Das Imparitätsprinzip. The principle of unequal treatment. Risks and losses are booked when they become likely. Gains are booked only when realised. The asymmetry is deliberate and named. The German accounting system treats bad news and good news differently on purpose.
Hidden reserves
Stille Reserven. German commercial law permits hidden reserves — assets carried below their real value, so that value is available later if it is needed. International accounting standards prohibit their deliberate creation outright. German law treats them as prudence. The two systems disagree about whether understating your own strength is a virtue or a misstatement.
The prudence principle
Das Vorsichtsprinzip. Section 252 of the German Commercial Code requires that valuation be made prudently. Losses and risks are recognised as soon as they become probable. Profits are recognised only once realised. The principle exists to protect creditors, and it traces back to the first all-German Commercial Code of 1861.
The German balance sheet is built to understate.
Leaked German military documents
The Guardian. 2017. A leaked defence document has revealed the country’s worries about the breakup of the global order – a scenario with serious consequences for post-Brexit Britain.
The German defence ministry set out its worst-case scenario for the year 2040 in a secret document that was leaked to Der Spiegel last week: “EU enlargement has been largely abandoned, and more states have left the community … the increasingly disorderly, sometimes chaotic and conflict-prone, world has dramatically changed the security environment.”
The 120-page-long paper, entitled Strategic Perspective 2040, is a federal government policy document – and the scenarios it imagines are grimly realistic: an east-west conflict in which some EU states join the Russian side or a “multipolar” Europe, where some states adopt the Russian economic and political model in defiance of the Lisbon treaty.
Contingency
Because Germans believe in discipline – in sticking to a plan – they plan for less unforeseen circumstances. Instead, they build in room for quick adjustments based on the situation on the ground.