Elections Uber Alles (Part Zwei)

Maybe they’ll care now?

On Sunday Germany’s electorate gave Angela Merkel a stunning victory, increasing her party’s share of the vote from 33.8% to 41.5%. It’s the best result for the Christian Democrats since 1990, when Helmut Kohl won a third term. In fact, she almost won an outright majority in the Bundesrat, Germany’s lower house. Now she has to form a coalition.

The CDU’s current partner, however, is not available. The Free Democrats’ share fell from 14.6% four years ago to 4.7% now—not enough to send delegates to Parliament. It’s a painful comedown for a party that has frequently played the role of kingmaker in German politics. Because their libertarian philosophy is adaptable, they have been a junior partner in several government coalitions.

Merkel’s most obvious associate is now the Social Democratic Party, which also picked up seats. This election saw the center-left and center-right parties gain seats, while the more extreme parties lost them. So a national unity government seems possible.

Such a combination would provide strong support for the Euro. While there is still considerable skepticism regarding bailouts—the anti-Euro party gained share, but no seats—a CDU-SPD government would have enough votes to amend Germany’s constitution, if necessary, to sustain the common currency.

The Euro has always been a political project. Germany’s voters just gave Merkel—one of the currency’s most powerful sponsors—the political strength she needs to keep the project alive.

Douglas R. Tengdin, CFA

Chief Investment Officer

By |2013-09-24T09:43:07+00:00September 24th, 2013|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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