This page has been archived and commenting is disabled.
"Massive Collapse" For Angela Merkel Following Today's Hamburg Election As Germans "Just Say No" To More European Bail Outs
As the results of the first of seven German regional elections hits the wire, the German people are heard loud and clear: "no more bail outs." The outcome of the Hamburg election is nothing short of a disaster for Angela Merkel and her ruling (for now) CDU party. Bloomberg reports that "Chancellor Angela Merkel’s party lost control of Hamburg, Germany’s richest state, in the first of seven state votes this year that threaten to limit her scope to respond to Europe’s debt crisis, television projections show." Merkel’s Christian Democratic Union took 20.8 percent in today’s election, its worst result in the port city since at least World War II, ARD television projections showed. The Social Democrats, the main national opposition party, took 49.8 percent, enough to end the CDU’s 10-year rule in Hamburg and form a majority government without need of a coalition partner. The CDU suffered “a massive collapse of support in this
booming city that must set off hand-wringing in Berlin,” said
Hans-Juergen Hoffmann, managing director of Hamburg-based
pollster Psephos. “Merkel will surely be concerned now that
this disaster won’t be repeated in upcoming state elections.” To their great chagrin, the young participants on the FRBNY's OMO desk will have to be absent from their President's Day NYU mixers overnight as they are urgently needed by JC Trichet: the reason - buying up every single Portuguese bond as soon as the market opens tomorrow: "There’s a risk to peripheral bonds if Germany is seen not to be displaying support for the countries that are in trouble,” said Orlando Green, assistant director of capital- markets strategy at Credit Agricole Corporate & Investment bank in London. “The market would have been hoping that a deal would have been struck already” before the elections." And while German people are just modestly more civilized than their North African peers, what has happened in Germany is nothing short of a revolution to the existing status quo. The attempt to cover up European bail outs with endless rhetoric is over. If Merkel continues the course she is on, she is history... and she knows it too well. Time to be less than bullish on the EUR's prospects.
From Bloomberg:
The CDU took less than half its tally at the last Hamburg election three years ago. The results are “painful” for the CDU, Mayor Christoph Ahlhaus said in comments broadcast live, congratulating his Social Democratic opponent Olaf Scholz, a former Labor Minister in Merkel’s first-term government.
“It’s a warning to Merkel,” said Carsten Brzeski, an economist at ING Groep NV in Brussels. “If she has to draw any lesson, it probably will be to get tougher at the European level to show something to German voters,” he said. “There is no room for Merkel to come home from Brussels on March 25 with anything that could look or smell like a defeat.”
As Zero Hedge pointed out two weeks ago, and as was widely ignored by the FX markets, the European forward calendar in the cruellest month of March will be a blast...alas, not in the party sense.
As a reminder, here is what lies in store:
March Madness -Political Risk Is High and Rising
- Funny thing about democracies is the feedback loop between electorates and national policy
- Policy risk remains tethered to national, and even regional political risk across the European Union
- Higher risk within coalition governments
- Breakdown of coalition (i.e. Ireland) can lead to snap elections and uncertainty around policy action
- Two primary sources of political risk as it relates to the Euro sovereign crisis
- Stressed states (periphery Europe) lose the electoral support to carry out reforms, trim deficits, and curtail debt
- Core Europe or payer states (e.g. Germany) lose electoral support to bail out Peripheral Europe or debtor states
- EurozonePolitical Sound Bites:
- “We
believe that Ireland may be left with no option, in the absence of a
renegotiated deal, but to write down the value of the bonds in the Irish
banks or face the prospect of a hugely damaging sovereign default”- Fine Gael, Irish Opposition Party, February 2, 2011
- “62% of [German] voters oppose further bail-outs of weak euro members….”
