners are nonetheless jumping into the commercial spirit, helped along by the often substantial savings they accumulated during decades of living in a society where nothing was worth buying.

"I look at the fancy watches and all the perfumes from Paris people buy here," said Ilse Willerding, an east Berliner buying toys at KaDeWe, where as many as 200,000 people shopped on a busy pre-Christmas day. "It's out of my price range. But we could never buy such nice presents for the children before the revolution. This is what we went to the streets to have."

Far from cutting staff as many U.S. merchants have done, German department store chains report that they cannot deliver fast enough to keep the shelves stocked at their outlets near the old east-west border.

Auto dealers who rushed to set up lots in the east have been overwhelmed, and carmakers have put workers on additional shifts to deal with the demand. New car registrations nationwide are up more than 20 percent over 1989.

The plummeting U.S. dollar has hurt German automakers -- exports were down 8 percent in October -- but eastern Germans' hunger for western cars has more than made up for the loss. In all, German vehicle production is up 10 percent over last year, according to the German Automobile Industry Association.

The addition of 16 million new Germans is the main engine behind the boom. It is known here as the "uncoupling effect," in which the addition of demand from the east protects the German economy from the recession elsewhere in the West. Economic growth peaked at 5.5 percent in the third quarter and is expected to be about 4.5 percent for all of 1990 -- as much as double the growth in other major Western nations.

Nearly 80 percent of the groceries now purchased in eastern Germany are shipped in from the west. The few remaining east German products sit unsold on store shelves.

The few attempts to introduce new eastern wares have flopped; the west German chocolate company Ritter tried to team up with an east German firm to market a brand called Thuerina, named after the east German state of Thuringia. After six months, Ritter abandoned the project.

But anything western is a different story. Small appliances, computers and computer games, VCRs, cassettes, color TVs, radios, all are selling out at top prices.

And in western Germany, tastes have taken an especially luxurious turn this season, merchants say. Sometimes it seems like a flashback to the United States in the high-flying '80s as shoppers pick out expensive stereo equipment, the latest yuppie household gadgets and, for the first time, thanks to a recent change in Germany's restrictive telecommunications laws, designer telephones.

"Adults are buying computer games, plush animals, technical toys," Teupe said. "This year, it is not the price that determines a sale, but the quality and style. The customer is picking items in the mid to upper range, not the low to mid range as usual."

The German boom is more than an expression of confidence. The use of credit cards is not widespread in Germany and personal checks are not used for shopping, so a healthy Christmas in the shops means that people have the cash right now, not just that they are in a spending mood.

At Soennichsen, a Hamburg jeweler, Rolf Benecke said he is having no problem selling $23,000 platinum watches.

"They are buying joyfully and easily," Benecke said. "Our chancellor asked us to be calm and cool about the future, and my customers took it to heart. Everything's going well."