N-TV brought up this interesting economics story this morning in the German news.
It's been generally known, but not the extent that N-TV drew out the story.....a fairly high number of German towns and villages are in serious debt issues. If you use their numbers....it's a debt of 40 billion Euro.
Most of the municipal operations will admit that they are paying off the debt, but it's eating up their property-tax revenue bucket, and basically requiring them to look at increased taxation, to make up the shortfall.
So the Finance Ministry has stepped into the picture. Based on ample funds existing in the national pot, they are going to siphon off around several billion Euro (they are careful about explaining what 'several' means) and direct it to the affected communities.
What is curious about this....the bulk of these towns that are affected....are in four German states (Hessen, Saarland, Pfalz, and NRW).
How they got so in debt? Around three years ago, there was a community in my region that had debt suddenly become a massive story. This town of roughly 12,000 had a money-manager who'd found this great Swiss banking deal about a decade prior. It was a revolving credit account, with exceptionally low rates on interest. So they signed the deal, and had several million Euro in debt with this Swiss bank. Then one day.....an adjustment occurred with the exchange rate (yep, the Swiss aren't into the Euro). There is fallout, and this interest rate now....coupled with the Euro exchange rate....makes the debt almost double. Crisis stage? Oh yes....to the ninth degree.
The funny thing about this situation.....it wasn't widely reported around Germany, just regionally. But there were dozens upon dozens of towns which had done the exact same thing. All of them went into a crisis stage, and have been in serious debt issues ever since that day.
So here's the amazing statistic to think about....almost 11,000 German communities and towns are in some form of serious debt crisis. This chunk of money they are talking about for relief? It's not near enough to help all of these towns.
No comments:
Post a Comment