I was hoping to entitle this post "Gerhard, don't let the door hit you in the Arsch on your way out" but it appears the German electorate has failed to give either coalition enough votes for an outright majority in the Bundestag. Angela Merkel's CDU/CSU party got about a percent more than Schroeder's Social Democrats (SPD). Neither natural partners CDU/FDP or SPD/Greens have the 300 votes for a majority.
Generally the outcome I think favors Schroeder because the New Left Party (PDS) made of ex-communists and SPD defectors can give the SPD/Greens a majority. Both Schroeder and Merkel have said outright that they would not discuss a partnership with PDS but I'll bet that Schroeder will go back on his word and come to an arrangement with the PDS. A broad coalition of CDU/SPD seems unlikely as Schroeder has stated that he would have to be chancellor in such an arrangement.
While it appears that Merkel did not run a good campaign while the veteran Schroeder effectively reprised his populist demagoguery - this time it was 'taking the military option off the table in Iran' instead of fighting the US tooth and nail in Iraq the German electorate has shown that it is addicted to the German welfare state - 11.0+ unemployment and stagnant growth fails to dislodge the governing party. It also shows that the anti-American mood still prevails.
This result is bad for Germany and bad for Europe. The euro is off half a percent from Friday's close and short-term gains will be tough given German electoral uncertainty over the next month.
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