I commented a day or two ago....about a county here in Hessen....Rhinegau-Taunus (the next valley over from me) who had the Swiss Franc loan, and went into absolute shock ten days ago as the Swiss took itself off the chained-exchange rate. Overnight.....the Franc became twenty-percent more expensive, and everyone with loans were in serious trouble.
Well...there was supposed to be a press conference today in Rhinegau-Taunus, with the head of the county commission (an SPD guy), and it was cancelled as of this morning.
The state finance officer is blasting away that the whole gimmick used to get the cheaper interest rate....put the county into serious financial jeopardy.
Somewhere in the sixty-million Euro range....the county has acquired quick and unexpected extra debt. No one can say for sure....how this will be fixed.
There's basically only three methods. One, they could ask the Hessen state for more money, but it's zero chance they will get it. Two, they could stall infrastructure projects (roads, bridges, renovation, public buildings, etc) for two or three years....upsetting the locals greatly but making up the loss. Three, increase property taxes substantially.....probably by two or three times the current taxation rate....angering residents in the region for the next decade. Without the ability to do sales taxes....they really are limited.
My humble guess is that the news conference to discuss this....will be rescheduled by next Monday. I suspect that they will find a German bank to make the loan for now, and just try to pay off this debt as quickly as possible before the Swiss rate climbs even higher. As for halting infrastructure projects? I'd give it a ninety-percent chance of happening. But we might be talking about more than two or three years of this.
It is one of those rare occasions when a German group of financial wizards really screwed up badly, and they have no way of fixing or solving the mess.