if you are ever, in a
situation,
without enough time
for contemplation,
all of your friends go
in the same way,
you feel kind of
trapped, you don't know what to say,
just say no, 'cause
better save than sorry,
Although the grassroots of the social-democrat SPD could
still spoil the party, everybody assumes that the deal is done for Germany: the
country will get a large government coalition, consisting of the christian-democrat
CDU/CSU, led by Angela Merkel, and the SPD of Sigmar Gabriel.
BNR News Radio reported the following news on the new German
government:
German chancellor Angela
Merkel, Horst Seehofer (CSU) and Sigmar Gabriel (SPD) have presented their
government agreement, with the motto “Designing the future of Germany”.
After marathon
negotiations of 17 hours, the party leaders of CDU, CSU and SPD agreed upon a
government agreement this morning. However, this agreement must be approved by
almost half a million SPD party-members.
“This could pose a problem, as this
agreement has a clear christian-democrat signature”, according to
secretary-general Dobrindt of CSU.
Merkel stated in a
formal comment that a large coalition has been formed “for the great tasks that
lie ahead of German politics”. She emphasized the importance of solid
government financing.
SPD-leader Sigmar
Gabriel started his speech with a plea for the “stabilization” of the EU and
the Euro. According to him, a great idea is under jeopardy, due to the
rightwing-populists. Important is to maintain the confidence in Europe.
Germany will not enter
into new debt, from 2015 and further. Besides that, there will be no new taxes.
The Social-democrats had been in favor of more government spending, in order to
create additional jobs, but that desire has not been rewarded.
Nevertheless, the
fondest wish of the SPD - to establish a minimum wage of €8.50 per hour - has
finally been rewarded. However, during the transitional periode (until 2017), it is yet possible
for the employers to negotiate a lower payment within the collective labour
agreements. The CDU/CSU feared that otherwise many jobs would be lost, as a
consequence of this minimum wage.
From 2017 and further,
the Germans will receive a “social benefit for the elderly”: this enables
people, who could only pay little contributions during their working life, to
receive a minimal amount of €850 per month anyway.
Negative for
foreigners is the introduction of a German highway toll system, based on a similar
toll vignette, as in Switzerland and Germany.
No names of future
ministers have been mentioned yet. However, the CDU will get five ministers
(besides the chancellors position), the SPD six and the CSU will get three
ministers in the future cabinet. The plan is that the Bundestag (German parliament) votes Merkel as third
time chancellor in the week before Christmas.
I must admit: I was wrong with my
prediction that Germany would get a blue/green cabinet, consisting of
CDU/CSU and the German Green Party.
Where I was right, however, was my
prediction that the negotiations would be tough and would take quite some time:
However, the SPD has a
lot to lose in such a coalition:
the party will have to
make a lot of impopular decisions, for which it is undoubtledly blamed at the
following elections. The real advantages for the SPD are therefore not certain
at all.
besides that,
Steinbrück might be forced to act as a stooge for Angela Merkel: making at
least half of the jokes, but never receiving the applause for it.
Is this the reason
that the SPD used today (and probably the rest of the week) to ‘lick its
wounds’, before taking a decision on a possible red/blue coalition in Germany?
Although this CDU/CSU/SPD
coalition is clearly the favorite possibility of many Germany-watchers, I am
not so convinced that such a coalition will indeed emerge, due to the
aforementioned reasons.
Well, the Germans of the CDU/CSU and SPD “did it” anyway and
formed a new cabinet.
In my opinion, this will indeed be the future cabinet of
Germany: I suspect that the sense of responsibility of the SPD grassroots will vanquish
their feelings of disappointment and resentment against the CDU/CSU combination.
This will happen, in spite of the Prime Minister’s bonus that will undoubtedly
be rewarded to Angela Merkel again.
The following snippet is from the article mentioned behind the previous hyperlink:
This is the
consequence of a phenomenon, called the Prime-Minister’s bonus: where the
largest party in a two-party coalition (the party, which delivers the PM) often
receives the credits for the things that went right during the previous
government stint, the smallest coalition party is often blamed for everything
that went wrong in the coalition. Especially, by the people who voted for the
latter during the last elections.
