Bershidsky on Europe: Germans Vote Merkel, Hack New IPhone
Here's today's look at some of the top stories on markets and politics in Europe.
Angela Merkel wins big and loses coalition partner.
Official preliminary results of the German parliamentary election show Chancellor Angela Merkel's Christian Democrats well ahead of the rest of the field with 41.5 percent of the vote, which will allow them to take up 311 of 630 seats in the Bundestag, just short of an absolute majority. The second-place Social Democrats won just 25.7 percent of the vote and 192 seats. The voters gave Merkel's conservative in Sunday's election, common sense policies a ringing endorsement as Germany's dominant politician, but the new-old chancellor will not be basking in her glory for long. Her coalition partners, the pro-business Free Democratic Party, failed to get the 5 percent of the vote required to get into parliament, foiled by a new maverick anti-Euro party, the Alternative fuer Deutschland, which cut into its voter base but also missed the 5 percent mark by a whisker. That leaves only four parties with parliament seats: the Christian Democrats, the Social Democrats, the Left and the Greens. Neither Merkel's party nor the Social Democrats want to partner with the too-radical Left, so there will be either a "grand coalition" of the two big centrist parties or a less likely union of the Christian Democrats and the Greens. In either case, negotiations will be tough for Merkel because of serious economic policy differences among the parties. Either way, however, the result is likely to be a somewhat more pro-euro government committed to keep Germany at the center of the European integration process even at a cost to taxpayers.
German hackers crack IPhone fingerprint sensor.
Also on Sunday, the German hacker organization Chaos Computing Club said it had managed to bypass the fingerprint authorization built into the new iPhone 5s. Just two days after the new smartphone hit the stores, the hackers fabricated a fingerprint and used it to unlock the iPhone. "We hope this eliminates the remaining illusions that people have about biometric security," a CCC spokesman said. The news is a major embarrassment to Apple: The Cupertino company hyped the fingerprint sensor as one of the new model's most important changes from the old iPhone 5. If Apple needs more pressure to go back from incremental improvement of existing products to more revolutionary innovation, the German hackers have provided it.
Swiss canton bans Muslim veil.
The Italian-speaking canton Ticino is set to become the first one in Switzerland to ban the burqua, or full-face veil. According to preliminary results, about 65 percent of Ticino residents voted in a September 22 referendum for a measure according to which "no person shall cover her face on public streets and squares... no person can force another to cover her face because of her sex." The Swiss public has long shown strong anti-Muslim sentiments, banning the construction of minarets in 2009 and giving broad support to the far-right, anti-immigration Swiss People's Party, which won the biggest share of the vote in the 2011 federal election. Swiss policies are an inspiration for right-wing parties throughout Europe. In the European Union, however, the success of these political forces' success is directly related to the degree of economic distress in a particular country. The sooner Europe comes out of its recession, the sooner their influence will wane.
Best year for U.K. IPOs since financial crisis.
The value of U.K. Initial public offerings reached $7.16 billion this year, eight times as much as in the same period of 2012. Foxtons, the real estate agency that went public on Sept. 20, was once such a headache to its investors that they referred to it as "the F word," but its share price went up 17 percent on the first day of trading. That is a typical picture: U.S. institutional investors who want to get in on the nascent European rebound story are jumping at the chance to invest in IPOs. The U.K. government is set to benefit from the trend as it floats at least 41 percent of Royal Mail. This is an excellent time to cash in on market expectations. Actual growth in Europe is still slow and is far from certain to accelerate.
EDF proposes $80 billion overhaul.
EDF, the French power company, has announced plans to refit its nuclear power plants to extend the life of reactors and meet new security standards. According to company estimates, the program will cost a total of $80 billion, most of it to be spent between 2017 and 2022. As a result, EDF's reactors will serve up 58 to 60 years instead of 40. The company operates 60 reactors throughout France, but they are an increasingly unpopular energy source. The socialist government wants to reduce the country's dependence on nuclear power from 70 to 50 percent, put a heavier tax burden on the nuclear plants and close down the oldest of them, at Fessenheim, operating since 1978. The ambitious refit proposed by EDF is a response to these proposals: it wants to demonstrate to the government that there are better uses for its cash than taxes, such as investment in making the power plants safer and modernizing them.
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Leonid Bershidsky at email@example.com