- The Economist, January 13, 2010
- “49% of Germans would like to have a return of the D Mark”
- YouGovInsitute, December 26, 2010
- It may be “useful for the €440 billion European Financial Stability Facility to buy government bonds”
- Jean-Claude Trichet, January 26, 2011
- “We
Showing this visually:
More on what the first prediction of many coming true means for Europe:
German state ballots follow in Saxony-Anhalt, Bremen and Mecklenburg-Western Pomerania, home to Merkel’s electoral district, and culminate in Berlin in September. A double-header looms next month in Rhineland-Palatinate and Baden-Wuerttemberg, the southwestern state ruled by her party for more than half a century. Both votes are on March 27, two days after the EU summit, constituting Merkel’s “Super Sunday,” Brzeksi said.
In Hamburg, the Greens took 11 percent and the Free Democrats, Merkel’s national coalition partner, 6.2 percent, enough to win seats in the state parliament for the first time since 2004. The anti-capitalist Left Party won 6.6 percent, TV projections as of 7:56 p.m. showed.
Merkel’s main European policy challenge this year is getting the EU debt-fighting deal through parliament and “for her, Baden-Wuerttemberg is the test,” said Holger Schmieding, chief economist at Joh Berenberg Gossler & Co. in London.
Hamburg is the first electoral test of Merkel’s policy since her party lost a state election last May, a result that she blamed on voter anger over bailing out Greece. The defeat cost her control of parliament’s upper house in Berlin, the Bundesrat, where regional administrations are represented. The Hamburg result, if confirmed, would cost the CDU 3 seats in the Bundesrat, further limiting her ability to pass legislation.
The Christian Democrats went into the Hamburg vote after a spate of negative headlines for Merkel. Axel Weber, her candidate to be the European Central Bank’s next head, dropped out of the race on Feb. 11 in what the best-selling Bild newspaper called “a blow to the chancellor and to the euro.” Defense Minister Karl-Theodor zu Guttenberg, Germany’s most popular politician, is denying allegations that he stole parts of his doctoral thesis.
And just to make the calendar even more problematic, Ireland (which itself is facing a critical election on February 25) opposition party Sinn Fein said it would seek a referendum on the euro rescue deal, which would put the entire banker rescue operation codenamed "Dublin" in jeopardy.
Sinn Fein would agree to a referendum on the multi-billion euro rescue deal from the International Monetary Fund and Europe.
Party President Gerry Adams said the country could not afford to draw down the 85 billion euro loan.
Asked if he would put the IMF/EU package to the people, Mr Adams said: "If that's the way of strengthening whoever happens to be in government, if that's the way of putting it up to the European Union in the Irish interests, yes of course."
Yep. March will sure be exciting and likely to conform to our expectations that the Fed policy tool known as the Russell 2000 will peak in March/April.
Full European forward calendar from Knight Capital. Perhaps more will pay attention to it this time.
»
- 21294 reads
- Printer-friendly version
- Send to friend
- advertisements -
Well China could save the EU by buying bonds. The only reason China would do this is to have the EU arms embargo lifted so they can get their hands on the latest Western military technology to catch up to the US. So the EU is not dead yet. The EU was and is a failed experiment and will plunge the world into a depression.
The amount of.chinese bond buying in the euro sovereign space has been minimal compared to their rhetoric. China.thinks.they are all grown up now and can jawbone the markets. I suspect they are mostly talk.
I agree,China is a weak superpower that has a centralised economy. China is weak and hoping this would end the embargo. They just hope it does so they can get those weapons. However the EU is done for as the germans do not want any more bailouts.
So at the last minute when the euro is about to fail you think the chinese might offer to buy 300 billion over five to ten years in exchange for lifting the technology transfer ban?
What do you base this on? The Chinese might not bid at the auctions, but that doesn't mean they don't accumulate European pheriphery bonds by buying them through other financial institutions.
Do you have a balance sheet, or some other factual information?
They could be.hiding their buying. However it wouldnt make sense to hide it as they seem to want to use bond market.rhetoric and.a.few buys to support the euro. As far as i know they have only bought a few billion in private placement portuguese bonds, and no irish or greek debt. So the noise from china wasnt matched by any significant buying, at least not in public.
troll----what country are you from, you sure arent from a western country. all those periods in your sentences is the sign of asian/middle eastern person. you give double messages--are you with us or against us?
