Tag Archives: Germany

Cracking the Code

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In a recent post I noted that, despite some improvements, good corporate governance isn’t something Germans have an easy time getting their heads round. The Financial Times Deutschland reports that there might be a good reason for this: in Germany, it doesn’t seem to matter much how well a corporation is governed.

As the FTD reports, a new study from the consultancy Ergo Kommunikation maintains that ‘investors do not reward German firms that abide by the Corporate Government Code…. Their share prices profit just as little from a high level of transparency or disclosure of managing directors’ compensation.’ [My translation.]

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Oooops It Isn’t Baaack….

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Morgan Stanley team members Steven Jen and Eric Chaney (joined by Takehiro Sato and David Miles) debate today the interesting question of whether the eurozone economies have entered a liquidity trap (LT). Those who have no idea what one of these would look like could do worse than read Paul Krugman’s classic article on the topic: It’s baaack! Japan’s Slump and the Return of the Liquidity Trap (pdf).

So what is all the fuss about?
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Things You Can Do When You’re 20 Points Up in the Polls

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1. Have the main headline about your electoral program be how much you’re going to raise taxes. Particularly VAT, which practically everybody pays on practically everything.

2. Face a knock-down drag-out fight with your prospective coalition partner over #1.

3. Have the two parties that make up your Union disagree about the basic approach to health care reform.

4. Present security plans that your prospective coalition partner says had been previously rejected for good reasons.

And that’s just the first 24 hours after the presentation of your campaign program.

The CDU/CSU still leads the SPD by 20 points in the polls, and I, along with every other commentator, have to think that Schr?der is toast. You just don’t make up 20 points of ground in eight weeks. But if the CDU/CSU want to make it an interesting race, they’re off to a great start…

UPDATE: 5. Eliminate grants to support university students. (The article is an interview with the SPD minister, so grains of salt advised.)

How do you say ‘corporate governance’ in German?

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About the bombings in London I have nothing useful to say, beyond expressing my sympathies for the wounded and bereaved and my admiration of Londoners’ stoic resolve. And as others, here and elsewhere, are expressing those things better than I could, I shall leave it to them to do so.

Instead I shall turn to another topic, one that is admittedly less dramatic, but important for all that. That topic is corporate governance; specifically, corporate governance as it is (or is not) implemented in Germany. In recent days German headlines have been full of two particularly interesting items: a corporate governance scandal of colossal proportions at a major firm, and now a significant governance reform that is unlikely to make top German managers very happy.

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Forthcoming German Elections?

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Apparently there are still constitutional doubts about the validity of Scr?der’s election call:

“I have my doubts whether the chancellor convincingly demonstrated that his coalition is no longer stable or has lost its ability to rule,” Karin Grasshof, a retired Constitutional Court judge, told Bild am Sonntag newspaper

Any of our German readers able to clarify what the real extent of these doubts are?

Promising Elections

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The Guardian today has a short profile on Angela Merkel, while the FT looks at some of the proposals which may well form part of the SPD campaign manifesto. Far be it from me to worry about ‘sting the rich’ tax proposals, but as far as I can see the main isssue is getting Germany back to work, and Schr?der’s time might be better spent adressing this issue.

Talking of which, this could be a good moment to mention the whacky world of Hans Werner Sinn.
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No Answers Only Questions

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One person who could rightly claim to know more about global ageing and its possible consequences than anyone else in the business is the German Director of the Manheim Research Institute for the Economics of Ageing Axel B?rsch-Supan. If there’s a conference being organised, he seems to be there. Actually his comments at both these meet-ups are well worth reading in and of themselves (here, and here).

In a sense B?rsch-Supan is almost uniquely qualified to express opinions on the topic since he has both devoted a large part of his professional career to studying the question, and he lives and works in a society which is already reeling under the impact. As he says:

“Today?s Germany has essentially the demographic structure that the United States will reach in a quarter of a century. The dependency ratio (the ratio of persons aged 65 and over to those aged from 20 to 59) is at 28 percent, and it will reach 75 percent in 2075, if we dare project that far. Almost one-fifth of the German population today are aged 65 and over. One quarter are aged 60 and over, which is relevant because the average retirement age in Germany is 59.5 years. Thus, in this sense the United States is not ?entering largely uncharted territory,? …. Rather, they can look to Europe?in particular to Germany and Italy?to see what will happen in the United States.”

I mention B?rsch-Supan because he serves as a good pretext for going over where we are to date with the issue. As he says himself. watching demography change is rather like watching a glacier melt, on a day-to-day basis it’s hard to see that anything is happening, but over time the impact is important.

One of his recent papers has the intriguing title: “Global Ageing: Issues, Answers, More Questions“. It is a good up-to-date review of the ‘state of the art’, and a quick examination of the points he makes probably serves as a good starting point, since I can’t help thinking, in the case of global ageing, it isn’t so much what we know that matters, it’s what we don’t know.

So here we go, a review of what we “know”, what we think we know, and what we don’t know:
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The Democratic Left/PDS Alliance

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We had some discussion on this topic back in May. The FT this morning – in addition to reporting a change of tack by Hans Eichel and Wolfgang Clement on wage levels – suggests that the Democratic Left-PDS alliance was making headway:

An early poll for ZDF television showed 18 per cent of people would consider voting for the new leftwing coalition. Mr Lafontaine said he was optimistic the new group could become the third largest party. The conservative opposition currently has an overwhelming lead in opinion polls.

Any observations from Germany on all this?