Is the European political fabric coming apart?

Recent political developments in Germany, one of the eurozone's most important economies, suggest that the bloc of countries that share a common currency may be heading for a period of increased turbulence. According to international news sources, an event took place on April 18 that global investors may want monitor their positions if they have exposure to European assets or liabilities.

The nation's legislature was conducting a final vote on the Cyprus bailout package, as the current legal framework for the European Union's (EU) assistance programs requires an up-or-down approval in the Bundestag. Political analysts and observers in that country were nervous ahead of the tally, as members of Chancellor Angela Merkel's center-right coalition of the Christian Democrats and Free Democrats had voiced open concerns about the contents of the bill.

Deutsche Welle, or the German World, reported that Merkel was unable to assemble enough votes from her coalition to pass the proposal. However, the leftist opposition – composed of the Social Democrats and the Greens – put forth enough votes to award final approval for the bailout package.

While on the surface this appears to be a success, the reality is that Merkel's previously steady hold on power is beginning to show cracks. As she takes her party into elections this fall, seeking yet another term in office, this event could be the first indication that victory may not be guaranteed. Her political opponents are far more skeptical of the EU bailouts and a change in governments could lead to greater financial uncertainty and instability in the region.

As we mentioned previously on this blog, investors with exposure to Europe should tread carefully. Utilizing wealth preservation methods like cash flow real estate can help generate additional sources of income to hedge against losses. To learn more, download our "Free Game Plan Report" today.