Germany, a land where the indigenous population still pays with metal coins and paper bills, is not known for its “fintechs.” But there are a couple of exceptions. One of them is Wirecard, a Munich-based company that provides the invisible digital plumbing underneath all sorts of transactions. You’ve been using it without knowing it, maybe when you swiped your credit card or waved your virtual wallet. Even Germans who have no clue what exactly Wirecard does are proud of it, especially since last year, when it replaced long-in-the-tooth Commerzbank in the DAX index of blue chips. That’s why it is big news here that Wirecard is being investigated for accounting manipulation.
The alleged shenanigans, mind you, are said to have taken place in Singapore, not in Germany. They were first reported last week by the Financial Times. Still, even this whiff of trouble has sent Wirecard’s shares on a roller coaster. This prompted Markus Braun, the firm’s Austrian boss (pictured above), to have a call with investors and analysts yesterday. The whole thing is a “non-event” and a “non-story,” he assured them. Wirecard’s own internal investigation has found no wrongdoing, he said. But a law firm in Singapore will look into it, to make sure. Still, maybe Germany should nurse a few of its other fintechs, just to spread its bets. Maybe the one that promises “banking, but without the bullshit.”
Let’s move on to a different angle on the subject of money. As you know, Germany’s federal government has been rolling in it, collecting record tax revenues throughout this long employment boom. Its partners in the eurozone would have liked Germany to spend more of that money, but the Germans, always good savers, have instead used it to balance their budget and even pay down debt. They call this achievement the “black zero” (as opposed to a red minus). A Christian Democratic finance minister, Wolfgang Schäuble, gloated about it. Then his Social Democratic successor, Olaf Scholz (pictured), who entertains unjustified hopes of being chancellor one day, kept boasting about it.
And there’s the rub. Scholz may lose his black zero and get a red minus. As he admitted yesterday, the slowing economy will, in his projections, lead to lower tax revenues than previously estimated. At the same time, the government has promised more spending (in part because his own Social Democrats keep wanting to hand out goodies to preferred voter groups). As a result, there is a hole of €5 billion in this year’s budget, and a cumulative €25 billion until 2023. That means Scholz now has to find cuts, by going hat in hand to the other ministries, including the Social Democratic ones. Good luck with that. Read more.
In yesterday’s briefing, I wondered how Germany and its European partners would respond to being ignored by Nicolas Maduro in Venezuela. The Europeans, remember, had given him an ultimatum to hold new and fair elections at once. Fat chance. Now Venezuela is teetering on the knife-edge of a revolution, as its population, its army, and the world must choose sides between Maduro, the corrupt dictator, and Juan Guaido (pictured), the opposition leader who has declared himself the legitimate interim president. So where does Europe stand?
The good news is that Germany and almost all other EU governments yesterday recognized Guaido, thus joining the US, Canada, and most of Latin America, and opposing a rogues’ gallery of Russia, Cuba, Iran, China, and North Korea on Maduro’s side. The bad news is that they still could not get a resolution by the EU itself, because that would have required unanimity among the 28. As so often, one country balked.
It was Italy. It has a government consisting of left-wing populists, called the Five Star Movement, and right-wing populists, called Lega Nord. And the left-wingers blocked the EU resolution. Their official reason was the principle of non-intervention, but their deeper motivation was probably a lingering sympathy with the socialist Maduro. That should make everybody take note. Moreover, it is yet another reminder that the EU, despite all protestations to the contrary especially in Germany, will always remain a midget in world diplomacy.
Apropos polarization: I really am a bit worried about the drifting poles. The northern one, especially. First, it’s nowhere near where I expected it: the point at which all the longitudes meet. That’s bad enough. Worse, it keeps moving, and even accelerating. In the 19th century, the magnetic north pole was still somewhere in Canada, which I consider safe. But for years, it has been sprinting over the top, as it were, to the other side. It’s in the Arctic Ocean right now, but heading fast toward Siberia.
That has the attention of the World Magnetic Model, a joint outfit between American and British scientists that is also used by NATO. They usually update their maps of the pole every five years, but because this thing is going so fast, they had to bring the new map forward, releasing it yesterday. It’s because of all that liquid iron sloshing around deep inside the earth and wobbling the magnetic field. So they claim. How naive. One of my colleagues put her finger on it: “It’s Putin.”
Handelsblatt Today Editor-in-Chief
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