Angela Merkel has stumbled badly coming out of the gate in forming a government from the Grand Coalition negotiated between the SPD and her CDU/CSU, as the Socialist element of the SPD has bolted from Gerhardt Shroeder's party. The turmoil cost her one key ally from the CSU, and now it appears that the country might have to face new elections in the spring:

Germany's nascent government was in chaos yesterday after the would-be finance minister, a key ally of the future chancellor, Angela Merkel, turned his back on the administration.

Edmund Stoiber, the governor of Bavaria, said he would prefer to stay in Germany's most prosperous state than risk his fortunes in Berlin.

Mr Stoiber, who is the leader of the Christian Social Union (CSU), junior partners in the conservative alliance led by Mrs Merkel, said his decision was influenced by uncertainty over the future of the Social Democrats (SPD).

Franz Münterfering, designated vice-chancellor in the planned grand coalition, resigned as head of the SPD on Monday in an internal struggle over the leadership and the direction of the party.

Mr Münterfering also hinted that he might not join the coalition as labour minister as planned. He made clear that he needed to have the official support of his party for the new administration and his place in it.

While the politicians blame other parties for the instability, in truth no one wants to take on the German economic portfolio, and for good reason. Decades of creating a cradle-to-grave social system that reflects more of a Ponzi scheme than a solvent financial program have led Germany to the brink of economic disaster. Their finances stalled the overall EU economy, along with France, and for the same reason: not enough new workers entering the pipeline to pay for the former workers collecting benefits. Any attempt to fix the problem results in massive strikes and demonstrations and an end to ambitious political careers -- and not just for economic ministers.

Merkel has the unfortunate luck to have won office on the brink of a disaster that everyone recognizes but no one wants to sacrifice their own comfort to avoid. Millions of Germans see the train wreck coming, but none want to be the one who pulls the brake. Instead of acknowledging their lack of intestinal fortitude, however, party leaders allow the illusion to continue by blaming interparty politics for avoiding tough ministerial assignments, which might well force another round of elections onto a weary German electorate if not resolved in the next fortnight.

Before Americans get too sanguine about this, we should know that we face a similar problem, although not quite as acute as the Germans. We have a huge unfunded mandate issue with Medicare -- estimated at eight times the problem that Social Security presents -- and yet no one wants to seriously tackle entitlement reform. If Americans think about how easily the Social Security reform efforts got shot down here, then the German response shouldn't appear so amusing or unrecognizable.

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» German grand coalition deal reached–130 pages of policy agreement from Fruits and Votes
The Christian Democrats (CDU/CSU) and Social Democrats (SPD) have reached their long-aniticpated agreement on a grand coalition. As outgoing SPD leader Franz Müntefering said at a news conference: None of us was prepared for a grand coalition ̵... [Read More]

Tracked on November 11, 2005 4:54 PM