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“Dumb money” is back. Among the many victims of the collapse of Carillion, the UK infrastructure specialist, stand a large contingent of German investors clutching £112m of Schuldscheine, or debt certificates — a hybrid of bonds and bank debts.

Patrick Jenkins sees a familiar pattern here. As he writes in a comment piece, there is a lot of evidence to support the idea that German banks and their customers have racked up their fair share of losses from the various financial disasters of the past decade. As Michael Lewis noted in his tell-all tale of the financial crisis, the more unscrupulous Wall Street salespeople viewed German institutions — particularly local and regional savings banks — as gullible punters to whom you could sell pretty much anything. The notion of “dumb money” was born.

Since then there has been an expansion in the volume of products such as Schuldscheine. In return for less onerous disclosure requirements these loans offer better yields — an attractive feature in a world of very interest rates. Last year the market grew by a third in terms of borrower numbers.

There is another twist, says Patrick. A business that was very German, and originally largely geared towards the financing of the country’s fabled privately owned Mittelstand sector, has become more global. Among those who bought the Carillion Schuldschein were a number of international investors, including several from Taiwan. As Patrick concludes, dumb money knows no borders.

© Sarah Tanat-Jones

Trumped Republicans: Opponents of Donald Trump, or those simply alarmed by the initiatives being tweeted out from the White House, have long looked to the Republican party to check presidential power. Edward Luce suggests they look elsewhere. In his column this week, Ed argues that for all the rhetorical push back from Congressional Republicans, the president has more cards than people like to think. “If Mr Trump was a marsupial,” Ed writes, “the Republican party would be in his pouch.”

Tech addicts: Fears about the potential negative effects of smartphones on children have made it to the boardroom. In her weekly Notebook column, Roula Khalaf writes about academic research comparing high device usage to risk factors for suicide among teenagers. This has been taken up by activist shareholders who are calling on the likes of Apple to take action. But, Roula asks, how much of the responsibility rests with Apple and how much with parents?

China works: Is Silicon Valley losing its edge to China? Michael Moritz, one of the stand-out investors in the tech sector, notes that when it comes to workplace culture, China is stealing a march on California. In a provocative column, he writes that while on West Coast is gripped by “soul-sapping discussions” around the “inequity in life”, in China tech engineers are logging on by 8am for 14-hour days.

Best of the rest

The price of China’s haphazard urbanization — Helen Gao in the New York Times

Neither the girthers nor a white knight will eject Trump; it’s down to democracy — Jonathan Freedland in The Guardian

Model democrats: Germany’s Social Democrats and their debate about a new Grand Coalition — Florian Gathmann in SpiegelOnline

We can’t rely on wealth to trickle down to the rest of the economy — Kemal Dervis in Le Monde

Trump’s debt to Ron Paul’s paranoid style — James Kirchick in the New York Review of Books

What you’ve been saying

Bitcoin: foundation to bust in nine years? — letter from PW Beddows, London, UK

“Sir, With China moving to shut bitcoin mines, South Korea clamping down on bitcoin (‘Bitcoin tumbles as South Korea looks to outlaw all cryptocurrency trading’, January 12) and regulators elsewhere warning of its potential risks, has it perhaps been noticed that bitcoin seems to be heading towards perfect alignment with the 300th anniversary of the bursting of the South Sea Bubble in 2020; or perhaps matching its trajectory precisely by going from foundation to bust in nine years.”

Comment by Tom Sutcliffe on James Politi’s column, A happy opera ending sparks a #MeToo debate in Italy

“It is about 15 years since Catalan theatre director Calixto Bieito staged Macbeth with a modern ending in Salzburg. Instead of Macduff beating Macbeth, he was shot by the Scottish usurper. Routine stuff in German opera stagings in recent years. It makes the work more relevant to modern times, the dramaturgs say. In David Garrick’s day King Lear was performed with a happy ending — instead of indulging the (then considered tasteless) barbaric horror of death all round. We don’t want the wrong people to be the victims, do we. We are civilised.”

Turn on to Frankenstein for its philosophy — letter from Brian Bollen, Wengen, Switzerland

“Sir, I’m reading Anjana Ahuja’s piece on Frankenstein (Opinion, January 16) with some interest. I first read the book when I was 11 or 12, and again in early adulthood. One thing that irks me is the unthinking use of the phrase Frankenstein’s monster. As I recall, the author refers to the entity throughout as a ‘creature’ not a ‘monster’. Another thing that irritates me is that virtually no one ever refers to how well read and fluent in speech the creature becomes as the book progresses. If I remember correctly, the book at one point clearly becomes a philosophical treatise rather than a horror story, more Elephant Man than Boris Karloff.”

Today’s opinion

FT View: Letting light through the Great Firewall of China The EU and US should push for global rules on internet freedom

Silicon Valley would be wise to follow China’s lead The work ethic in Chinese tech companies far outpaces their US rivals

Closer Anglo-French defence co-operation after Brexit The two countries have common interests and shared responsibilities

The Bank of England’s anti-Brexit bias endangers its credibility Its forecasts have been consistently wrong and are distorting policy

Instant Insight: Carillion’s board: misguided or incompetent? The directors ticked all the good governance boxes, yet the contractor still collapsed

Kids and tech: whose responsibility is it anyway? It is in the interests of companies like Apple to help parents limit smartphone use

Donald Trump holds more cards than we think Despite low approval ratings, the US president has an iron grip on the Republican party

Free Lunch: A Franco-German consensus on the euro? Politicians should follow a new trail blazed by leading economists in both countries

Carillion’s downfall shows dumb money knows no borders German banks are facing big losses as a result of the outsourcing company’s collapse

FT Alphaville: That time when American banks basically existed to fund the government

Opinion today: Emerging optimism The sunnier outlook for global economic growth provides an opportunity for even the most challenged to improve

The Big Read: Trump agenda: does the president have America’s back on trade? The US leader has done little to implement his protectionist rhetoric but faces big decisions on tariffs and quotas

FT View: Nigeria plays with fire in its handling of Shia sect The persecution of radical cleric Ibrahim el-Zakzaky rebounds upon the state

FT View

FT View: A GE break-up is not the end of the conglomerate A much maligned business structure still persists, with some reason

FT View: Letting light through the Great Firewall of China The EU and US should push for global rules on internet freedom

The Big Read

The Big Read: Trump agenda: does the president have America’s back on trade? The US leader has done little to implement his protectionist rhetoric but faces big decisions on tariffs and quotas

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