The Invisible War: The Editor-in-Chief’s Weekly Review

Good morning dear readers,

My colleagues from companies of all sizes have been hearing about cyber extortion for months. Sometimes there are small attacks, sometimes larger parts of the company are paralyzed. Newspaper publishers, university hospitals and pipeline operators have also been hit.

The damage quickly runs into the millions – as are the ransoms. But instead of talking about it or warning others, many companies prefer to buy Bitcoin in order to be able to pay the ransom quickly and inconspicuously and hopefully gain access to their blocked data and computers again.

This creates a dangerous cycle of ignorance and ignorance. The subject of cybersecurity is a bit like colorectal cancer screening: You know that it can become existential, but all too often you push the problem away because the danger is so abstract and prevention is so troublesome. In Germany in particular, IT security is underestimated, studies show time and again.

A Handelsblatt team of corporate and investigative reporters got into the topic over several months.
The result is a terrifying report that shows how entrepreneurs lost control of their company within minutes and how they had to buy their trade secrets. My colleagues spoke to those affected, analyzed numerous blackmail cases and interviewed police officers and public prosecutors. Investigators paint the picture of a global epidemic that is only just beginning – and the authorities are shockingly powerless to fight.

The director of the US Federal FBI, Christopher Wray, recently compared the threat to the terrorist attacks of September 11th. Except that the head of the authorities does not suspect the perpetrators in the Arab region – but mostly in Russia, where the Kremlin allegedly lets the hackers do their thing as long as they strike abroad.

Incidentally, Germany is particularly badly affected, as this graphic shows:

What else has been on our minds this week:

1. As a complete surprise, Bundesbank President Jens Weidmann resigned this week. “I’ve come to believe that more than ten years is a good time to start a new chapter,” he said. But of course there are reasons for this fatigue. Weidmann felt increasingly isolated with his strict stability course in the ECB Council, the steering body of the European Central Bank, insiders report. His warnings of a gradual loss of monetary independence from governments and financial markets faded. And that frustrated him.

An era ends with Weidmann’s departure. And all this at a time when some ECB representatives are still dismissing the hard-to-deny risk of rising inflation rates as a pipe dream for sensation-hungry journalists.

2. Weidmann’s departure comes at a time when European fiscal rules are also up for debate. The head of our Brussels office, Moritz Koch, reported exclusively on Monday about the mind games of the EU Commission, which is promoting a more flexible debt pact: The reduction of the liabilities, which have risen sharply in the pandemic, is a “central challenge” to “buffer” before the next crisis strikes, ”the Commission believes. The consolidation process must, however, take place “in a sustainable and growth-friendly way”. Behind this is nothing less than a quiet farewell to the Maastricht criteria. The debate should continue next Monday.

3. The financial wind is also turning in Berlin: politicians from the SPD and the Greens are pushing for a more creative approach to the debt brake. They discuss new calculation methods for the debt rule, the creation of a mega-reserve in 2022 as a buffer for the following years, the establishment of state investment funds that are not subject to the debt brake, or the protection of private investments by the state bank KfW. So the ideas are numerous.

Less is currently being heard about how the billions that have already been planned for digital education, infrastructure and artificial intelligence can be spent more quickly. Or where savings could be made in the household. All of this shows that a new mindset has arrived in monetary and fiscal policy, which is becoming more and more mainstream, the dominant economic school of thought, worldwide – but also in Germany. Instead of budget consolidation, debts are the order of the day, rather lax debt rules instead of stricter ones, an expansive monetary policy instead of a conservative one.

4th Probably the next Chancellor, Olaf Scholz, has gathered a handful of loyal followers around him. My colleague Martin Greive explains who the advisors in the background are and what positions they could take on in the Chancellery. A must-read for everyone who wants to understand who will have to say how much in the future center of power in the republic.
5. It could be the next cum-ex scandal: Around 50 wealthy citizens are suspected of evading hundreds of millions of euros. Three public prosecutors are already investigating. Germany is, as the case shows, an Eldorado for tricksters. This is also due to the overly complex German tax laws. The regular thicket offers an ideal biotope for tax lawyers and tax advisors of the sub-genres from resourceful to windy.

6th There is currently an uproar on the commodity exchanges. Worldwide stocks of copper, aluminum and magnesium are falling rapidly. This development is fueling concerns about new bottlenecks in the industry. Incidentally, the latest rally was triggered by the sharp rise in energy prices. The high gas prices in Europe make metal production more and more expensive.

7th The consequences of the metal shortages are already threatening the supply chains in the automotive industry. The supply chain managers there are still fighting the chip crisis, but now an even bigger problem is brewing: aluminum is becoming scarce, reports the Handelsblatt car team. According to the report, purchasing managers expect “massive production interruptions”.

8th. The reasons for the metal shortage also lie in China. The regime in Beijing is increasingly cutting the power supply for energy-intensive industries due to the shrinking reserves of coal and gas. German companies are also feeling this, as our China correspondent Dana Heide describes in a very readable report.

9. At the start of the weekend I would like to recommend a podcast to you: In the latest issue of Handelsblatt Green, my colleague Kathrin Witsch spoke to Marc Elsberg, the author of the thriller series “Blackout”, which deals with a power failure paralyzes all of Europe. How realistic is the scenario really? Could Europe be in the dark if too many electric cars are connected to the grid at once? Or are these just horror visions from a thriller author? Kathrin Witsch discusses this with Marc Elsberg.

I wish you a nice weekend.

Best regards
you

Sebastian Matthes
Editor-in-chief Handelsblatt

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