Micha is stopped in the street by a rather grumpy Horkefeld, who it turns out has been demoted to Sergeant for playing contraband music in the presence of a higher officer while drunk at a party.

After a run-in with Mr. Fromm, a sinister-looking neighbor thought by all the other tenants to be a Stasi agent, Micha's father, Hotte, reveals that he has been provided a telephone due to a bogus chronic illness.

Fueled by drugs, the party becomes raucous, and Micha and Mario escape to the balcony, where they are photographed from the western side urinating onto the border wall below.

The next day, Micha and Mario are called into their headmistress' office, where a Stasi agent informs the pair that the photographs of them urinating on the Berlin Wall have made it into the West German press.

Doris, Micha's mother, carries out a plan to defect to the West using a stolen passport and makeup, but when she is waiting to go through the border, she gets cold feet and changes her mind at the last moment.

Nearing the end of his diary forgeries, Micha has a sudden realization about his political beliefs, and reneges on his promise to join the army.

When Micha returns home, he discovers Heinz – who always claimed the asbestos in East German dwellings would kill someone – dead of lung cancer.

With border guards pointing weapons in his face, he pleads that he knows nothing about this and reveals that he gets his fancy cars from the hotel where he works as a parking valet.

Wuschel is crushed to find that it's the wrong record, but Micha argues that it's great music anyway and they end up playing air guitar to it on the balcony.

Below, a crowd of people gathers, looking at them and listening to the music, including Horkefeld, who is now reduced to a street-sweeper (presumably due to shooting Wuschel), newly-weds Mario and Sabrina, and the rest of the characters.

Writing for Der Spiegel, Marianne Wellershoff argued that the film glorified the GDR and played down the negative aspects of life in East Germany, under Erich Honecker.