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Thread: Germany's SPD Elects Leftist Leaders, Risking Coalition Government Collapse

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    Germany's SPD Elects Leftist Leaders, Risking Coalition Government Collapse

    Merkel's last term as German chancellor has been a series of relentless blows to her reputation and legacy, as the former leader of Europe finds herself trapped and increasingly powerless in a world that has grown hostile to her style of governing.
    The latest shock came on Saturday, when the German Social Democratic Party (SPD) announced the winner of its leadership contest as both coalition partners of Germany’s Grand Coalition were transitioning their party leaderships after disappointing results in opinion polls and at regional elections.
    Whereas consensus had widely expected finance minister Olaf Scholz and regional politician Klara Geywitz to preserve their control over the SPD after topping the first round of voting, the result announced just after 6pm CET showed that with a vote of 53% to 45%, SPD members elected Norbert Walter-Borjans, a former minister in the regional state of North Rhine-Westphalia, and Saskia Esken, an MP from Baden-Württemberg, as their new leaders.
    The outcome was a blow to Merkel and her coalition government, as the duo of Walter-Borjans and Esken represent the left-leaning segment of the SPD and have been highly skeptical of the SPD's role in the Grand Coalition government.


    The surprising swing to the left for Germany's (formerly) centrist and fiscally prudent Grand coalition threatens to trigger a prolonged phase of political uncertainty in Germany, because as Bloomberg notes, "the victory of Walter-Borjans and Esken, who favor taxing the rich, boosting welfare spending and abandoning Germany’s long-standing policy of a balanced budget, will certainly weaken pro-government forces."
    Goldman Sachs agrees: in a Thursday note by the bank's European strategist Sven Jari Stehn, he wrote that a victory by Walter-Borjans and Esken increases the risk that the SPD pulls out the coalition because under a left-leaning SPD "there would be a diminished consensus within the coalition" as the newly elected duo is demanding a re-negotiation of parts of the coalition agreement, and seeking to increase federal fiscal spending and investment.
    Whereas this would be a virtually impossible concession for the CDU to make during its own leadership transition, Goldman does not expect "an immediate dissolution of the coalition", even though the collapse of Germany's current coalition is now just a matter of time.
    "I never said we need to leave,” Walter-Borjans said after the results of the election were announced on Saturday evening. "We must improve the policies and perhaps loosen the black zero," he said in reference to Merkel’s balanced budget policy, news that would be met over champagne and caviar everywhere from the ECB to Brussels, to the IMF, all of whom have been demanding that Germany boost its fiscal stimulus.
    Ironically, it's now only Angela Merkel who stands in the way of Germany doing away with its "black zero" balanced budget policy, and any deviation would almost surely mean the end of the Chancellor's political career.
    The fate of Germany's fiscal stimulus has emerged as arguably the most important topic for Europe's economic future.
    While Germany avoided a technical recession by the narrowest of margins, growth continues to slow and will drop to an estimated 0.5% this year, one-fifth the rate of what it was in 2017, largely as a result of the global trade war and China's collapsing credit impulse, although the ECB's recent monetary boost has certainly helped delay the day of reckoning.
    Ironically, after a tumultuous year in which the SPD and Merkel’s Christian Democrats both faced intense power struggles, Germany’s political and business elites had hoped for a period of calm and continuity; instead they are now looking at what appears to be an almost certain collapse of the ruling coalition.

    More at: https://www.zerohedge.com/geopolitic...ion-government
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

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    Having promised revolution one week, Germany’s Social Democrats called it off the next, hoping that nobody would take much notice. As so often in contemporary German politics, rupture was averted for the sake of stability, open conflict exchanged for suppressed frustration, movement foregone for stasis.As recently as Nov. 30, the Social Democrats seemed dead set on quitting their loathed coalition with Chancellor Angela Merkel’s conservative bloc, after electing two leaders who had promised exactly that. Germany was to get a new government. The SPD would retreat into opposition to lick its wounds and regain its ideological purity.
    But as the SPD convenes today, that fervor has dissipated. The new co-leaders, Saskia Esken and Norbert Walter-Borjans, have miraculously turned from leftist firebrands into meek functionaries. Instead of reading their coalition partners the riot act, they’re merely suggesting policy tweaks — a higher minimum wage, more public investment, that sort of thing.

    More at: https://finance.yahoo.com/news/germa...101700742.html
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankind…it’s people I can’t stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment



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