WELL, THE TORIES ARE TAKING LONGER TO PICK A LEADER:

This coalition is grand in name only (Kate Connolly, 17/11/2005, Daily Telegraph)

The new government is grand in name. But it is unlikely to be grand in nature or ambition. Where are the signs that Germany will enter the 21st century and allow shoppers to use credit cards whenever and wherever they want, or to buy bread and newspapers on a Saturday afternoon?

So unsure are shoppers about Germany's future that they are saving like never before, deciding against new washing machines and cars. The average age of cars on the roads is now seven years - unheard of since the 1950s, just before the Wirtschaftswunder kicked in. So what does the new government do? It announces plans to increase value added tax by three points to 19 per cent.

Already-cautious shoppers are only likely to sit even more tightly on their earnings. Business leaders are appalled at the new government's lack of zeal in cutting bureaucracy, or encouraging a breed that is virtually unknown in Germany: entrepreneurs. You cannot, for example, set up an office in your garage: every office has to have a window, according to one law, while another dictates that garages must not have windows. There is no sign that Merkel & Co intend to reform the garage law or others like it.

Could Germany have produced a Bill Gates? Had Gates, a college drop-out, grown up in Germany, he would have ended up in middle management at an electronics firm - if he was lucky. Germany remains so set in its ways, and so deferential in the face of formal qualifications, that managers almost always have to be graduates.

Even the process of forming the government - the uneasy bedfellows of the Christian Democratic Union and its Bavarian sister party, the Christian Social Union, together with the Social Democratic Party - typifies the state of things in Germany: slow and sclerotic. It has needed the longest period of any post-war government to complete the task. As the outgoing chancellor, Gerhard Schröder, commented, it was like "mating porcupines" - cautious and painful.

That's how you turn good deflation into bad.

Posted by Orrin Judd at November 17, 2005 7:30 AM