As the athletics world championships closed in London with Usain Bolt having run his last race, Mutti Merkel launched her own race with the formal opening in Dortmund of her party’s campaign in the run-up to the Bundestag elections on September 24.
Before we even start, let’s just get one thing clear and that is that the great Theresa May cock-up was to only garner 42.34% of the popular vote whereas, at current poll standings, Mutti will be lucky and will be fêted as a victor if she can bring home 35% of the ballot or, including the Bavarian CSU allies, closer to 40%.
The SPD, once the proud party of the towering characters of Willy Brandt and Helmut Schmidt, is now hanging on to a champagne socialist leader and fully paid-up member of the Brussels eurocracy in the form of Martin Schulz. He, like many of the Brussels jet-set, has yet to grasp that it is nigh on impossible in the age of social media to rewrite and spin one’s track-record to suit the occasion. Just six months ago the CDU/CSU and the SPD were level-pegging at around 31%. Now Schultz’s lot are lingering in the mid-20s.
Whereas the UK saw a centripetal outcome with the Conservatives and Labour taking 82% of the poll between them, Germany is experiencing a centrifugal effect the ex-East German Communist party, the Linke or Left on 8%, the Greens on 7%, the Liberals on 9% and the eurosceptic AfD also on 8%. On that basis, 32% of the vote would go to parties that are neither government nor principal opposition but which will still make the 5% hurdle and thus be represented in the Bundestag.
Without stating the obvious, Germany is sometimes a strange place and one we outsiders struggle to understand. On one hand it is the epitome of industrial efficiency while on the other it has a mythical fascination for nature and especially for forests. It is not entirely by chance that the Green movement started life in Germany and that it is the only country where Greens have more than just scratched the surface of the political scene. Forget not that from 1998 to 2005 the Greens provided, in the form of Joschka Fischer, the vice chancellor and foreign minister in the Gerhard Schröder administration.
Green light
Jump to 2017 with Germany’s economy still “in fuego” with the help of a deeply manipulated euro/dollar exchange rate. Then, with VW and Audi still reeling from “dieselgate”, news breaks that the whole of the flagship auto industry might be rotten to the core, corrupt and conniving, and VW’s cheat mechanisms might be just the tip of an iceberg of collusion and deception. We like to be green and moral so we approve of closing down our nuclear power capacity to save the planet while much of the wealth that gives us the freedom and the independence from the fight for daily survival is generated by a bunch of home-grown two-faced polluters. That was never in the script.
Merkel has a tricky task on her hands, namely to help define whether Germans prefer to be rich or environmentally friendly. Surely one can, to some extent, be both but Germany’s belief that it already was has proven to be misguided. This impact of this shaken belief should not be underestimated. The election is now not only about with whom Merkel will form a coalition but what the moral priorities will be for the coming years.
Based on the polls quoted above, Merkel will have to form a grand coalition with the SPD; there is barely another permutation, other than one including the AfD, which would secure her a parliamentary majority. I suppose she would give her eye teeth to win the election with the sort of support with which Theresa May lost hers. Funny stuff, elective democracy, isn’t it?
Meanwhile, on the green theme, I had the pleasure of passing the day yesterday with a very senior bod from the UK’s Advanced Propulsion Centre. It’s not quite the same as the famous US Jet Propulsion Laboratory but, in a quiet way, it is just as innovative. The APC is a government-sponsored research outfit working on the solutions for automotive power in the future. The subject of Tesla came up.
Pit stop
On Friday Tesla brought its bond deal. What had been expected to be US$1.5bn at 5.25% turned into US$1.8bn at 5.30%, the first large bond deal I can think of in a very long time that came at a spread wider than initial talk. Well, Tesla needs the money to keep the lights on and if there was a PIMCO-type order – I’m not suggesting in any way that PIMCO was involved but this would have been their style – for several hundred millions of dollars at 5.30%, all or nothing, that might explain the increase in pricing and issue size.
I gave my sixpence’ worth on Tesla – see Thursday’s column – while my APC chum sat there gently shaking his head. Tesla, he inferred, is a brand on the way to nowhere. Its branding and marketing may be innovative but in terms of technology it has, so I understood, added nothing new and, more to the point, it is unlikely to do so.
Somewhat by chance I heard Tesla being discussed on the radio in the context of battery technology. Although moving forward apace – the weight of batteries is very important when looking towards smaller, more practical vehicles. If you’re running on batteries, then switching on your lights, using your windscreen wipers or even your radio reduces your range. Anyhow, the interviewer asked his guest how long it would be before one could realistically expect to be able to run from London to Edinburgh on a single charge. After some beating around the bush the answer came back as “In 20 years … maybe”. It can easily be done on one tank of fuel – Jeremy Clarkson went there and back on Top Gear – but fuelling a car and charging a battery are not the same….yet. I noted ahead of the issue that I would not choose to have Tesla bonds in my portfolio. My opinion has only been reinforced.
Chequered flag
It is easy for ministers in France and the UK to announce that in 2040 only electrically powered cars will be matriculated because by then the minister in question will be long gone and long forgotten. But that does not detract from a German election campaign being fought when the driver – no pun intended - of national wealth and pride is under attack. That election is far from over and anybody who thought that with the anointment of Young Macron all was well in the European political garden and that the risk of shock was banished would be well advised to think again. Yes, Mutti Merkel will win, and handsomely so too, but that is just the beginning. Please don’t take your eye off that ball and don’t get rocked into believing that Germany is a done deal.