Posted on 09/23/2002 4:44:32 AM PDT by MadIvan
Germany's stock market has tumbled following the election victory of Chancellor Gerhard Schroeder's Red-Green coalition.
Oh let's see, elect a government that is hostile to business, and what do you expect? The German electorate is being punished with a death by a thousand cuts, erm, stocks falling. ;) - Ivan
The Dax index of leading German shares fell 102 points to 2,963 by 1000 GMT.
Other major European markets rose.
Mr Schroeder's coalition's narrow victory depressed stock traders who have seen shares fall to their lowest levels in five years.
"This is an uncomfortable position for the stock market," said Johannes Reich, chief analyst at German private bank Bankhaus Metzler.
The result could also spell bad news for the euro.
Tee hee! Which makes it that much easier for us in the UK to avoid! - Ivan
"An inconclusive result is certainly the worst imaginable result for the euro," said Dorothea Huttanus, a foreign exchange analyst at DZ Bank.
Reform backlog
With all hopes of a Conservative-Liberal coalition delivering dramatic reforms, traders were concerned that a weak chancellor would find it hard to push through economic reforms.
Better a weak Red chancellor than one who'd force you to sing the Internationale. - Ivan
"It would have been better if one party had received a clear electoral mandate," said DekaBank economist Andreas Scheuerle.
"The reform backlog will continue."
Unemployment in Germany, Europe's largest economy, remains stubbornly high at around 10% and recession fears are strong.
"If we are looking for change in Europe, and change in Germany in particular, this result is disappointing," said CSFB chief European economist Julian Callow.
Weak investment
The election campaign did much to alienate foreign investors, analysts said.
"Not only have Schroeder's government failed to carry out the necessary reforms, they behaved like a bull in a china shop in the most recent dispute with the US government," said BDI industry association chief, Michael Rogowski.
Mr Rogowski referred to Justice Minister Herta Daeubler-Gmelin's comparison of the policies of President George W Bush and Adolf Hitler.
"That will have an impact on the economy," Mr Rogowski said.
In addition, many investors would shy away from Germany, said Fred Irwin, vice-president for corporate clients at Citibank and president of the American Chamber of Commerce.
"Without [economic] reforms it will be more difficult to convince our companies to invest in Germany," he said.
Schroeder's commitment to postpone 7bn euros (£4.43bn; $6.89bn) in tax cuts to pay for recent flood damage would also burden economic growth because consumer spending would be held back, insisted the country's leading retailer, Metro.
Perhaps Britain and America should invite Mercedes, BMW and Volkswagen to move, and then say to the German government, "All your factory are now belong to us".
Regards, Ivan
This is Steven C. Den Beste's take at the USS Clueless:
And so, Schröder's party wins the German elections, after a rancorous campaign in which Schröder and his ally Fischer of the Greens faced a challenge from the right, and in order to win had to play every leftist card they had, including the Anti-American card. Over and over again.
In the course of that, their denunciations of the US became ever more loud and emphatic. At first they simply proclaimed their disagreement with American foreign policy (especially with regard to this or any other war), and said that Germany wouldn't participate in this or any other war. Then, raising the stakes, they claimed that they would try to prevent America from fighting in Iraq, with or without German troops. The next step was to begin to directly criticize President Bush, and it came to a head when the Justice Minister, Herta Daeubler-Gmelin, said a couple of days ago that Bush was trying to stir up a war in order to not have to answer to Americans for the problems of our economy, and that this was just the kind of thing that Hitler used to do.
At which point it hit the fan. Bush and his advisers had been seething anyway, and at that point they went rather public with their dissatisfaction. Schröder apologized.
Sort of. "We're sorry you got the idea from incorrect news reports that we'd compared you to Hitler." He apologized without admitting that anything had happened that should be apologized for, and tried to pretend. I don't think that was enough, and there has been very real damage to German-American relations.
There are rumors that Schröder said privately that once he'd won, he'd make it up to Washington. It's not that easy.
Read this article by Walter Russell Mead on Jacksonian America and Jacksonian American foreign policy. It's a long read, but well worth it.
Life isn't fair.
Does ch.man stand for Swiss man? Just curious.
We can then repopulate the region with better people.
The problem here at the Federal congressional level is that 95% of the districts are re-districted into one party fiefdoms and there's no political competition. The districts ought to be designed to create competition.
Hah! Nice touch Ivan.
But they COULD have spoke up!!! You reap what you sow, ya know?
You mean there's some other kind?
Tee hee! Which makes it that much easier for us in the UK to avoid! - Ivan
What are the chances of you folks dodging the Euro bullet these days Ivan? Losing the British Pound would not be a good thing for anyone.
With this mess, the odds for us Eurosceptics improved substantially. After all, why would we want to join in a currency which would permanently link us to that kind of fuss and bother? ;)
Regards, Ivan
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