Political Prediction: Merkel Loses Chancellorship in September as Support for AfD Soars

Now that we have an Understanding German Political Parties let’s consider some scenarios from reader Bernd who lives in Germany about how the election on September 22 plays out.

In past elections, as many as 40% of the eligible population did not vote. This brings a very large pool of voters that may turn out for the anti-Euro AfD party.

Bernd comments “All indications show that AfD has a huge potential to convert nonvoters to voters. If election turnout is high, seats in Parliament may look drastically different than today.”

For the past two weeks I have been watching the iPhone app Wahl-O-Meter and AfD has risen from 5% of the vote to 6.6% now.

Not only has AfD been rising, but today is the first day I have seen AfD above Die Linke. In the same timeframe, support for FDP has been sinking.

FDP is right on the bubble, polling 5% down from 5.4% or so. It takes 5% of the vote to stay in parliament.

This is significant because FDP currently has the third largest representation in parliament and is the junior partner in Merkel’s existing CDU/CSU/FDP coalition. The very real danger to Merkel is FDP goes to zero percent representation.

In theory CDU, CSU, and SPD could easily form a coalition that totals over 50% of parliament. However, the SPD political party leadership has ruled out a coalition government that includes Merkel as chancellor.

AfD Support Rises to 19% in Handelsblatt Online Poll

Via Google translate, please note 19 percent would vote for the anti-euro party.

The new anti-euro party alternative for Germany (AFD) has a good chance to collect in autumn in the Bundestag. The result of a representative survey of online market research company market research on behalf of Handelsblatt Online. 19.2 percent of the 1,003 respondents affirmed therefore the question of whether they would give the party their vote in the general election (24.9 percent of men and 14.8 percent of women).

54.6 percent of respondents (56.7 percent of men, 53 percent of women) would not choose the AFD on the other hand, 26 percent of respondents stated that they have not made a choice decision (18.4 percent of men, 32.2 percent of women).

Their greatest potential voters, the party in the 46 – to 65-year-olds: 23.1 percent of this age group, the AFD would give their vote (in the 31 – to 45-year-olds: 19.3 percent among 18 – to 30 – year: 14.2 percent).

Online polls are notoriously inaccurate, so the key takeaway is continually rising interest.

A few weeks ago many news agencies were stating AfD would not reach the five percent threshold. Bernd and I think 12% or more is easily achievable.

With that backdrop out of the way, let’s take a look at reader Bernd’s speculative estimates for the September election.

Bernd’s Speculative Estimates

• CDU/CSU: 36%


• SPD: 23%


• Grünen: 13%


• AfD: 12%


• Die Linke: 06%      


• FDP: 04%


• Piraten: 03%


• Others: 03%

Should that scenario or any close approximation play out, it will be quite difficult for Merkel to stay in power.

A “natural coalition” between CDU/CSU and AfD could in theory work, and it might not take 50% of the popular vote to form such a coalition on account of the parties losing representation. Yet, even in such scenario, the price to pay for CDU/CSU would likely be Merkel’s chancellorship.

Bernd outlines four possibilities

Four Possibilities

1. SPD, CDU, CSU form a coalition in which Merkel steps aside or is forced out.


2. SPD forms a coalition with half term Merkel (CDU) and half term Steinbrück (SPD) as chancellor.


3. The politics splinters as happened in Italy with unknown effects for the coming government.


4. CDU/CSU and AfD form a coalition under a new and unknown chancellor. Together they reform EU politics.

Bernd states option four would be ideal but right now such a possibility is wishful thinking as opposed to a strong likelihood.

Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com

Mike “Mish” Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Mish’s Global Economic Trend Analysis

Political Prediction: Merkel Loses Chancellorship in September as Support for AfD Soars

UKIP Leader Nigel Farage Says "Get Your Money Out of Spain While You’ve Still Got a Chance"

UK Independence Party (UKIP) leader Nigel Farage makes the same common sense plea that I have been stating for some time. Farage says “Get Your Money Out of Spain While You’ve Still Got a Chance“.

The UK Independence Party leader said that the European Union had “crossed a line” by trying to extract funds from savers under the terms of the abandoned Cypriot bail-out.

Mr Farage said: “Even I didn’t think that they would stoop to actually stealing money from people’s bank accounts.

“There is going to be a big flight of money and that flight of money won’t just be from Cyprus, it will be from the other eurozone countries, too. There are 750,000 British people who own properties, or who live, many of them in retirement, down in Spain.

“Now that we see the EU are prepared to resort to anything to keep alive their failing euro project, our advice to expats living down in the Mediterranean must be, ‘Get your money out of there while you’ve still got a chance’.”

Surge in Support for UKIP

The latest poll shows Ukip only 10 points behind Tories.

The Conservatives and Liberal Democrats have suffered a double blow as Nigel Farage’s UK independence party soared to 17% in the latest Opinium/Observer poll, and a large majority of voters have said they believe coalition economic policies are harming the country.

Labour has dipped by 2% to 39% – also a likely victim of the UKIP bounce – while the Tories are down by the same amount to 27%, one of their lowest ratings of recent years.

