Germans Order Weak Tea, Get Brown Water

I hinted here that the German election result is looking worse and worse, sad to say, for the Germans and consequently the Euro. Well, the policy program of the grand coalition government are out and they are anything but grand. There will be more government spending, higher taxes, little to no deregulation and no derailing of the imminent energy trainwreck. So while a Merkel chancellorship holds out the prospect of substantial shifts in foreign policy (read George Melloan today for more), it will be more of the same economic policy that got Germans into their 11% unemployment pickle. I think it would be wrong to say that Angie paid a heavy price for the titular head of government. She got exactly what was due her, no more no less; and Germans got the government that they deserve. The market, of course, is barfing all over this outcome and the Euro is now very close to my prediction of $1.15. I speculated that Berlusconi's vulnerability could be one of the developments that drives the Euro to $1.10. Melloan echoes this sentiment and adds developments in Spain for good measure.