The two best options for governing Germany remain the so-called Jamaica coalition (black, green and yellow: CDU/CSU, Greens, and FDP) or a grand coalition under Angela Merkel. The obstacles to these options are the leaders of the unequivocally defeated outgoing coalition. Schroeder - whose party fell from first place to second - insists that he must be the leader of a grand coalition. He seems to have utter disdain for the result of the election. Joschka Fischer of the Greens - whose party fell from third place to fifth - rules out the Jamaica option entirely. But he is stepping down as leader of his party, just as Schroeder should.
A grand coalition is completely workable for the short term, provided Schroeder's ego can be accomodated. The main parties are agreed on some aspects of reform and these could be rapidly implemented by a coalition with a huge majority. Schroeder's timid efforts at reform were always hostage to his party's left, and Merkel might have encountered similar problems from her own party's die-hards. A grand coalition would have a limited agenda, but should be able to implement it rapidly.
The best option would be for Schroeder to resign immediately and the SPD leadership to negotiate a three year programme of reform with Merkel. This would be followed by a new election. It has the additional advantage of making Guido Westerwelle of the FDP leader of the opposition, and perhaps well placed to capitalise on any unpopularity with the government.
A female chancellor and gay leader of the opposition? Germany really is changing.