Here is why elections in Germany can also have a negative side

For many the German elections are a done deal. Chancellor Angela Merkel will win and Germany will once again be the anchor of stability for another four years.

But, the devil is in the detail.

She will need a coalition partner or two and all alternatives don't look like a walk in the park. Many observers suggest that it could take as long as 100 days to form a government.

Merkel officially has no favorite although her CDU (Christian Democratic Union) party has had a long tradition of getting together with the FDP (Free Democratic Party). According to current polls both parties would have enough votes to form a coalition government

However, the Greens would need to be added to the mix. A formation which Germans call a Jamaica coalition, named after their black, yellow and green colors. Those coalition talks could end up being fairly. In case these talks falter without success, the good old grand coalition between the CDU and the SPD (Social Democratic Party) is the last alternative.

Those talks though would need a referendum from SPD party members as their candidate for the leadership, Martin Schulz, has promised this. Some extra time would also be needed here as well.

And this is why a new German government might only see the light of day in early 2018. Would that be a shocker for the rest of the world? Probably, yes.

Source: Bloomberg Pro Terminal
Trader I. Ivanov

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