>I think that how the markets will take it will depend on what
>kind of government Schroeder forms. If he forms a "red-green"
>coalition, that is a coalition of Social Democrats and Greens and
>possibly also Free Democrats then we will probably have a government
>that will probably try to uphold the welfare state. If on the other hand
>he forms a "grand coalition" - that is a coalition with the Christian
>Democrats then we will probably be seeing a government committed
>to rolling back the welfare state. It is no secret that much of
>Germany's
>business community prefers the latter option. Which option that
>Schroeder chooses will no doubt depend on the final election tallies
>since it is still not quite clear how the PDS did and that will in turn
>effect
>how many seats the Social Democrats and Greens actually wind up
>with. If he goes for the "grand coalition" option then no doubt Big
>Business will be pleased and the markets will react accordingly.
>On the other hand the last time West Germany had such a
>government back in the 1960s, there was a social explosion as
>many of the constituents of the Social Democrats reacted against
> that party's betrayal by supporting the so-called extra-parliamentary
>opposition - that is the New Left. If history should repeat itself then
>the markets will presumably not be so sanguine.
As for the seats: SPD and Greens have a sound majority of 21 seats in the new parliament. This will be even more than the present government had in the old parliament. Grand coalition: This is very unlikely, due to the election result. Furthermore especially CSU-leaders (CDU in Bavaria) spoke out very decisevly against a 'grand coalition'. It seems there have been already talks between SPD and Greens in the night. When appearing in TV last night Lafontaine and Trittin, the leaders of SPD and Greens, were very cosy with each other. Markets: I agree with James that what the German capitalists fear most is a re-run of 66: A grand coalition resulting in a radicalisation of certain parts of the German society. Taking into account the election result for the capitalists a red-green government will be the lesser evil. One has to keep in mind that the green party is no longer that one of the eighties. A lot of radicals left them ( e.g Dittfurth, Ebermann, Trampert ). Even when it comes to their public anouncements the Greens of today are very soft-spoken and try to avoid everything that could provoke the liberal mainstream. Furthermore the capitalists consider Schroeder (as against the SPD as a whole) openly has their man inside the government. Commonly Schroeder is known as the bosses comrade (Genosse der Bosse). So for German stock markets the election are a non-event. Events in Russia and the crisis in Asia are of far more concern. The news today will be that just another Japanese bank collapsed. Johannes