They hide their purchases of just about everything else, and when you play poker, you will unquestionably be more succesful if you keep your cards secret.
People want jobs and you can only 'snow' them so long. Its that fucking simple.
The "Hamburg-Madison Axis". We'll see what else springs up. Will it be vs. the "Springfield-Merkel Axis"?
- Ned
I will beleive politicians of any party only after they act. In my books it does not matter to which party a politician belongs .. he always acts with a vested interest. Rest all is rhetoric!
Vive la Iceland!
Iceland refuses deal to repay UK Landsbanki deposits
Iceland's president has refused to sign a $5bn (£3.1bn) deal to repay the UK and Netherlands for deposits lost when Landsbanki failed.
"Iceland’s President Olafur R. Grimsson will give his country’s voters the final say on repaying about $5 billion in debts owed to the U.K. and the Netherlands to cover depositor claims.
Grimsson’s announcement yesterday that he won’t sign a depositor accord struck between the three countries’ governments in December follows lawmaker approval of the bill. He told reporters he was responding to popular demand for a referendum after more than 42,000 of Iceland’s 318,000 inhabitants signed a petition asking him to block the accord. Forty-four of the Reykjavik-based parliament’s 63 lawmakers voted for the bill on Feb. 16.
“There is support for the view that the people should once again, as before, act together with the parliament as the legislator in this matter,” Grimsson said.
Yesterday’s announcement marks the second time Grimsson has rejected an agreement designed to compensate the U.K. and Netherlands for depositor losses stemming from the October 2008 failure of Landsbanki Islands hf. His Jan. 5, 2010, refusal to sign a prior accord prompted Fitch Ratings to cut Iceland’s credit grade to junk. Moody’s Investors Service and Standard & Poor’s give Iceland’s debt the lowest investment grade.
Grimsson’s decision threatens to sour relations with the U.K. and Netherlands after Iceland’s government persuaded the two countries to negotiate a new deal following last year’s rejection of the previous accord."
Icelanders to Have Final Say on British, Dutch Depositor Debthttp://www.bloomberg.com/news/2011-02-20/iceland-president-blocks-bill-guaranteeing-5-billion-u-k-dutch-deposits.html
i hear he was wearing a Viking helmet and chompin' on a Lars Teten when he said it, too.
You do have to wonder if the CIA/FBI/ etc aren't active on ZH as elsewhere on the net to interfere with sites, discredit them and distract them.
The very first comment on this site and those that it attracted immediately diverted discussion to anti-semitism, bigotry and so forth and zero to do with the topic of the thread.
You can see why some of the more able posters have abandoned the site, and that is probably one of the intentions of the spoilers.
Then I would recommend that everyone stay on-topic or label your post(s) as off-topic, so they can ignored, if appropriate. Spooks, go home!
Actually they try and kill me. I take it as a compliment. Insofar as Germany is concerned I get the feeling "one 3rd Reich every thousand years" is the German compliment. Clearly they look at what Berlin is trying to do to their Basic Law and they're terrified. One look at how our Regime has completely shredded our Constitution has shown them that the true enemy of freedom is centralized power whose ultimate expression is Time Warner and Comcast and all the Big Media pyschopaths who took one look at Hoover and said "we like that, we need that, it's for the money." Standing opposed to this evil is of course God in the form of the Catholic Church, Islam both Shiite and Sunni and what little is left of the beautiful wooden crosses of what used to be a land devoted to the idea of tolerance indeed need for the multiplicity of other faiths. now all faiths serve the master of the digital domain. no longer do you think. no longer do you believe. no longer do you free your self from the tyranny of the material but in fact willingly become enslaved by it.
This article is nonsense. I am sorry to say this. The SPD was in fact in favour of the EU bailout plan and they criticized the CDU for not handing out more money to other European countries. And for not handing it out faster.
