"Worst Case Scenario" Looms As Merkel's "Jamaica Coalition" Collapses

Tyler Durden's picture

We warned on Friday that German Chancellor Angela Merkel faced a 'night of the long knives' in her efforts to bring together the co-called 'Jamaica' coalition of four parties and after a desperate weekend of talks, Bloomberg reports Merkel's efforts at forming a coalition have failed meaning a second election looms and sending the euro sliding.

As Bloomberg reports, talks on forming German Chancellor Angela Merkel’s next government collapsed, throwing the future of Europe’s longest-serving leader into doubt and potentially pointing the world’s fourth-biggest economy toward new elections.

After a 12-hour negotiating session that ended shortly before midnight Sunday, the Free Democratic Party walked out of the exploratory talks, saying the differences with the Green party were too great to bridge.

Merkel has sought for four weeks to enlist the two smaller parties for her fourth-term coalition.

“It’s better not to govern than to govern badly,” FDP head Christian Lindner told reporters in Berlin.

No further coalition talks were scheduled, he said. There was no immediate comment from Merkel.

EURUSD is down aroound 80 pips on the news...

As MINT Partners' Bill Blain noted previously, Germans are not used to multiple elections – and a second vote early next year would be massive negative for Merkel herself – she may even have to stand down if coalition looks like falling. That could be massive shock.

As a result, the prospects for more volatile European peripheral markets, particularly Greece and Italy, are likely to be exacerbated, and we might well see some of the currency and European stock market froth blow away in coming days as the scale of the “German Problem” becomes clearer.

  • My worst case Germany scenario is a second election early next year, political uncertainty as Mutti Merkel finds herself squeezed out, and a scramble to build a new coalition government in her aftermath.
  • The best case scenario isn’t much better: that Merkel manages to forge a new coalition, but it will be a long drawn out affair and the resulting administration will be vulnerable, weak and fraxious.

These sound like German problems, but they mean the “leader of Europe” is likely to be entirely inward focused in coming months/years.. at a time when the European union will be facing a host of new issues regarding closer union, banking union and reform of the ESM, bailout and QE policies. There will also be new potential crisis points – Italian elections next year, Greece bailout, renewed immigration crisis or a blow-up with Trump. And these are just the known unknowns.

This has profound implications for the so-called French/German axis as it slides towards Paris. We are not going to see a new German government “waste time” on issues like closer EU union, European Banking Union, or critical finance issues like reforming ESM or new approaches on QE and Bailout funds. Forget Wiedemann for ECB president, it’s more likely to another Frenchman (Trichet II) – I’m sure its already underway. In short.. Germany negotiations could get very fraxious while Europe is dragged down in its wake. I doubt the markets have discounted it yet.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
johngaltfla's picture

I saw Jamaica and thought for a minute there Germany was giving out free hash.

After all, the Bundesbank has for a decade now along with the ECB.

junction's picture

If the NWO follows its past game plan, expect a terrorist attack in Germany around Christmas time, probably in Berlin.  It will take a lot to remove Merkel's claws from Germany's throat.

BuddyEffed's picture

Anyone with insight on the earthquakes near Tadine, New Caledonia

Recent swarm up in the 7 to 4 range seems unusual.

Richard Chesler's picture

She thought turning the homeland into the homeyland was ok.

 

TBT or not TBT's picture

Europe needs less government "leadership" than it has now.   So this is a good development. 

JohninMK's picture

Much less, so we are pulling our contribution to EU Government out in March 2019.

Expect more 'bad' headlines on Brexit as a diversionary tactic from this mess.

giovanni_f's picture

The consul of Jamaika in Berlin colluded wit the Russians against Angela Merkel, I'm sure. And they pobably even used the same weapons of mass confusion against the negotiators which the Cubans used against our embassy staff in Havanna.

forexskin's picture

hate to say it, but seeing her drooping mug in tears was click bait.

merkel crying is good news for the world generally - more please?

Haus-Targaryen's picture

This is all political theater. 

In the EU, some 80% of all regulation ultimately comes from Brussels -- the other 20% are fairly toothless. 

