Germany Leans Right Update

Well the battle is over in Germany and it looks like Schroeder and his socialists have pretty much won the day over there. In a compromise (beginning to remind you all of anything over here in the USA?), it seems that Merkel's Conservatives (Christian Democrats) formed a coalition government with Schroeder's Social Democrats (SPD) giving each eight seats around the new cabinet table. The problem is in the compromise. In order for Merkel to be named Top Dog, she had to concede control of the most important cabinet seats to the socialists, er...Social Democrats. This compromise ends any real chance at the badly needed reform of this nearly bankrupted government. Immediately stocks gave up early gains after the news was released. Bonds rose in anticipation of future interest rates rising. Chances for meaningful reform of the collective bargaining bonanza that labor enjoys in Europe, as well as skyrocketing non-wage-related costs and a social security boondoggle that makes our system look good, have all gone right out the window. Germany's non-wage labor costs are 41.7% of gross wages, among the highest in the world!

The good news is that they still want to cut the payroll taxes that fund unemployment insurance. Of course in order to be allowed to do that the SPD insists that a corresponding rise in the Value Added Tax be instituted! Six of one, half dozen of the other. If they don't cut the state's umbilical cord none of these things will ever matter.

Still, it's nice to see that others have it worse off than us. Maybe I'll look into Sweden's situation next...