For those who would like some numbers to go with that, the prognosis on ARD (German public broadcaster) has CDU/CSU on 24,7% (their worst performance since the war), SPD on 24,9%, AfD on 11,3%, FDP on 11,2%, Linke (Left) on 5%, the Greens on 14,8% and others on 8,1%.
Full official, though yet preliminary, results are:
SPD (social democrats): 25.7% of the vote, 206 seats in parliament
CDU/CDU (conservatives): 24.1 / 196 seats
Greens: 14.8% / 118
FDP (liberal/business): 11,5% / 92
AfD (CTers, anti-everything, nationalist nutjobs): 10.3% / 83
Die Linke (socialist; former GDR state party): 4.9% / 39
SSW (Danish minority): 0.1% / 1 seat
Everyone else (30 or so tiny parties): 8.5% / 0 seats
We have a "5% hurdle" rule that stipulates that the percentage you get in the general election counts towards your numbers of seats only if you get at least 5.000% of the total vote - OR if you win 3 seats outright by winning a relative majority of direct votes, and thus a personal candidate winning, in at least 3 out of the 299 voting districts. This applies to "Die Linke" ("The Left"), which failed the 5% hurdle, but won enough districts to get their 4.9% of seats.
The Danish coverage had a reporter suggest that both CDU/CSU and SPD will attempt to form a government, though who ends up governing remains up in the air.
The CDU candidate, Armin Laschet, pretends to be serious when he claims that he has now a mandate to form a government - but everyone outside his party, and not few inside it, see clearly that he and his party suffered a crashing loss: They lost a quarter of their share of votes compared to the last election in 2017, and finished second in national elections for the first time since 1998, and only the 3rd time in the Federal Republic's history (since 1949), with the lowest vote share ever by an extreme margin.
So Laschet is really not in a position to call any shots. There essentially only one configuration where he might get handed the chancellorship - not by his own doing, but by grace offered by two of the smaller parties. I'll explain.
The reigning coalition under Angela Merkel is "black-red", meaning CDU/CSU and the SPD, with Angela Merkel of the CDU being chancellor because all those years of her reign, her party was the largest in parliament.
The same two parties still add up to a >50% majority, but with the ranking reversed. The only realistic option for "red-black" would be under a Chancellor Olaf Scholz (currently Merkels's vice chancellor, and minister for finances), with Laschet at best becoming Scholz' "vice". But I'd guess this is not really attractive to the SPD, which has been the "junior" party for too long, to now still coalesce with the conservatives.
Scholz' other option is the "traffic light" ("Ampel") coalition, so named after the colors red, green, yellow for SPD, the Greens, and the "liberal" FDP - where "liberal" does not at all mean what it means in US parlance, but rather what it actually means: the FDP stands for individual rights, and particularly the protection and freedom of the individual businessperson. It has traditionally had "left" and "right" wings - "social liberals" and "national liberals", with a constant core of "economy liberals".
The FDP has in the past prefered to form coalitions with the more conservative CDU, but coalitions with the SPD are nothing new, and even the "traffic light" has been tried - there is currently such a governing coalition in one of our 16 states (Rhineland-Palatinate). Previous attempts at "traffic light" in other states however did not see the end of their respective regular end of term.
Whether or not such a coalition has a chance depends mostly on whether the FDP wants to be part of a governing coalition enough to bite what is two "sour apples" to them, the social-democrats AND the Greens.
More palatable to the FDP would be the last of the three major options on the table right now: A so-called "Jamaica" coalition, so named after the three colors of the Jamaican flag, which stand for CDU (black), Greens (green) and FDP (yellow). Here again, Greens and FDP would be a "sour apple" to one another, and the CDU would be a "sour apple" to the Greens, although perhaps not quite as sour as the SPD is to the FDP - after all, the Greens, despite conventionally being seen as a left-leaning party, has a surprisingly strong share of (formerly) conservative voters (such as yours truly, and many of his friends).
So we see that two of three possible coalitions include the Greens and the FDP, and so it is expected that those two will first talk to one another, to figure out which bigger partner they are going to support; and then for them to bargain with a unified front against either the SPD or the CDU, to find out which of the larger partners would cede the most concessions.
If Greens and FDP play hardball too much, or if one of them decides that remaining in the opposition is a good enough option, in the end we might see a fall-back to the "red-black" aka "Great Coalition" (so named because it involves the two largest parties).
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Without having consumed any commentary on the news media so far today, my guess is that "red-green-yellow" has the best chance of success, as it would unite the three winners of the election, and signal the most change. It hinges on the FDP accepting a role as #3 - but surely, the other two have to offer them content beyond their 11.5% weight. "Simplify taxes" could be a token.
I can't imagine AfD will be invited to any talks, and there seems to be little enthusiasm for a repeat of the Grand Coalition (CDU/CSU & SPD).
Absolutely no. They are not needed, and absolutely no one at all wants so much as to touch them. They also are among the losers of this election (from 12.6% down to 10.3%), and who wants to elevate a bunch of loser ********?
From a Danish perspective, it will be interesting to see if SSW makes the cut for a place in the Bundestag.
See above: The SSW had 1 candiate win a majority in her or his voting district and thus ascend to the national parliament, the Bundestag. The party itself did not make "the cut". So it's only this one seat.
A bit of an exotic curiosity.