The border created by modern finance between Anglo-American and German bankers was treacherous. “The intercultural misunderstandings were quite intense,” Röthig says as he tucks into his lobster. “The people in these banks had never been spoiled by any Wall Street salesmen. Suddenly, there is someone with a platinum American Express credit card who can take them to the Grand Prix in Monaco, takes them to all these places. He has no limit. The Landesbanks were the most boring bankers in Germany, so they never got attention like this. And all of a sudden a very smart guy from Merrill Lynch shows up and starts to pay a lot of attention to you. They thought, Oh, he just likes me!” He completes the thought. “The American salespeople are much smarter than the European ones. They play a role much better.”

At bottom, he says, the Germans were blind to the possibility that the Americans were playing the game by something other than the official rules. The Germans took the rules at their face value: they looked into the history of triple-A-rated bonds and accepted the official story that triple-A-rated bonds were completely risk-free.

This preternatural love of rules, almost for their own sake, punctuates German finance as it does German life. As it happens, a story had just broken that a division of a German insurance company called Munich Re, back in June 2007, or just before the crash, had sponsored a party for its best producers that offered not just chicken dinners and nearest-to-the-pin golf competitions but a blowout with prostitutes in a public bath. In finance, high or low, this sort of thing is of course not unusual. What was striking was how organized the German event was. The company tied white and yellow and red armbands to the prostitutes to indicate which ones were available to which men. After each sexual encounter the prostitute received a stamp on her arm, to indicate how often she had been used. The Germans didn’t want just hookers: they wanted hookers with rules.

Perhaps because they were so enamored of the official rules of finance, the Germans proved especially vulnerable to a false idea the rules encouraged: that there is such a thing as a riskless asset. There is no such thing as a riskless asset. The reason an asset pays a return is that it carries risk. But the idea of the riskless asset, which peaked in late 2006, overran the investment world, and the Germans fell for it the hardest. I’d heard about this, too, from people on Wall Street who had dealt with German bond buyers. “You have to go back to the German mentality,” one of them had told me. “They say, ‘I’ve ticked all the boxes. There is no risk.’ It was form over substance. You work with Germans, and—I can’t emphasize this enough—they are not natural risktakers.” So long as a bond looked clean on the outside, the Germans allowed it to become as dirty on the inside as Wall Street could make it.

The point Röthig wants to stress to me now is that it didn’t matter what was on the inside. IKB had to be rescued by a state-owned bank on July 30, 2007. Against capital of roughly $4 billion it had lost more than $15 billion. As it collapsed, the German media wanted to know how many U.S. subprime bonds these German bankers had gobbled up. IKB’s C.E.O., Stefan Ortseifen, said publicly that IKB owned almost no subprime bonds at all—which is why he’s recently been convicted of misleading investors. “He was telling the truth,” says Röthig. “He didn’t think he owned any subprime. They weren’t able to give any correct numbers of the amount of subprime they had because they didn’t know. The IKB monitoring systems did not make a distinction between subprime and prime mortgages. And that’s why it happened.” Back in 2005, Röthig says, he had proposed building a system to track more precisely what loans were behind the complex bonds they were buying from Wall Street firms, but IKB’s management didn’t want to spend the money. “I told them, You have a portfolio of $20 billion, you are making $200 million a year, and you are denying me $6.5 million. But they didn’t want to do it.”

As Clear as Mud

For the third time in as many days we cross the border without being able to see it, and spend 20 minutes trying to work out if we are in East or West Germany. Charlotte was born and raised in the East German city of Leipzig, but she is no less uncertain than I am about which former country we are in. “You just would not know anymore unless you are told,” she says. “They have to put up a sign to mark it.” A landscape once scarred by trenches and barbed wire and minefields exhibits not so much as a ripple. Somewhere near this former border we pull off the road into a gas station. It has three pumps in a narrow channel without space to maneuver or to pass. The three drivers filling their gas tanks need to do it together, and move along together, for if any one driver dawdles, everyone else must wait. No driver dawdles. The German drivers service their cars with the efficiency of a pit crew. Precisely because the arrangement is so archaic Charlotte guesses we must still be in West Germany. “You would never find this kind of gas station in East Germany,” she says. “Everything in East Germany is new.”