There is no real opposition to the EU bailout plans. Only a few parties on the right wing. But most of them are new and with our history most of us don't like right wing parties at all.
Even though many Germans (I know) oppose more EU bailouts, there is still no powerful party or organization that is speaking out against it. And if you dare to speak out, some (mainly hardcore leftists) might even suspect that you are in favour of radical right wing parties (in other words a neonazi).
The CDU in Hamburg did a terrible job. In Baden-Wurttemberg it is mainly a fight between CDU and Gruene (Green party). For over one year now people (10,000 to 100,000 per demonstration) are demonstrating in Stuttgart against plans to build a new train station, which they view as ineffective and costly.
The average German is against more bailouts. We've given up most of our living standards. We are the only country in the whole OECD that lost massively income. Our municipalities close down public baths, schools, reduce the amount of police officers, while our neighbours are handing out money without any fiscal discipline. We have shown enough solidarity with them. People in Spain, Ireland and Greece are earning more money and can retire sooner. We are the only country in the EU that hasn't even a minimum wage. Some people earn just 3 Euros per hour.
Those earning just "3 Euros per hour" are the "guest slaves" that will soon stand up and shout "NULL MEHR!!" while they burn down the Reichstag and hoist a Turkish flag atop the Brandenburger tor.
To put the record straight about Hamburg, and this may have been mentioned already in the long list of comments above, reports from all the financial clever dicks that the Hamburg election was about the Euro and bailouts are balderdash. The election was fought on the local issues of bad school standards, declining morals of the elected representatives, a ballsed-up coalition between the CDU and the Greens, increasing violence, astronomical costs of the still unfinished concert hall Elbe Philharmonic, you name it, everything but Berlin economic policy and the Euro. The SPD gained about 48% of the votes but the turnout was only 57% of the eligible voters, which in my calculation gives a large majority to the non-voters.
This article is only in German but may get translated sometime on the Der Speigel Website:
http://www.spiegel.de/politik/deutschland/0,1518,746678,00.html
An interesting tidbit from history. The currency pair Great British Pound / United States Dollar is nicknamed "the Cable".
Way back when, 1855, they tried to lay a cable across the ocean floor from Britain to what was labeled as "British America" and now known as Canada. They tried 5 times, failing in 1857, failing twice in 1858. Anyhow it kind of worked in 1858, until Mr. Whitehouse "overclocked" the cable with too much voltage trying to get faster telegraph operation. He smoked the cable. Hmmmm, some things never change.
Obviously, these were huge financial losses and they didn't try again until 1865. After 14 days at sea, and 1000 miles of cable payed out, somehow the cable snapped, leaving half a million pounds of cable on the bottom of the ocean, the end was lost.
Mr. Field went back to the grindstone, issued a prospectus (think of IPO maybe) and gathered up enough money to try it again in 1866. They did it. This new cable using a flexible design of 7 strands of high quality copper wrapped in a helix form could transmit EIGHT WORDS PER MINUTE! 50 times faster than previous cables.
Keep in mind, there was no radio, it didn't exist. People liked the cable so much they grappled 2.5 miles deep to find the old 1865 cable, after much ado, found it, surfaced it, and connected it to a new cable and completed the connection.
Making 2 Cables across the Atlantic! Funny that the Wikileaks emails were termed "cables" isn't that curious. So besides some important government communication and high price corporate telegraphs, do you know what the cable was used for?? Trading currency, the GBP / USD affectionately known as "The Cable",
The EUR/USD became known as "The Fiber"
I just recently coined the GBP/JPY as "The Satcom". That pair moves exceptionally fast.
Charts here, they are maybe 6 hours old.
http://oahutrading.blogspot.com/2011/02/cable-and-fiber-taken-as-short.html
wrong analysis. there is little drama involved here. the outcome of the election has nothing to do with bailouts, - not even with Merkel. They simply liked the one chap better than the other.