In Germany, you have 87% of the population that wants MORE "European Integration" while 13% does not.  It matters not who or what kind of coalition is formed, the results will be the same. 
Song_Of_Roland's picture

Political theater 100%. Same with the FDP pulling out and trying to look principled.

I am still trying to figure out whether this collapse will benefit the AfD... Thoughts?

But on those same lines, you could say that 67% of the population didn't vote for Merkel and therefore reject her platform.

Haus-Targaryen's picture

Not sure how the AfD will fare. I think it will only help it as its around 15% whereas they get a little less than 13% previously.  Anything 15% of more from the AfD really starts screwing up the math for a coalition government ... save for Union/SPD again. 

I think the best thing that could come from this is simply political instability and a stalemate in German politics where essentially nothing happens for the next few years. 

And yes, while 67% of the population voted against Merkel, 87% of the German population voted for MORE EU integration, a idea and policy that all other "major" parties are behind, including FDP. 

Same can be said for NATO, with a few caveats with the Linke on that one -- but I digress. 

The Germans want more EU integration, and they'll most definitely get it.  Not sure about you, but do you have as much fun as I do watching everything slowly going to Hell here and everyone blaming literally anything and everything save the EU.  

"Its American Foreign Policy that is doing it to us" or "Its the Russians" or "Its the banks" or "Its Capitalism" or "Its the Linke Flügel" or "Its corruption in the PIGS" etc., etc., etc., 

As soon as you mention the EU, everyone from left to right almost unanimously agrees that the EU is doing the right things and everything they can to fix the above problems.  Its like a cult at this point. 

WordSmith2013's picture

The best way to understand Merkel is to see her in action in Greece.

 

http://themillenniumreport.com/2017/11/angela-merkels-snake-dance-video/

 

Angela Merkel’s Snake Dance (Video)

UnschooledAustrianEconomist's picture

"Not sure about you, but do you have as much fun as I do watching everything slowly going to Hell here"

Having the blast of my life ;-)

And with everything what is now going to hell, we'll have the chance to fight for what is ours.

Keep the faith.

Haus-Targaryen's picture

Dans tempus acceptabile,
Da lacrimarum rivulis
Lavare cordis victimam,
Quam laeta adurat caritas.

Multi's picture

I like your avatar. One can only dream.

Haus-Targaryen's picture

All it takes is the Russians to pull their heads out of their ass, rebirth Preußen where Kaliningrad is with the specific aim of attracting wealthy, educated and disenfranchised German nationals. 

The Polish would shit a live clucking chicken, but I'm okay with that. 

SoDamnMad's picture

UK, just walk away and say you owe them nothing.  

Sy Kloine Bee's picture

Keep dreaming, it's all a show. Neither the EU, nor the UK gov't will ever allow a real Brexit.  It will be a Brexit in name only if it happens at all.  Likely they will just keep dragging it out until either 1) it is politically convenient to cancel it 2) there will be a major event - a contrivance, a false flag, an economic event, a war perhaps - which gives a reason for continued membership.  The EU is to be the new Soviet Union, and "more Europe!" is the cry of the Bolshevik marrano.

JohnGaltUk's picture

The EU is not going to last. Look at those deparate European clowns trying to pretend they are one big happy family.

The only thing that is holding it together at the moment are all the manderins that have a vested interest and do dont want to see their big fat pensions disappear which they are going to anyway.

The bond bubble will end Europe as we know it. When sovereign bonds fail, there goes the whole European banking sector and your pensions. It will spell the end of socialism in Europe. Amen.

Thoresen's picture

“Much less, so we are pulling our contribution to EU Government out in March 2019.
Expect more 'bad' headlines on Brexit as a diversionary tactic from this mess.”

Now being reported that German industrialists are looking for ways for the UK to stay in the EU but with border and migration controls. That should strengthen May's hand, but she just looks as if she is going to agree to pay a bigger exit fee.

malek's picture

Actually, a few days ago I realized that in 2015 she may have thought like this:
"I am not a politician that is liked by my voters emphatically, and now facing the migrant crises where I have to choose between doing the right but difficult thing or just give way and attribute it to my (and the German peoples') empathy.
Well my big idol Helmut Kohl pulled the "Pflegeversicherung" ("long term care insurance") out of the hat in 1994(*) and with that practically guaranteed his reelection in October of 1994.
Maybe I should do the same approach now!"

