The wrong strategy of Angela Merkel

The German economic performance intrigues politicians, researchers and countries worldwide. How can this country, after 10 years of poor economic achievement, reach growth rates that match those of China in some quarters, and that is well above those of its European neighbors? Intriguing indeed, but unfortunately for the Chancellor, her popularity is nothing compared to this rather good news: unemployment down, German industry booming, but still Misses Merkel is loosing ground to a strong left- wing coalition driven by the astonishing success of the Green Party.

Given this situation, it seems only logical that she wants to reinforce her much weakened coalition partner (see: The collapse of the German Liberal Party), the German Liberal Party, in order to get back on the track to a successful reelection in 2013. Finally realizing an election promise, Misses Merkel is searching for support to cut taxes, hoping to win over the voters lost during the coalition’s two years of headless government.

The risk that she’s running is tremendous. Not only does she have a growing opposition in her own ranks, including the powerful finance minister Wolfgang Schäuble, but also she’s likely to lose more ground among the voters. Indeed, cutting taxes at a moment when the Euro zone and whole Europe is heavily shaken by a debt crises, does not find the approval of the population other then high income tax payers hoping to further comfort their fortunes. The future being highly unpredictable, and heavy costs likely to arise from money dedicated to prevent Greece and other countries from bankruptcy, one does not have to be an economists to realize that such politics are insane.

Worst of all, it will cost her the last bit of credibility she had within the German population. Despite the economic recovery, most Germans are aware of the highly precarious situation Europe and the world economy is confronted with. Even if Angela Merkel is going to score some points by pushing through tax cuts, she will not gain in the field that wins elections: politics that comfort the population and make them feel that the country is on the right track to a better future. But maybe the German chancellor is all to desperate to even consider this. In one of the most difficult times that Europe has been in since 1945, its leading economy has literally lost its head.

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