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.

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.

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.

- 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.

Aldi is a pretty poor example because they are an example of a company that actively disrupted German corporate life.

So being understated is a north European characteristic but that isn't why German billionaires behave that way (they are often extremely overstated in private). They have no public profile because the way they made their money is usually horrific (Oetker family, Quandts, etc.), there are always vague suggestions of corruption, and they are very rich but aren't capitalists...it is crazy.

Also, the amount of corruption in Germany is huge. The most similar country is probably China. The state is run by and for billionaires. There is almost no oversight of this. The purpose of the German economy is to steal from consumers: low wages, forced savings, essentially free loans from state-owned banks to well connected companies, very weak unions. Not as bad as China, stuff like hukou is...fedualistic, but unlike almost any other developed economy.

Interesting. Is there a strong feeling of innovation/unicorn envy among the wider business culture in Germany? Is it a fear of being stale, comparisons to Silicon Valley & Asian tech scene, or something else? I'm curious if you have more insight on this?

I think in the German industry itself there is no real fear of staleness because our systems of innovation generally work differently, on occassion there is a media hype cycle about "rising economy X" displacing everyone, but that has been going on since the 80s when the UK's financialisation was everyone's favourite model. I'm glad we didn't follow on that front... well I guess except for Wirecard that is.

Still, developers are probably mostly active in traditional industries. Manufacturing needs software experts for example, the product isn't necessarily software itself. There are advantages and disadvantages to that. Overall I don't think Germany/EU is friendly for startups. There are grants for some business ideas, but it is mostly older established folk that know the details of successfully getting capital.

In general, I think there is a huge fear of being "left behind digitally". Not so much in the industry itself than in politics or on a personal social level. The demographics responsible for implementing digital innovations often speak english and just use international solutions. There is little "local patriotism" in software. Perhaps there is also a strong idealism which lets people get involved in open source instead of creating business models and market digital services. Again, advantages and disadvantages.

edit: To the question about the kind of medical devices perhaps in reaction to the "shitty" software I mentioned: medical devices that cannot kill you and were mostly for diagnostic support. It was safe, the software "architecture" was all over the place though.

I don't think so. Judging by the low salaries most companies are offering in parallel with the huge number of devs on reddit from outside of the EU wanting to move to Germany it doesn't look like there's a shortage of developers, quite the contrary.

If there was a shortage, pretty shore we'd see higher salaries being offered.

Basically, I was quite impressed with their brilliance and almost insane work ethic.

The ones I worked with were kind of unorganized, but that was a small sample.

I have seen more software projects fail because of over-engineering for alleged maintainability, extensibility and a too generic design. Some would say that violates KISS. Many have shifted to more iterative development, which doesn't exclude the need for a solid architecture and extendable software, but it can improve time to an MVP. Quality can suffer, but you also gain experience.

Business logic can be as complex as you want. In fact one of the highest paid field resolves around optimizations in this particular field. SAP is an example here but there are others. "Cubing" data on your normal business data server isn't trivial, but allows to answer questions about trends management is very interested in and they have all the money bags.

Still, developers aren't payed that badly to be honest and you have options to reduce your workload, so that you don't end up with 60h work weeks or regular crunch. Projects might take as long as some unrelated airports in some setups I guess. If you code in a quiet smaller city, you can kiss 6 figures goodbye of course, but in many cases you are the best paid person in the room.

The device I worked on was classified as IIa. There was a focus on a thorough risk analysis and we ensured mechanism were in place to shut down the device in any case of emergency.

I don't want to say what kind of device it was, it had to do with higher frequency ultrasonic sensory.

Everyone wants to be like the SV hipsters, no one can because the higher-ups are still mentally and literally stuck in fax times, there is almost no venture capital (and the venture capital that is here gets invested into stuff like Rocket Internet whose "business model" is to copycat US ideas), banks (across the EU) won't dish out dumb money because unlike the US we have public funded pension systems and not capital-based ones and we have strict loan regulations (Basel framework).

> Is it a fear of being stale

Culturally, us Germans are known for being extremely risk-averse, bankruptcies are socially shamed. This of course clashes with the US way of life that from the bottom to the top embodies "fail fast", and the youth yearns for change but as explained above that's hard to do.

That's simply not true. There is a lot of VC but there aren't many good startups - because the best people are heading straight for SV instead of dealing with a second-rate environment and a second-rate (in IT) labor force.

Not to mention that what gets invested in is mostly food delivery, shops and not particularly technical businesses (which are a very large investment sector in the US but aren’t considered “startups”. What gets written up in, say, Gründerszene are companies like the one that would tell you where to get your car repaired.