Well that didn't turn out as expected...
 
 
(*) opening up another bottomless pit besides the existing federal "retirement insurance" for everyone

So It Goes's picture

"scale of the “German Problem” becomes clearer." 

Can't stop laughing - haven't heard about a German Problem since the 1940s.

la0508's picture

watch DUTCHSINSE on youtube. He's brilliant, and very intellectually honest. He'll show you how to predict most earthquakes, both in magnitude and location. His predictions are spot on. Check it out. Very very worthwhile. No joke.

BuddyEffed's picture

Underwater volcano maybe. Shallow earthquakes noted.
Clustering around 6.2 miles down. That's pretty shallow.
Some even just 2 miles down. Some magma coming up?

Dame Ednas Possum's picture

Does he use ShepWave? 

I hear that these geniuses are 1,264% accurate... then can even accurately predict when Mutti sharts herself. 

 

ebear's picture

Sheep bladders are your best bet.  100% accurate 1/3 of the time.

The Jaguar's picture

It’s hilderbeast stirring her fat ass at the news her sister in germany is having problems with the luftwaffer.

junction's picture

Thanks for the information on this 7.0 earthquake.  Statrting in Iran a week ago, where a 7.3 earthquake struck, there has been earthquake activity across the world.  Most of the quakes and aftershocks have been small.  Like the 2.8 Richter scale Tasmanian earthquake on April 12, 2011, which struck one month before the Tohoku 9.0 earhquake on May 11, 2011.  

Ace006's picture

Is this an article about volcanoes?

Laowei Gweilo's picture

is this a serious question?

try a message board that would actually logically have insight o.0 try reddit seismology. you'll need to 'adjust for libtard' but you'd probably end up closer to the scientific mark that having to 'adjust for conspiracy' =p

44magnum's picture

Or "it was the russians" again

iadr's picture

IDK. For obvious reasons, the right candidate/messaging could conceivably make that into a losing game for her.

But will it be tried?, 99% sure yes.

ZH Snob's picture

Hallelujah!!  bye-bye EU. 

get a real job, Draghi.

Wage Slave 927's picture

Did you hear about the new German microwave oven? It has seats for 35.

BarkingCat's picture

I hope that is simply a model prototype. They better be cracking on the 35000 version.

SoDamnMad's picture

Let's see. 6 million divided by 35,000 equals  ...

fajensen's picture

When I hear "Jamaica Coalition", I think of Kingston, Jamaica - where the SAS sends medics to get the best hands-on training in the world on the treatment of real-world gunshot wounds.

Germany will be the world training center for knife wounds, the UK will be the "Acid Burns Educational Facility", Sweden will be dick-in ass-wounds

.... If the future isn't bright, at least its Colourful, maybe that's the deal with "Jamaica!?

max2205's picture

Will printing Moar help?

???ö?'s picture

"Jamaica' coalition"...  dnd we thought only Clinton has bad tag lines.

How fucking detached from reality are these tools.  Everything in their eyes is color, diversity, and humanity.

Not a fucking ounce of animal instinct, just like the shitty equity markets they pretend to run. 

 

gladih8r's picture

I'll drink to that!

Cheers everyone! 

GOLD AND SILVER NATZI's picture

The obvious solution is to allow several million more muzzies into the country.

Anteater's picture

Better to splash pig's blood on all the Temple doors in NYC-WADC,

since their 'pre-emptive' jungle law of Moloch is the entire reason

that we have immigrant Muslims in the first place. Cause -> Effect.

"We won, you lost. It's just business, get over it. Now geh weg."

Burn Zionism to bone ash, before we're put in concentration camps.

 

Smegley Wanxalot's picture

Jamaica coalition? 

I thought that fatass idiot Mutti was trying to build a islamo-rapefugee coalition.

loveyajimbo's picture

Maybe if she lost 70 lbs and grew a little moustache?

buzzsaw99's picture

they call her "mom"?

TBT or not TBT's picture

"Fuerher" having lost its former appeal     Strange moniker for a childless commie.