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I'd would rather say: a) Incompetence instead of curruption. Plus b) trust culture as entry-vector. a) It has been bemoaned on many instances regarding Germans
by woodpanel 6y ago
I'd would rather say: a) Incompetence instead of curruption. Plus b) trust culture as entry-vector.
a) It has been bemoaned on many instances regarding Germans and finance: We're just inapt when it comes to knowledge about finance. Teachers unions fight tooth and nail to keep finance and business acumen out of the curriculum. This (itself being rooted in culture) will have to bear fruit in some way or another. Eg. Germany has the lowest share of people invested in equities of all industrialized nations. Even with negative interest rates, people rather use savings accounts than "risky" products with yields above 2%. And then there is real estate…
So it is no wonder to me that a state-agency is even easier fooled than E&Y was. Afterall (regarding leaked chats of Eno Kurniawan), they internally boasted about "brainwashing" the E&Y guys.
b) after all, what short-cuts our lack of understanding most of the time, is that we assume there is no wrong doing in the first place. So Markus Braun, claiming everything is fine until the very last minute seemed plausible. Even after the news broke on Thursday it seemed plausible for many, that the wrong doing was on the side of some Philippinian actors only.
- mschuster91 6y ago> Eg. Germany has the lowest share of people invested in equities of all industrialized nations. Even with negative interest rates, people rather use savings accounts than "risky" products with yields above 2% That is mostly to be blamed on savings accounts being decent in interest until the 2008 financial crisis while at the same time, especially in the dotcom boom, a lot of money was destroyed in the stock markets. The "Volksaktie", today known as Telekom (yes, this Telekom, for the US folks), wiped out a lot of people's savings and they remembered this.
- woodpanel 6y agoI disagree. - Returns of Savings accounts were better accross the industrialized world back then. - The amount of people investing in equities was low before the "Volksaktie". It only declined thereafter even throughout the latest, longest bull-run in history. But yes, events like the dot-com bubble or now Wirecard just strenghten the prejudice Germans have toward the whole topic.
- hogFeast 6y agoGermany's economic model in the late 19th century, one copied by East Asia, was to force savings into banks, and then give out loans at heavily subsidised rates to well-connected industrialists. This model has never stopped. Equity markets have never really existed because they are competition with the banking system. And the banks are heavily supported by (or owned) government. They have always paid a rate significantly under market. Always. Germans have the same median net wealth as Greeks and the highest level of wealth inequality in the world (bar China). This is part of the system. If savers take their money out of banks, it is over (and btw, most German banks are functionally insolvent...they were the biggest buyers in pretty much every meltdown in the past fifteen years). Germany is a developed economy but it's financial markets/banking system is Chinese (unsurprising because China copied Japan and Japan copied Germany). Savers get utterly screwed, the wealthy are eating their lunch.
- neuronic 6y agoE&Y simply had no interest in losing a customer by reporting what was well known to them.