Now that the Greens have said “no way” to a “Jamaica coalition” with the CDU and FPD, Germany’s pretty much stuck with a grand coalition. Merkel, whose reform credentials were weak to begin with (thus resulting in very high numbers for the Free Democrats), is not going to be credible after being in grand coalition with Schroeder’s gang. She’s already had to cut too many deals with the regional bosses, and there are many in the party who see her as a backstabber to begin with.
Either Merkel stays boss, but achieves absolutely nothing, in which case she’s toast long-term, or else for the coalition to work, there is a “double decapitation,” and she and Schroeder are both out immediately, and probably for good.
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