Well, the economy over there is starting to improve, and with a lot of their exports going to the Middle East and continued good relations with that region, that would help a lot. I hope, however, nothing bad comes from their souring relationship with Poland.

There is some limited agreement on the economy so they will address that part of it - simplying the Federal system, for example. There may also be some progress on farm subsidies given there is some discussion about that on the continent. In the end the reforms will only come about when Germans are ready for them, with a parlimentary system it is difficult for one side or the other to impose solutions. The areas they cannot agree with will just have to be set aside, especially since the SPD was able to strip out labor from economy and health from social services, allowing them to put on the brakes on any substatial change. They'll fix the easy stuff that most people recognize needs fixing.

While Merkel is a difficult person to work with and may become a popular target, at least Schroder is out of the equation so this will be less of a personality clash than one of ideas. I think the mood over there is shifting, however. I don't see that even if the CDU had fully won they would be able to achieve their goals: changing an economic system requires a visionary who can inspire confidence, qualities totally lacking in her case. She is an East German technocrat whose political skills are more suited to infighting.

This may be good in the long run - I think Germans are needing some time to adjust to the necessity of change, and if things go badly they will be able to point to the coalition government as the villain and not to a specific party, which would lead to polarization such as over here. It would also give some time for a charasmatic reformer to rise from the ranks, providing Merkel doesn't undercut them or start a political war.