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Tue, 25th April 2017

Anirudh Sethi Report

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Archives of “2005” Tag

Auf Wiedersehen, Pet? Merkel’s Reign in Jeopardy as SPD Surge Under Schulz

Germany’s Social Democrats (SPD) have pulled ahead of Chancellor Angela Merkel’s Christian Democrats (CSU) in opinion polls for the first time since 2006.

Two polls have placed the SPD ahead; Emnid (SPD 33 percent, CSU 32 percent) and Insa (SPD 31 percent, CSU 30 percent). The results, arguably a reflection of the SPD‘s newfound momentum under Martin Schulz, who replaced Sigmar Gabriel as SPD leader in January, are notable not only for marking the first occasion since 2006 the SPD has bested the CSU, but the SPD’s seismic, record breaking leap in the polls in 2017.

In December 2016, both Emnid and Insa placed SPD support in the 20-21 percent range. The SPD, currently junior partner in Merkel’s ruling coalition, have trailed the CSU for years in opinion polls; it last came first in an election under Gerhard Schroeder, in 2002.

Schulz, almost unique in German politics for not having a university degree, has revitalized the SPD’s fortunes with straight-talking candor; his promises to campaign for social justice and oppose right-wing populism have struck a chord with voters at a time when Merkel’s ruling CSU are shifting rightwards in response to the success of populist politicians and parties the world over. 

Tony Blair leaves door open to second referendum on EU membership

Former British prime minister Tony Blair has hinted at his support to have a second referendum if a “significant part” of those who voted for Brexit change their mind.

Speaking to launch his campaign to “persuade” people not to leave the EU, Mr Blair said:

If a significant part of that 52 per cent show real change of mind, however you measure it, we should have the opportunity to reconsider the decision.

Whether you do it through another referendum, or another method, that’s a second order question.

The former leader of the Labour party also invoked the “propensity for revolt” seen across the developed to call on pro-EU supporters to convince people who “voted without knowledge of the true terms of Brexit”.

Mr Blair said he wanted to “strengthen the hand of the MPs who are with us and let those against know they have serious opposition to Brexit At Any Cost”, adding:

This is not the time for retreat, indifference or despair; but the time to rise up in defence of what we believe – calmly, patiently, winning the argument by the force of argument; but without fear and with the conviction we act in the true interests of Britain.

German Media Says Merkel Can Not Afford To Bail Out Deutsche Bank

Having kept mostly silent during the past week when Deutsche Bank stock was crashing, its default risk soaring, and only a spurious rumor by French AFP, based on a Twitter report, prevented the bank’s stock from going into a three day weekend at all time lows , on Saturday the German press woke up to the ongoing local banking crisis, reiterating what stoked the crisis in the first place, namely Angela Merkel’s statement last weekend that it won’t bail out Deutsche Bank.

Repeating not only what Merkel herself said last week – a statement which first prompted this week’s plunge in DB stock – but what we have said all along, namely that a bailout of Deutsche Bank would be political suicide for the Chancellor due to pressure from AfD, and may lead to the collapse of Europe, where other nations, namely Italy, have been pushing for a similar bailout of their own banking systems only to be met with stern denials by German, Reuters reports that according to much of the German media, Angela Merkel cannot afford to bail out Deutsche Bank given the hard line Berlin has taken against state aid in other European nations and the risk of a political backlash at home. 

Last week’s events, which have prompted numerous flashbacks to that certain historic week in September 2008 when Lehman failed after counterparties yanked cash from the doomed bank, culminated when the German government denied a newspaper report on Wednesday that it was working on a rescue plan for the Germany lender, unleashing a plunge in DB shares, which was accelerated after a Bloomberg report that hedge fund counterparties to DB’s prime brokerage had quietly withdrawn cash from the bank.

Only a so-far unconfirmed and very improbable report on Friday morning that the DOJ is willing to cut the $14 billion penalty to DB by more than half, prevented the stock from plunging further into the Friday close. 

And while we wait to find what the real story about the DOJ’s settlement decision is, Germany’s press is already making it clear – once again – that a Deutsche Bank bailout is out of the picture.

As Reuters adds, Germany, which has insisted Italy and others accept tough conditions in tackling their problem lenders, can ill afford to be seen to go soft on its flagship bank, the Frankfurter Allgemeine wrote. “Of course Chancellor Merkel doesn’t want to give Deutsche Bank any state aid,” it wrote in a front-page editorial. “She cannot afford it from the point of view of foreign policy because Berlin is taking a hard line in the Italian bank rescue.”

Merkel’s CDU Stunned By Election Defeat To Anti-Immigrant Party In Her Home State

Last Thursday we previewed that in today’s regional election in Mecklenburg-Western Pomerania, the home state of Angela Merkel, she was looking at the unthinkable: losing and not just to anyone but to her nemesis, the anti-immigration AfD. This is what we reported: “According to the latest shock poll, released late on Wednesday, the AfD is leading the CDU by 23 percent to 20 percent, with the Social Democrats, who currently run the rural state in coalition with Merkel’s party, at 28 percent support. What’s more, according to Bloomberg the AfD’s recent history in regional votes suggests it will perform better on election day than predicted in polls.”

Sure enough, according to the first exit polls released moments ago, Merkel’s CDU has come in third, in line with expectations, and more importantly, behind the AfD, which is the only party to see popular support in the elections as all other major parties have seen an exodus in popularity

  • SPD 30.5 %, -5.1%
  • AfD 21 %, +21%
  • CDU 19 %, -4.0%
  • Linke 12.5 %, -5.9%
  • Grüne 5 %, -3.7%
  • NPD 3.5 %, -2.5%
  • FDP 3 %, 0.2%

Australia on edge after close election , Turnbull and Shorten both confident of victory

The Australian  national election polling booths have now closed 2 July

  • PM Malcolm Turnbull and opposition Labour Party leader Bill Shorten both say they are confident of a victory but concede the result could be tight

Malcolm Turnbull ,the leader of Australia’s conservative Liberal Party-led Coalition dissolved both houses of parliament in May in a bid to oust  independents in the upper house Senate who had blocked his agenda, including company tax cuts.

It looks a very tight race to the wire and the likely threat of a hung parliament looms.

More, and live, coverage from ABC here

I’m sure our intrepid reporter Down Under will be along here over the week-end to update and assess the election result’s impact on the AUD and markets in general.

In the meantime I’m heading to France for a few days. Have a great, and restful, week-end everyone and thanks again for your fantastic support.

Aussie elections too close to call as polling closes