Germany: Political chaos continues - BBH

Germany’s struggle to find a working government coalition continues as the news that the attempt to forge a four-party coalition in Germany collapsed Sunday saw the euro marked down in early Asian activity, notes the research team at BBH.  

Key Quotes

“It is not clear where Germany goes from here.  However, the important takeaway is that investors do not see this as a systemic issue, but a local one.  Investors quickly looked past Catalonia's secessionist push on similar grounds.  Likewise, state developments in the US rarely move the markets, even large states, like New York and California.”  

“There are several options available to Germany.  More compromises by the CDU/CSU and Greens could try to win back the FDP.  The CSU/CDU could try to woo the SPD, which has thus far refused to be part of a Grand Coalition again.  The CSU/CDU and Greens could form a minority government, which the FDP says they would support.  The German President could reject a minority government and insist on new elections.”