A poor deal

After three weeks of wrangling, Angela Merkel has finally emerged as Germany’s first female chancellor. She will head a coalition of her CDU/CSU party and the SPD. The measured reaction of equity and foreign exchange markets suggested relief at an end to a period of political paralysis. But it hardly indicated confidence that the new leadership would deliver tough and necessary reforms. That assessment seems about right. The SPD has extracted a hard bargain in return for sacrificing the Chancel...