The personal ratings of the leaders of the three main parties in parliament have all dropped, with David Cameron’s having fallen by 8 points in two weeks from -18% to -26%. That of Labour leader Ed Miliband has dropped 5 points in a fortnight to -20% while Nick Clegg’s rating has crashed a further 7 points from -46% to an alarming -53%.

But the findings on the economy will reverberate most at Westminster. Just 20% of all voters now believe the government’s economic policies have been beneficial to the economy, against 58% who say they have been harmful.

Let’s hope there is a run on Spanish banks. The sooner this mad experiment in the eurozone ends, the better.

Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com 

Mike “Mish” Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Mish’s Global Economic Trend Analysis

UKIP Leader Nigel Farage Says "Get Your Money Out of Spain While You’ve Still Got a Chance"

Hollande Announces 20 "Confidence Shock" Measures to Support Home Building

Sticking with his economically insane campaign promise to construct 500,000 new homes in 2013, Hollande Announces 20 Measures to Support Home Building.

Advocating a “confidence shock” to revive the building “against the Emergency Economic, social and environmental” the head of state has shown its desire to remove “all obstacles to construction”, while there was about 340,000 starts of new homes in 2012, below the target of 500,000.

Housing Starts Insanity

I commented on this once before but it’s worth a repeat now that Hollande is hell-bent on forcing his will on the market.

Reader Tim Wallace helps put the insanity into perspective. Wallace writes …

Hello Mish

I was astounded to see that France wants 500,000 units of housing starts. According to the World Bank in 2011 France had a population of 65.5 million people. This compares to the USA population of 311.6 million from the same source. Therefore France is approximately 21% the size of the USA. For the USA to have an equivalent number of housing starts to population (the people who would get the units) we would need to have 2,380,952 starts!

We know how that would end.

Indeed, we do know how this would end.

The US is currently running about 890,000 housing starts annually, on a seasonally adjusted basis. And Hollande wants an equivalent 2,380,952 starts “for the public good“.

US housing is distressed. However, France is in the midst of a bubble now burst, and it is beyond stupid to keep building anywhere in the face of falling demand.

“Confidence Shock Coming Right Up”

Before the election, people assured me Hollande could not possibly be foolish enough to actually follow through on his campaign promises. To them I say, never underestimate what a socialist fool (or any other kind of politician) might attempt to do.

Should Hollande actually succeed at getting developers to build 500,000 new homes even though developer Nexity predicts 280,000-300,000, I can guarantee you there will be a “confidence shock” because home prices will crash through the floor.

Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com

Mike “Mish” Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Mish’s Global Economic Trend Analysis

Hollande Announces 20 "Confidence Shock" Measures to Support Home Building

Housing Construction in France Lowest in 50 Years; Hollande Responds With Measures to Support Building "For the Public Good"

Housing starts in France will fall to 280,000-300,000 in 2013, the lowest level in 50 years warns developer Nexity. The government wants 500,000 units per year.

French president Francois Hollande thinks he knows the proper amount of houses that need to be built. Therefore, Hollande confirmed measures to support building quickly.

Here is a Mish-modified translation from Les Echos…

Emergency. This is the word that comes to everyone’s lips about building. Housing is at its lowest level since fifty years. François Hollande confirmed in an interview yesterday that “support for building” will be amplified quickly for the “public good”.

The Ministry of Housing was happy about yesterday’s statements from the Head of State: “This means we are moving towards an ambitious plan”. We recall the campaign promise to build 500,000 homes per year, of which 150,000 will be in social housing to offset the increase in the VAT rate.

France is in the midst of a deflating property bubble. Nonetheless, Hollande wants to build more houses anyway. His rationale is interesting. Hollande wants to offset the increase in the VAT, taxes that he hiked.

Hollande is on a mission to wreck France, and he is succeeding spectacularly as the following history shows.

June 8, 2012: Please consider economically insane proposal by French president Francois Hollande “Make Layoffs So Expensive For Companies That It’s Not Worth It”

August 13, 2012: In France, Government spending amounts to 55% of total domestic output. For discussion, please see Hollande’s Honeymoon is Over; 54% of Voters Unhappy; Unions Promise “War” in September.

November 29, 2012: Given that any clear-thinking person should quickly realize that if companies cannot fire workers they will be extremely reluctant to hire them in the first place, it should be no surprise to discover French Unemployment Highest in 14 Years (And It’s Going to Get Much Worse).

December 28, 2012: Economic implosion in France is underway. French Retail Sales Contract 9th Consecutive Month as Cost Inflation Surges

February 6, 2013: Germany Rebounds but … France Economic Implosion Accelerates; Record Decrease in Service Employment in Italy

February 21, 2013: France Sinks Further Into Gutter; PMI Accelerates to 4-Year Low; “Core” of Europe Now Consists of Germany Only

March 6, 2012: Eurozone Downturn Accelerates Despite German Growth; Divergence to France Widest in 15 Years

For the public good, Hollande ought to resign along with his entire socialist government.

Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com

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Mike “Mish” Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Mish’s Global Economic Trend Analysis

Housing Construction in France Lowest in 50 Years; Hollande Responds With Measures to Support Building "For the Public Good"