I don't know where that number comes from, but I'll assume it's the sum of investments and not the sum of capital available for investment since the latter is a bit hard to determine.

I don’t know of any German funds that make venture investments outside Europe though doubtless some exist. Still, if you want to back into the size of the domestic venture funds, pick a percentage (70%?) of the investments made as having come from domestic sources and figure that a fund wants to put all its committed capital to work within the first couple of years, and figure that the total venture pool is perhaps $7B. There are bigger single venture firms a few blocks from my house in Palo Alto. For example I walk past Accel every day to get a coffee.

As you say there just aren’t many companies there being funded, and when I read the local blogs and such people seem to want “the lifestyle” (or hate it) more than talking about building major businesses. To me it’s indistinguishable from people starting a sandwich shop.

That's not the same as the available venture capital. If there are no good investments to be made, the potential venture capital simply isn't (all) invested. So the point that lack of VC is a problem is wrong, it's the attractive startups that are missing. It's the same in Austria - I invested in 2 startups, got a little burned and have since not invested for lack of good opportunities. I've also been asked a few times by a larger German company for my opinion on potential investments, so I know they're looking and can't find anything worthwhile. Funding is not the problem! And the "market size" is only indicative of the (too few) good startups, not of the potentially available capital.

It seems like an unfair situation

In the US, before taxes, an income of $130,000 to $170,000 is the norm in bigger cities. I imagine based on my calculations that the difference between Berlin's discretionary income for SWE and NY/SF/SEA/BOS is probably an extra $50,000 post tax.

I know plenty of people in that income range myself who do own houses (or apartments in some cases) and wouldn't think of forgoing their summer vacation in Menorca or Ibiza.

"The other commenters" is just one, and he's factually wrong. No matter how much HNers love to pile on, 50k Euros is a respectable income in most parts of Germany.

The idea that all software engineering is in Stuttgart, Munich or Berlin is laughable. We have lots and lots of family companies of the so-called "Mittelstand" strewn across the province (but West Germany primarily). Some of those are hidden champions. In towns and regions few Americans will ever have heard of.

After an entire decade of working, this will only result in a best case scenario of $250,000 in savings, which, for my personal lifestyle is not going to work. I think collective action for higher wages is proper here.

Too many mediocre developers available (local & EE), too few good ones (they're in the US, UK, Switzerland). Also, if you can't find software engineers at that price, you just close the office and move it to Poland or so. Hence fewer employers remain.

1. our retirement systems is based on a generational contract, not capital 2. home ownership is very low

If you control for both the results would look very different. Now #2 obviously causes a huge issue in terms of generational wealth.

You mean that people pop kids so that those kids would feel obliged to take care of them when they're old? Yeah, that's one legitimate retirement strategy. It's very popular in poor countries e.g. ex-USSR where I'm from.

Personally I'm more of a fan of US-style self-made retirement. It's easily possibly working in tech in the US, a 10 year career basically guarantees you financial independence here barring any major set back (like divorce). But not so in Germany and much of Europe.

> 2. home ownership is very low

Isn't that roughly same as saying people aren't wealthy enough to afford one? So if you "control" for this factor, you're just selecting the richer subset of people.

It's not based on a generational contract within the same family (i.e. my kids pay my retirement) but society wide. Instead of saving up capital I pay the retirement benefits of the current generation and when I retire the then current workforce will pay mine. For the calculation of median wealth this shows up as a big fat 0 (no capital) but it gives me significant financial safety of having a set income from the age of 67 to the end of my life, no matter how old I get. Shit system if you die at 68 (or even earlier), amazing system if you live to be 95.

The existence of this system is largely based on WW2. There was no capital to pay for people at retirement age in the 50s so the current system was developed.

> It's easily possibly working in tech in the US, a 10 year career basically guarantees you financial independence here barring any major set back (like divorce).

The US has always been a very individualistic society and it' s probably the best country in the world to be rich in. For tech workers in FAANG it's a great place to be. If I look at the long tail of workers I shudder. The living condition of the working class is far, far worse than what I see in north/west Europe. Of course there's poverty here too but at a very different level. Personally, I'm happy to pay my taxes and social insurance obligations so I don't have drive past tent cities on my way to work.

> Isn't that roughly same as saying people aren't wealthy enough to afford one?

Well I'd control for it by excluding the value of your residency from the household wealth. Your original post was commenting on median wealth compared to other Western European countries. I'm merely pointing out that this is too simplistic a number to compare without context.

From what I could quickly find online (correct me if I'm wrong), the theoretical maximum pension you can get today is 3034 EUR/month, starting from the age of 67. With current life expectancy you're going to enjoy it for only about 15 years on average. To get it, you need to work for 45 years straight earning at least 82800 EUR each year and paying whopping 18.6% of that (incl. employer part) for the privilege to be part of this amazing system.

