The Off Topic Topic

[Eddie Teach]

The child in the French cartoon looks like Gandhi. 

[Sheilbh]

Really interesting video of the FT Investigations reporter who has been pushing the Wirecard story for the last two years - repeatedly threatened by the company's lawyers and accused of criminal offences by the German financial regulator. It turns out he was right:
https://www.ft.com/video/37cb70e6-72df-471e-943d-2d32c2785650

The FT has been running with this story - as is their right given the circumstances - but it feels like there's lots of institutional problems that need addressing here. The auditors failed, the German regulator seems to have been kind of in the pocket of Wirecard and there was an article by a former editor of Handelsblatt on the failings in the German financial media too.

As he points out in the video, you kind of have to feel for the guy who was hired as new Chief Compliance Officer, probably with a remit to tighten up compliance. He was meant to start in July but that got pushed forward as the scandal broke. He was announced in a late night press conference then the next day the CEO stood down and he was appointed interim CEO

[Josquius]

Why is Philadelphia so British?
Watching the Louis theroux law and order series it's really striking how non American it looks with terraced houses everywhere.
I understand pre war this was more standard in the US. But unusual it has survived there.

[Valmy]

"Terraced houses"  are pretty common on the East Coast in general.

[Valmy]

If only French Imperialism was just getting laid, their empire might still be around.

[Admiral Yi]

Why do youse guys call them terraced houses when they don't have terraces?

[Zanza]

Really interesting video of the FT Investigations reporter who has been pushing the Wirecard story for the last two years - repeatedly threatened by the company's lawyers and accused of criminal offences by the German financial regulator. It turns out he was right:
https://www.ft.com/video/37cb70e6-72df-471e-943d-2d32c2785650

The FT has been running with this story - as is their right given the circumstances - but it feels like there's lots of institutional problems that need addressing here. The auditors failed, the German regulator seems to have been kind of in the pocket of Wirecard and there was an article by a former editor of Handelsblatt on the failings in the German financial media too.

As he points out in the video, you kind of have to feel for the guy who was hired as new Chief Compliance Officer, probably with a remit to tighten up compliance. He was meant to start in July but that got pushed forward as the scandal broke. He was announced in a late night press conference then the next day the CEO stood down and he was appointed interim CEO

The early signs point to very poor performance by the regulatory body and the auditing company. Needs a thorough investigation. 

[Sheilbh]

If only French Imperialism was just getting laid, their empire might still be around.

French Imperialism was always awful overseas - but I think Europe peaked in the France of 130 departments

The early signs point to very poor performance by the regulatory body and the auditing company. Needs a thorough investigation. 

Yeah they seem to have got very close to lots of institutions and used that to influence them. In the UK we had a big scandal over a public service outsourcer that went bust - despite being signed off by their auditor (another one of the big 4). Since then the auditors have been reviewed by the competition authority and are being required to ringfence their auditing business and I think they're also being made to support other accountancy firms doing audits. Not sure if it's enough but the regulator has said they will consider splitting audit from their consultancy businesses.

As I say the former Handelsblatt editor is damning. But it's what I mean it feels like they wooed the regulator, they wooed the press, they wooed institutional investors and were able to sell them on their "story":

Why was Frankfurt so blind for so long about Wirecard?
Germany's financial establishment too often views harsh criticism of corporations as an affront
Bernd Ziesemer
Many believed the 'attack' on Wirecard was brought about by short sellers © Michaela Handrek-Rehle/Bloomberg
Bernd Ziesemer June 21 2020
Print this page

The writer, a former editor of Handelsblatt, is chairman of the Cologne School for Journalists

Over the past two years, Wirecard has been a rollercoaster; at least, that was the metaphor widely used in many German newspaper reports, investor forums and analyst presentations. Good news drove up the fintech group's share price; bad news pushed it down. But last week the funfair stopped abruptly when auditors warned that €1.9bn was missing from Wirecard's accounts. Many riders on the rollercoaster, not having taken seriously reports which suggested that a large portion of the company's revenue and profits did not exist, suddenly found themselves without seat belts.

Some fund managers such as Deutsche Bank's DWS, normally known for being risk averse, watched as their holdings of the stock plummeted in value. Many small investors, usually aggressive defenders of Wirecard on Twitter, fell silent. And the German press, which had mostly observed the critical reporting passively, started using the strongest words to condemn the company.

The case raises a disturbing question for Frankfurt's financial community. Why did so many institutions fail to take into account what the Financial Times had reported might be going on there? One reason sticks out. Many saw the reports as an "attack" invented, or at least co-sponsored, by shady Anglo-Saxon speculators and "locusts".

This premodern idea of capital markets — long-term investors are good; short-sellers are bad — is common amid the German public but also among large parts of Frankfurt's financial community. Over the weekend, Tim Albrecht, manager of DWS's flagship Deutsche fund, lamented that Anglo-Saxon short-sellers were Wirecard's only winners, and everyone else had lost. But hasn't the truth also won?

For too long, it found all kinds of bureaucratic excuses to avoid looking into Wirecard seriously. When it finally did, BaFin's regulators did not target company management but rather the journalists behind the critical reports and also unnamed hedge funds. Conspiracy theorists went ballistic when BaFin suspended Wirecard short selling last year, and then filed a criminal complaint against two British journalists. German corporate culture is still dominated by actors who favour corporations over their shareholders, and thus regard criticism as an affront.

BaFin not only amplified the home bias against Anglo-Saxon short-sellers; it used parts of the German press to attack them. In BaFin's early days, there was a practice whereby selected information was given to chosen journalists when the institution sought to present itself as a heroic fighter against evil financiers or foreigners intriguing against Germany's financial great and good. The ghost of this practice lingers in BaFin's corridors and too many local journalists still take as truth what they hear there.

BaFin bureaucrats were also offended when the first reports were published about potential irregularities at Wirecard. A huge scandal under their noses? Unthinkable. Since many German media lacked either the expertise or means to dive deep into such a global and complicated story, they were delighted when German investment funds or BaFin, or sometimes both, offered them an occasional Wirecard "scoop". Politicians meanwhile found the whole affair too specialised to pay much attention.

So it basically remained a lopsided fight, until last week. Only a few German journalists, mostly from smaller outlets, supported the critical reporting. No major financial institution publicly questioned Wirecard. Smarter funds meanwhile divested their holdings; dumber ones stayed in. One thing is sure, however. Future journalism students will read the affair as a telling case study. I know I am one teacher who will encourage them to do so.

[Sheilbh]

The NYT's coverage of the UK continues to be hilariously awful


Based on their reporting hear I don't trust anything they say about other countries. I assume their internal US coverage is better - I hope.

Edit: The only way I can understand this is if they had a very literal understanding of Hackney Marshes?

[Caliga]

Why is Philadelphia so British?
Watching the Louis theroux law and order series it's really striking how non American it looks with terraced houses everywhere.
I understand pre war this was more standard in the US. But unusual it has survived there.

[Razgovory]

I'm going to get two kittens today, my last cat died last year.  The cats I am about to receive were named "Hera" and "Hestia", which I thought was rather pretentious.  So I came up with two even more pretentious names: Catullus and Cataline.  They are cat names, but they are male cat names.  I think I'm going to get more down to earth names like Susan, Sally or Pantagruel.

[The Brain]

[Eddie Teach]

I think Hera and Hestia are great cat names.

[PDH]

Cat should have pretentious names.  They should be named after gods, goddesses, and rulers from ancient times.

[Sheilbh]

I love animals with human names