Lowest Common Denominator

Germany still does not have a new government. The talks between Merkel's CDU/CSU Union and the social democrat SPD are stalling. In fact, the only real agreement seems to be on a a quota for women on corporate boards. But, the discussions about a minimum wage (the SPD wants €8.50);  mothers' pension (for mothers of children born before 1992); or the toll for foreigners on the Autobahn that the CSU wants are going nowhere. This weekend the CSU leader Horst Seehofer hinted at new election as an option. Only two things seem certain: this will be the longest time Germany has ever been without a new government; and the next government will likely be one based on the lowest common denominator.

Reforming The Renewable Energy Law... Again

We still don't have a coalition contract for the next government, but today we learned more about the plan to reform the Renewable Energy Law. Merkel has realized that offshore wind energy is quite expensive after, well, Merkel massively increased (from under 9 €ct/kWh to around 15 €ct/kWh - depending on location - for 12 years plus 8 more at a lower level) the subsidies in the form of an allocation fee paid by consumers in 2009.  This new "reform" will not lead to any significant improvements to the consumers.

Quotas For Women On Company Boards

Merkel's conservative CDU/CSU Union and the social democrat SPD are still working towards a coalition contract. According to Sueddeutsche, they have come closer to a agreement on quotas for women for supervisory (Aufsichtsrat) and management boards (Vorstand) of the largest German companies.

Republicans Are Damaging US Foreign Relations

It is not just economic damage that Republicans are causing. Their unbelievable arrogance combined with childish ignorance made Republicans say really stupid things on US television this weekend. On "Meet The Press" Representative Peter King not only made up stories about thousands of lives saved by NSA spying, he also felt the need to pretend that eavesdropping on Merkel was somehow excusable because some of the 9/11 terrorists had lived in Germany.

NSA, Merkel's Phone, And Hypocrisy

According to Spiegel, Angela Merkel's private phone "might have been tapped" "for years" by US intelligence. Of course, the Bundesregierung "unequivocally disapproves". When the revelations were still about the German citizens her Minister of the Interior Friedrich called the critics "anti-American", and "naive".

What's Happening In German Politics

First up, Germany doesn't have a new Government yet, but the Greens will not be Merkel's next coalition partner. This isn't really news, a so called grand coalition with the SPD (new labor) was much more likely from the start.

Second, Merkel prevented a new EU compromise on car emissions. She wants higher Super Credits for environmental friendly cars, which basically just means counting these vehicles more than once when calculating the average fuel consumption of the whole automotive manufacturer's fleet. I have written  about super credits (counting electrical cars more than once against the CO2 emissions of the whole fleet) before; and described why I think they are important:

Super credits have the potential to increase the production capacity of zero emission vehicles, and also give companies an incentive to accept lower profit margins on these, therefore Merkel was right to stop the current proposal.

 So, again I completely agree with Merkel to stop an idiotic regulation based on fantasy assumptions of how much development potential is left concerning conventional engines. Also, we in the current form the regulation favors plug-in hybrids. Plug-in hybrid only produce less CO2 if one ignores the fact that more needs to be used in the production for the second engine and that the current German electricity comes in large parts from coal and lignite.

Still, CO2 regulation has become important for another reason. The CDU's biggest donor is the Quant family. The BMW shareholders gave €690,000 to Merkel's party this week. Of course, one would have to be an idiot to think that the Germany's biggest party can be bought with €690.000, still the timing is absolutely mind boggling.

Instead of a discussion about the size of super credits (should electrical vehicles be counted twice or thrice against the rest of the car fleet, for example), we now have a discussion about corruption. Super credits make sense since the buyers of large cars will cross finance zero-emission vehicles and thereby make them cheaper, but I have not seen a single article in the German media talking about this fact.

Other than that nothing will be happening until the coalition contract is written, which might take a while. Also there is a very small chance that we wont see a grand coalition in the end which would mean that there would be new elections, but that is extremely unlikely.

The German Government and the Handling of a Different Crisis

At the moment, we are all waiting how the Cyprus crisis will be solved evolve. Since I do not expect a "solution" before later today or even early in the morning tomorrow. I think one should - in the meantime - look at the handling of a different crisis by various German governments. The  Bosphorus serial murders or so called "Dönermorde", and - in my opinion very much connected - the attempts to ban the NPD.

Based on Krugman's headline about Cyprus, I'll ask:

Germany: the Sum of all FUBAR?

A simpler way to solve the crisis.

This will be really short. Let's just assume Europe were a Union. This Union has a entity controlling and in the end liquidating the banks. We shall call this entity EDIC. Here is what would have happened. One Friday evening  about 6 months ago EDIC people would have taken over the banks. Tuesday the bank would have been resold,ropened, and the people with under 100.000 € would have kept all their money. The EDIC employee coming home to the partner would have answered to the question "how was it?" with "not that bad I have taken care of bigger issues."

There wouldn't have been any talks. No stupid name calling afterwards. It would have happened months ago. So why is there no such institution: FinMin Schäuble was against it, Economy minister Rösler was against it, Bundesbank president Weidman was against it, Merkel was against it, the biggest opposition party SPD was against it.

Now. How did your alternative work mister Schäuble? Oh I see it just blew up in your face. Good job.

German Euro Sceptic Party

Germany now has its own Eurosceptic party, founded this Year by the journalist Conrad Adam, economics Professor Bernd Lucke and former IBM manager Henkel among others, the Alternative für Deutschland (Alternative for Germany) hopes to get into the Bundestag this September. The primary goal is to end the Euro of course but it is interesting how they want to achieve it.

We want to change the European Contracts so that any state is able to leave the Euro. Every nation has to be able to decide democratically over their currency.

Ok sounds reasonable. A nation can only be considered souvereign if it is able to choose its own currency. Of course this is for them just a means to achieve their goal of ending the Euro. The current plan sounds quite sinister, though:

We want that Germany enforces this right to leave the Euro by vetoing further  ESM loans.

So actually they don't want other nations to decide. Germany - through its power - will help them make this decision. This is also contrary to Lucke's statement that they want an orderly end of the Euro. What happens when Germany threatens its veto can currently be observed in Cyprus and nothing is orderly there.

There are a few more such talking points ranging from reduced EU bureaucracy to a simplified tax code but those wont help the all that much, since Merkel's CDU has either has a similar position or they are just generalities like: "Germany doesn't have enough children. It has to become more child and motherfriendly (sic)."

 In Germany a party has to get at least 5 % of the votes to get into the parliament. At this time it seems unlikely that the party will jump that hurdle. Even if it does AfD will definitely not become part of a coalition, so they will be rather irrelevant. But they might reduce the chances of the smallest partner in the Merkel government the struggling FDP to be in the next Bundestag.Thereby possibly preventing Merkel from being reelected. So we might see the former finance minister Steinbrück as chancellor.

This one bulletin point party is and will be irrelevant. But it got the media in Germany all dizzy, because some right wingers also want the Deutsche Mark back and therefore AfD is Hitler or something. Also it is dangerous, naive and have I mentioned Hitler? But the media also believes that the German economy is ever growing. They just make a habit of being wrong.