Angela Merkel’s power animal must be the cat. She has more political lives than one.

The initial response by the markets after the announcement by Horst Seehofer that he would resign from both his cabinet post as Interior Minister and as leader of the CSU was positive.

But as the evening wore on the reality set in, Seehofer was playing for all the chips at the table in a fight for Germany’s future.

In the end Merkel tried to stand her ground but to fight another day as Chancellor of Germany she had to accept that she no longer had control of the immigration issue at the national or even international level.

It was a furious weekend of wrangling over immigration policy first at the hastily put together EU meeting which produced a tentative agreement on Friday and then with both Merkel’s CDU and Seehofer’s CSU hunkering down to figure out their future.

The agreement reached last Friday wasn’t nearly good enough for Seehofer and the CSU. It didn’t go far enough to stop the flow into Germany by agreeing to turn away ‘already-registered’ migrants back to the country which received them.

The problem for Merkel was the deal that was announced was not agreed upon by all members of the EU and again it simply looks like she is trying to dictate terms and manipulate the headlines to keep things from spiraling out of control.

Seehofer reportedly had a tense meeting with Merkel which saw her refuse to budge on the deal as announced. That left him going back to the CSU with three options.

First, they could accept the deal, but it would cost them a lot of political capital back in the party’s stronghold of Bavaria where Alternate for Germany (AfD) is polling well enough to spoil the CSU’s long-held ruling majority.

Second, they could stand their ground which would threaten the fragile coalition government Merkel cobbled together just a few months ago. This has been the speculation since Seehofer gave Merkel his ultimatum to accept his so-called “Master Plan” on immigration reform two weeks ago.

The last option was for him to step down as Interior Minister and leader of the CSU. It seems he’s chosen the latter.

And now this is where it gets interesting.

At first glance it looked like Merkel had won, that Seehofer blinked in his stare-down with Merkel. By resigning he gives the coalition parties the option of working things out without him or not. He and the CSU make the initial offer to the German people saying, in effect, “We don’t want to topple the government and create turmoil but this is the will of the Chancellor, which we disagree with.”

But there is another interpretation which depends solely on how Seehofer framed his resignation request. To explain this I have to set the way-back machine to 2015 (and give thanks to a regular reader who explained this to me patiently).

In 2015 during the Greek debt crisis Finance Minister Wolfgang Schauble was in deep disagreement with Merkel over her concessions to Greece to keep them in the Euro-zone. Schauble had worked things out with Greek Finance Minister Yanis Varoufakis and Greece would be booted out of the common currency which would allow for debt forgiveness and write-downs.

Merkel is an EU-firster and under her leadership the EU is a prison with no exits. Geostrategically Greece was only admitted into the euro-zone because of its importance to NATO. Keeping Greece in the euro-zone meant continually kicking the can down the road via extending the payback period indefinitely.

This was the path ultimately chosen over Schauble’s objections. But, there were enough concessions made that he went along with it. However, during the battle Schauble floated a kind of nuclear option.

Schauble reached the point where he openly said he would ask the Federal President to release him from his office; in effect self-terminating rather than force Merkel to fire him.

In an interview with Der Spiegel at the time Schauble said, “Politicians have their responsibilities from their offices. No one can force it. If anyone would try, I could go to the federal President and ask for my release.”

What’s significant about this is that it would then trigger a no-confidence vote as it would nullify the coalition agreement agreed to by the President.

Now, in 2015, Merkel would have survived this with little worry and this is why Schauble floated the idea.

It was a way for him to do as little damage to Merkel as he could over their very public disagreement about the trajectory of Greek debt talks.

Now fast forward to today. Seehofer used this same tactic on Merkel in his public remarks after proposing to step down from his cabinet post. He wanted to go to Federal President Frank-Walter Steinmeyer be released from his post as Interior Minister.

This would trigger a vote of no-confidence against Merkel which would topple the government.

This, to me, is why the CSU did not make a public statement and delayed the actual resignation of Seehofer on Sunday. There is still a lot of political wrangling going on. Seehofer came out swinging on Monday morning saying, “Don't let me be dismissed by a Chancellor, who's Chancellor just because of me.”

That’s your clue as to why Merkel had to back down to Seehofer. The question on everyone’s mind was whether he was serious or not. Did he have the stones to take this moment to the limit. He did because the political tide had turned sufficiently for him to do so.

This loss for Merkel leaves her in power, but effectively neutered. Her coalition partners have all the power now and she is simply a care-taker for a German government which no one party controls anymore.

As this played out the latest polls show Alternative for Germany’s (AfD) national support rising above the critical 16% barrier. Seehofer had no choice but to fight for the CSU’s future as it is facing the stiffest challenge to its rule in Bavaria for the first time in decades, over this very issue.

Populism is spreading like wildfire across not only Europe but also in other parts of the world. In Malaysia former Prime Minister Najib Razak was arrested for corruption after the ruling UNMO coalition was thrashed. In Mexico Andres Manuel Lopez Obrador was elected in a landslide over the feudal overlords that have turned that country into a failed narco-state.

And Merkel had to accept her defeat if only to try and live another day. She won’t go quietly and will hold back any progress she can on border security and normalization of relations with Russia.

This internal political battle sets up a barn-burner of a NATO Summit in a little over a week.

She was able to swallow her pride and win this battle. But, Trump clearly has his sights set on taking her down and break the EU’s current power dynamic. Re-tasking NATO and negotiating with Putin can ultimately take away the few lives this cat-lady has left.