In other words: the
smallest party is punished for having been smaller and for not having as much
influence as the largest party. This happened to the FDP during the 2013
elections and to the SPD in 2009 (to 23% from 34.2% in 2005).
This new cabinet might be a very stable one; the Germans don’t
have a tradition of large political arguments and devastating cabinet crises, like in The Netherlands and Belgium.
Anyway, the $1000,000 question is: will it be a cabinet that is good
for Germany and Europe?! I have serious doubts, with Merkel at the helm.
Merkel’s conservatism and lack of courage is one of the
reasons that the
Euro-crisis took such a long time to solve; in reality the Euro-crisis has
not even been solved yet, only nobody
whines about it anymore, at the moment.
Germany, irrespective whether it has been Angela Merkel, the
Bundestag or the Federal Constitutional Court in Karlsruhe, has “sabotaged”
almost any attempt to save the Euro-zone and the Euro, spur the European economies and solve the European
banking problem.
Therefore, I hold Germany (together with The Netherlands) responsible for
a large share of the financial and economic misery in especially the PIIGS countries over
the last five years.
This makes the red and bold statement of SPD's Sigmar Gabriel about "maintaining confidence in Europe" so peculiar: perhaps Germany's past actions maintained the German confidence in Europe, but it put the confidence of many, many other Europeans under jeopardy.
And will this ‘German N.I.M.B.Y. (“not in my back yard”) politics’ change in the coming
years?!
The distinguished and savvy ING economist Carsten
Brzeski is very clear about this, in an interview with Petra
Grijzen of BNR News Radio:
Carsten Brzeski: First
and foremost, there were a lot of "No's" in the formal statement of both coalition
partners. They know best what Germany is NOT
going to do:
- "No" against the European Transfer Union
- "No" against a common deposit guarantee system.
- "No" against a completion of the European Bank Union
- "No" against the mutualization of [government and bank] debt among the European society
- A remaining "No" against Eurobonds
There were indeed a lot of "no's", but the coalition didn't make clear at all what Germany stands for in the
future.
I'm afraid that the German policy will largely be the same as now. This
means muddling through the crisis in Europe, instead of solving it.
Petra Grijzen: What does
that mean for us in Europe?
Carsten: What we see as an interesting development, is
that the German government will retreat from the current plans for the European
banking Union. One of the most important parts of this banking union plan was
the following proposition: in 2014, the ECB would be allowed to rescue banks on
their own initiative with money from the European emergency fund, without
asking permission from the European governments in anticipation.
The new German
government states, however, that this ECB plan will only be allowed by Germany,
when a European banking settlement mechanism for defaulting banks is
established. Such a European banking settlement mechanism is not established
yet and it might at least take two or three years for the EU to develop it.
A banking union that could
break the vicious circle between banks and governments is something that we
will not get so easily, I'm afraid.
Petra: What does that
mean for the banks?! The biggest problem in the EU is the weak banking
industry. What can we expect?! The next crisis, perhaps?!
.jpg) |
| Petra Grijzen of BNR News Radio Picture copyright of: Ernst Labruyère Click to enlarge |
Carsten: This means that the lionshare of responsibility will remain with the European Central Bank. The ECB has
the responsibility to supply the financial system with sufficient liquidity, without the European governments backing it up.
And when we look at
the stress tests results for the European banks next year and we see then that new banks will
have to be rescued, this will be again the task of national governments. Especially,
in those cases when the money of shareholders and bondholders does not suffice to let the bank properly default.
This development is exactly what we wanted to prevent with a banking union.
I don't think that
this will lead to a derailment of the financial industry, but it means that
what we wanted so badly - an integral and fully operational banking union for
the EU - will be a thing of the future.
Summarized: Angela Merkel will be "Frau Dr. No" in a German
N.I.M.B.Y-cabinet, which rather lets the Euro-crisis fester
on for another 5-odd years, than to take a few decisions that might hurt the
Germans a little, financially.
The same
Germans, by the way, who saved about €40+ billion in national interest
payments, due to the extremely low interest rates for Bunds, currently. It
would be funny, weren’t it so sickening…
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