I know German but never heard of "Bumsbude" before. It got a chuckle out of me.
The literal meaning (to use similar English words) would be "Shag shack", aka "brothel"...
Wirecard – The “German Enron”, and a personal history
21–30 of 88 posts
Re: Wirecard – The “German Enron”, and a personal history
#22It might still not be the biggest scandal in the recent history of Germany: From 1993-1999 a company named Flowtex caused 4.2 BN Mark (roughly 2.1 BN € or even 3 BN if adjusted for inflation) of damages with a remarkably simple fraud scheme: They would claim to produce horizontal drilling machines (which allow you to e.g. put in tubing for cables without completely opening up roads) that they would sell to leasing co…
> And while Manfred Schmider went to jail for a couple of years he apparently still managed to move a lot of his assets overseas and comfortably lives on Mallorca today.
This stuff makes my blood boil. I continue to be astounded that this seems to be the default.
Re: Wirecard – The “German Enron”, and a personal history
#23Is there a good summary of Wirecard for those of us who haven't been paying attention? Was it an inherently fraudulent business, or a regular payment processor whose managers were skimming, or what?
Unknown. The company now claims they got defrauded themselves, but like the OP says, that's weak sauce. It looks like the company was completely fradulent forever. Interesting and more clear cut is the role of the German financial authorities, as they protected that companies for all those years they either are either completely incompetent or completely corrupt.
Re: Wirecard – The “German Enron”, and a personal history
#24Is there a good summary of Wirecard for those of us who haven't been paying attention? Was it an inherently fraudulent business, or a regular payment processor whose managers were skimming, or what?
Unknown. The company now claims they got defrauded themselves, but like the OP says, that's weak sauce. It looks like the company was completely fradulent forever. Interesting and more clear cut is the role of the German financial authorities, as they protected that companies for all those years they either are either completely incompetent or completely corrupt.
> either completely incompetent or completely corrupt.
Both. German financial regulation is kept intentionally incompetent to not annoy the bosses and their politician friends. It is corruption hidden and performed by incompetence imho.
Re: Wirecard – The “German Enron”, and a personal history
#25> Lessons to be learned * even a pretty obvious fraud can go on much longer than one would think if the organizers are ruthless enough. My original short position would have gone against me 25x over 12 years and the share price even after today’s disaster would be higher than back in 2008 (just to be clear: the company is worth ZERO in my opinion) * a company that goes against people who write negative articles as ag…
amusingly: back in 2019, when journalists pointed out irregularaties in the company's accounts, the German Financial regulator's reaction was to ban short selling of their shares... and then issue legal proceedings against the journalists > On Monday, BaFin banned further short selling of shares in Wirecard, the Dax-listed payments services group. The stock has dropped steeply after FT reports raised questions over t…
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Re: Wirecard – The “German Enron”, and a personal history
#26I personally know people, who invested considerable amounts of money into Wirecard after the COVID-19 crash and even one, who invested last week on the day the stock took its first dip.
At the first point in time the shortselling, the FT articles and the ongoing BAFIN investigation were known. At the second point in time it was known, that they hired there buddies from KPMG, who could not find anything wrong, but even they were critizising the quality of their report, EY could not find the missing money and the public prosecutor in Munich started a criminal investigation.
They still invested. One of them is a computer scientist and CEO of a small business, the other one has a PHD in business administration and works at a big three consulting firm.
Even highly educated people seem think of investments inherently as pyramid schemes. "It fell, so it has to go up again next!" "It cannot rise further, it's already at its all-time-high." No consideration for the actual value being created. At some level, you cannot blame them, TINA and monetary policy actually make it true. Auditing and rating companies, who are supposed to help here are a joke, making it all seem like a game.
It digusts me. On one end of the spectrum, money is something real and valuable. It decides, for how long you have to work, whether you have to live in your car or what you can afford to eat that day. On the other end, it's a a surreal thing. The direction it goes is controlled by private (!) instutions with enourmous amounts of power.
I hope that more people, who did not need the money lost it, than those who needed it. I also hope, that not only Wirecard staff will get prosecuted, but auditors have to pay for this in some way.
Why do we allow auditors to be private institutions with a profit motive, who are also doing business consulting on top of it?
Re: Wirecard – The “German Enron”, and a personal history
#27It might still not be the biggest scandal in the recent history of Germany: From 1993-1999 a company named Flowtex caused 4.2 BN Mark (roughly 2.1 BN € or even 3 BN if adjusted for inflation) of damages with a remarkably simple fraud scheme: They would claim to produce horizontal drilling machines (which allow you to e.g. put in tubing for cables without completely opening up roads) that they would sell to leasing co…
> And while Manfred Schmider went to jail for a couple of years he apparently still managed to move a lot of his assets overseas and comfortably lives on Mallorca today. This stuff makes my blood boil. I continue to be astounded that this seems to be the default.
It signals to a lot of us that there are very different rules when playing on the "elite" level of the economy. When you amass power enough through capital our current system definitely tips over to be lenient against them, and the longer I live the more I feel it's not necessarily by design but definitely this hole is left open in the capitalist system on purpose.
This is one of the reasons why I feel that over time I got very much supportive to "eating the rich", their power to skirt the law is way overdue to be corrected.
Re: Wirecard – The “German Enron”, and a personal history
#28> Lessons to be learned * even a pretty obvious fraud can go on much longer than one would think if the organizers are ruthless enough. My original short position would have gone against me 25x over 12 years and the share price even after today’s disaster would be higher than back in 2008 (just to be clear: the company is worth ZERO in my opinion) * a company that goes against people who write negative articles as ag…
How many times will we need to learn that the audits and auditors are not always doing a good job?
Re: Wirecard – The “German Enron”, and a personal history
#29I personally know people, who invested considerable amounts of money into Wirecard after the COVID-19 crash and even one, who invested last week on the day the stock took its first dip. At the first point in time the shortselling, the FT articles and the ongoing BAFIN investigation were known. At the second point in time it was known, that they hired there buddies from KPMG, who could not find anything wrong, but eve…
The motivation of your friends to put many in Wirecard stock probably less about investment and more about gamblng. I guess, they didnt invest their life's savings but just some money the had not better use for right now. In these times of zero risk free returns (and even low returns on junk bonds), investing in distressed assets can be a good strategy if you have the stomach to lose it all.
Re: Wirecard – The “German Enron”, and a personal history
#30After the Enron scandal, the auditor (Andersen) was dismanteled. The german branch of Andersen was bought by no other than Ernst & Young, the auditor of Wirecard.