A constrained Merkel clearly raises the risks for Europe and thus for Germany. Markets, fearing the loss of German support, could take control of the situation away from the authorities, marking down the debt of periphery governments, straining existing support mechanisms, and perhaps forcing the failures that investors and the authorities fear. Merkel’s clear political abilities may allow her to navigate around even a constrained, partisan situation and calm markets in the process.

Yet that kind of maneuver might require more of the chancellor then even she may have to offer. At the very least, Europe will face rough sledding up through the German vote this fall—and very likely for some time afterward.

Milton Ezrati is senior economist and market strategist for Lord, Abbett & Co. and an affiliate of the Center for the Study of Human Capital and Economic Growth at the State University of New York at Buffalo. He writes frequently on economics and finance. His new book, Thirty Tomorrows, linking globalization to aging demographics, is forthcoming from Thomas Dunne Books of Saint Martin’s Press.