Monday, October 10, 2005

All eyes on Germany

Will they follow eastern european countries and reform their economy?

9 comments:

Chad Moats said...

The fact of the matter is there will be an election before 4 years. Most of the CDU's economic policies will have to be shelved and liberalisation of the German economy will be tedious. Probably the best thing for them at this moment, drastic reform is never the best way.
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Shawn said...

The Germans haven't suffered enough economically so they will keep trying to dig their way out of a hole. They and the French are in severe trouble but either too foolish or stubborn to admit it and bite the bullet. Next time around Merkel and co. will have an excellent shot at a majority as there will be ample evidence for the necessary reforms in the Baltics, Poland and other rapidly growing economies.

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Chad Moats said...

BERLIN, Oct 10 (Reuters) - Germany's next government won't shake up wage bargaining or trim tax breaks for shift workers, leading officials said on Monday, fuelling fears among economists that it may shirk further painful reforms.

As details of a coalition deal emerged, financial market relief that reform-minded conservative Angela Merkel would head the new government was offset by concern she had conceded too much in a power-sharing deal with the Social Democrats (SPD).

While the conservative and SPD parties will each have eight seats around a future cabinet table, the SPD won the right to name the key finance, labour and health ministers -- all but ending hope of radical changes in those areas, economists said.

"All-important structural reforms of the labour market and the social security system are clearly out of reach. Merkel will have to make concessions to an extent inconceivable only a few weeks ago," said HVB group economist Andreas Rees.

"It is time to say good-bye to an initially intended transition to a more flexible collective bargaining system and a reduction of non-wage costs for employers."

Shawn said...

My point exactly Chad. These items being shelved are exactly what may be able to revive a moribund German economy.

Anyone remember when the Germans were being predicted to economically outperform the US about a decade ago? The descent into 35 hour work weeks, massive paid holidays, etc. pretty much killed any chance of that.

Chad Moats said...

Your being sarcastic right ?
CDU may control the Chancellery but the SPD control the key cabinet portfolios. Honestly, its a victory for the SPD. If things go well it is them pulling the levers, if not well its Merkel's government. Look for it to last a maximum of 18 month with SPD/Green regaining a majority.

John Murney said...

Nobody won in Germany. Chaos rules. Egads.

Shawn said...

I believe Merkel can win next time if she is able to delineate which policies she wants to implement and differentiate them from the neandarthals of the SPD. If the ministries footdrag or block these attempts, she can throw the blame back at them. However, you are right, she will have to be ready to claim any successes brought forward by policy changes before the opportunists do.

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