Let's look at net present value as of retirement age of both sides of the equation:

  for r in [1.07, 1.05, 1.012]:  # discount factor
    for y in [15, 30]:  # years to live
      print('%.3f %d %.0f %.0f' % (r, y, 
            sum(82800*0.186*r**i for i in range(45)),
            sum(3034*12/r**i for i in range(y))))

  #discount factor, years to live, NPV contributions, NPV payout
  1.070 15 4400768 354813
  1.070 30 4400768 483414
  1.050 15 2459510 396798
  1.050 30 2459510 587664
  1.012 15 911856 503038
  1.012 30 911856 923662

Unfortunately the system is rather convoluted and the math has more unknowns to it.

- the maximum salary on which you pay the retirement insistence is dynamic and rises every year - every year you earn “points” based on the relationship between the current average salary and your own salary. (The average is 1 point)

Now these two above can be ignored to get an estimate how the return compares to a capital based system. The following three can’t:

- the worth of a point changes, both while you’re working but also during your retirement. You’ll receive more money in year 14 of your retirement than in year 1. Today one point is worth 33,23€. 2010 it was just 24,13€. The value changes based on the average net salary of those who pay I to the system. - the insurance will pay out early if you become disabled and unable to work. I just looked up my numbers from last year and while I only earned retirement benefits of less than 300€ so far (based on the current point value) my disability benefits would be over 900€ - if I die my widow and/or unsafe children can get some money for a certain amount of time. E.g. children under 18 or under 25 while in college

I want to stress again that this system is far from perfect and smart folks will save up in a capital based system as well (and there are tax incentives for this, especially for low earners) but it does guarantee a good baseline retirement for folks who worked all their lives that can’t be lost. No divorce, personal bankruptcy or anything else will be able to touch this money.

Their boomer parents worked hard and saved a lot and managed to buy lots of assets, especially real estate, back in the 60's - 80's when salaries were high and properties were cheap. Now they can just kick back and relax while all that sweet rent money, that skyrocketed in the last two decades, comes in.

If you move to Germany now you definitely won't enjoy this kind of standard of living as your rent costs will be financing their mortgages while you won't manage to save enough to buy one of your own since property prices now are way higher, wages are low and taxes are high.

It's true we missed the boat on the second and third waves of IT companies, but there are many unicorns in the manufacturing sector that most people in IT have just never heard of because it's outside of their bubble, these companies often dominate the world market in their respective segments though. For example, do you associate Germany with 3D printing? Probably not. Well, turns out some of the leading companies in industrial 3D printing technology were created here, in 2016 GE for example tried to acquire Germany-based SLM Solutions for 1.4 BN €.

Smaller countries like Sweden or The Netherlands host more successful unicorns than Germany.

Why is this a problem? If I studied IT and want a good job in IT then that will interest me the most. Sure, it's good for the overall economy, but what good is it to me that I'm surrounded by pharma or mechanical engineering companies if IT is my bread winner?

That's the problem Germany has, it's full of successful companies that aren't IT related so people who want good jobs in IT are forced to either leave to SV/CH/London or stay and be "the IT guy" at a non tech company where you get treated as a cost center.

Of course if you think that only SV-style software companies are worth working for then Germany isn't the place to be.

SAP is not "modern" in any sense and certainly not "innovative". Unicorn companies generally are both.

It's not the business culture that's driving this, it's politics. Germany simply isn't a competitive environment for entrepreneurship anymore with problems in many areas: schools, taxation, immigration (too easy for unqualified workers), legislation. Politics is in denial and desperate for success stories that would prove things aren't so bad.

Plus they seemed to have had a legitimate primary business, more than enough to cover their pump & dumping in foreign countries without strong rule of law.

There are always limitations on how much regulators and law enforcement can do and it always seems obvious in retrospect. There's always more that could have been done.

[1] the prior accusations by FT in 2019 mentioned it was their foreign subsidiaries inflating sales figures and recently the money got 'lost' hit a dead end in Asia. Companies often get plenty of time to pay back debts and billion dollar companies are given the benefit of the doubt they can pay it back...

The 2019 article was the killer, with one of Wirecard's financial partners traced to the home of a baffled fisherman in the Philippines.

IMO it's hard not to wonder if there's a story behind the story. "Oh dear we at BaFin really didn't notice" just doesn't seem at credible, even if you include some toxic politics.

But if you owe the bank 100 million dollars... then it's their problem.

This, by definition, cannot be an explanation, because what's in the DAX and what's not is based solely on the numbers of the listed companies. See https://de.wikipedia.org/wiki/DAX#Auswahlkriterien