A spectre is haunting Europe posted by Meaders

Meanwhile, in Germany:

Chancellor Gerhard Schröder is closing the gap on his conservative rival, Angela Merkel, according to the latest opinion polls, making it increasingly possible that the challenger could be forced into a "grand coalition" with the ruling Social Democrats (SPD).

Having started the election campaign with what looked like a chronic, insurmountable gap behind the CDU, Schroeder's managed to claw his way back. Under pressure from the newly-formed Left Party, the SPD - after years of swingeing cuts in benefits, and stagnating real wages - started to talk left: the party chairman described financial capital as descending like "locusts" on industry, whilst the CDU's Angela Merkel has been compared to Margaret Thatcher. As in the British elections earlier this year, a Third Way, post-socialist party has been forced to appeal to its traditional electoral base. Permanent neoliberalism may be all the SPD can offer, but it's been forced to pretend otherwise.

Pushy Tory wonks currently deluding themselves that a return to the 1860s is just what the British economy needs should take note. If there's one thing that's kiboshed Merkel, it's the CDU's foolish enthusiasm for flat taxes: the markets loved it, but ordinary voters contemplating huge tax cuts for the rich and rises for the rest were less enamoured:

...her initial lead in the polls started to ebb away following a row over her appointment of Paul Kirchhof as shadow finance minister. The SPD launched a brutally effective campaign against Mr Kirchhof, a former constitutional judge, portraying his plans for a 25% flat tax as unjust and a gift to the rich.

And what's the CDU's response? Pretend the Cold War still has to be fought:

Stung by sliding opinion polls six days before a general election, German conservatives warned on Monday that a vote for Chancellor Gerhard Schroeder's rival Social Democrats (SPD) could bring ex-communists to power.

"People have to know, anyone who votes for SPD does not know what they are getting," Volker Kauder, campaign manager for the conservative Christian Democrats (CDU), told reporters.

Kauder dismissed as empty the promises by Schroeder, chancellor for the last seven years, that he would never form a government with ex-communists and leftists even if he could after the September 18 election.

The glorious irony, of course, is that having argued like two bald men over a (privatised) comb, both the SPD and the CDU are in their desperation turning on a common, hirsute enemy: the Left Party. Mutual hatred of the real left, and a mutual delight in the dubious virtues of the free market will most likely tie them still more closely.

The so-called "grand coalition" that both SPD and CDU profess to despise is starting to look like a distinct possibility. Schroeder may yet return to government as the CDU's partner. That would leave the Left Party, led by former SPD finance minister Oskar Lafontaine and currently polling as Germany's third party, as something like the official opposition: whilst the FPD has always pushed free-market liberalism, the Greens are enthusiastic converts. The sole dissenting voice in this otherwise harmonious privatisers' chorus would be heard from the left. Here's Lafontaine in action:

During a blazing hot Saturday afternoon in the historic city of Potsdam, once a residence of Prussia's kings, Oskar Lafontaine has been tapping into every social grievance. "We want social justice, social fairness and jobs," he told a largely middle-aged crowd that repeatedly cheered and clapped for him...

Lafontaine has been relishing the problems he has caused Schröder and Merkel.

"Stop sending German soldiers to places such as Afghanistan, where we have no business," said Lafontaine. "We need peace, jobs and a minimum wage."

The rise of the Left Party decimated the CDU (and the Nazis) in the east, whilst the SPD's extraordinary hegemony in working-class west Germany has been distinctly nibbled at. It has posed, starkly, the question of alternatives to neoliberalism at the heart of the European economy. Most incredibly, the Left Party is on the brink of forcing the two parties of neoliberalism into a coalition against it.