Now Berlin has a massive debt problem.

[techs]

http://www.reuters.com/article/2012/07/18/us-germany-berlin-debt-idUSBRE86H10720120718

Cash-strapped Berlin stalked by 540-year-old debt

The sleepy hamlet of Mittenwalde in eastern Germany could become one of the richest towns in the world if Berlin were to repay it an outstanding debt that dates back to 1562.

A certificate of debt, found in a regional archive, attests that Mittenwalde lent Berlin 400 guilders on May 28 1562, to be repaid with six percent interest per year.

According to Radio Berlin Brandenburg (RBB), the debt would amount to 11,200 guilders today, which is roughly equivalent to 112 million euros ($136.79 million).

Adjusting for compound interest and inflation, the total debt now lies in the trillions, by RBB's estimates.



Trillions in debt?

 

[TheVrolok]

Awesome

 

[Double Trouble]

That's funny.

 

[juiio]

Why would you adjust for inflation? That is what the interest is for.

 

[MedicBob]

Will they take a two party, out of state, starter check?

 

[gevorg]

were "guilders" fiat money? if yes, then print to infinity call Bernanke for consultation

 

[PingviN]

http://www.reuters.com/article/2012/07/18/us-germany-berlin-debt-idUSBRE86H10720120718

Cash-strapped Berlin stalked by 540-year-old debt

The sleepy hamlet of Mittenwalde in eastern Germany could become one of the richest towns in the world if Berlin were to repay it an outstanding debt that dates back to 1562.

A certificate of debt, found in a regional archive, attests that Mittenwalde lent Berlin 400 guilders on May 28 1562, to be repaid with six percent interest per year.

According to Radio Berlin Brandenburg (RBB), the debt would amount to 11,200 guilders today, which is roughly equivalent to 112 million euros ($136.79 million).

Adjusting for compound interest and inflation, the total debt now lies in the trillions, by RBB's estimates.

Trillions in debt?

Article fails at maths.

 

[her209]

Article fails at maths.

I have to agree on this one.

Its only 450 year old debt, not 540 year old.

2012 - 1562 = 450

Next 400 guilders at 6% interest compounded annually is:

400 * (1+0.06)^450 ~ 97,656,096,445,214 guilders

 

[GTaudiophile]

So what is the Guilder:Euro exchange rate these days?

Silly Germans and their meticulous record keeping!

 

[PingviN]

So what is the Guilder:Euro exchange rate these days?

Silly Germans and their meticulous record keeping!

1/10.000 article claims.

So we take her209's (more) accurate product, multiplies by 10.000 and end up with... €976.560.964.452.140.000

Roughly... 977 quadrillion Euros?

I hope I fail at maths too, or the author is seriously math-retarded.

 

[simpletron]

I have to agree on this one.

Its only 450 year old debt, not 540 year old.

2012 - 1562 = 450

Next 400 guilders at 6% interest compounded annually is:

400 * (1+0.06)^450 ~ 97,656,096,445,214 guilders

simple interest

400*.06*450+400 = 11200

but whats the guilder to euro conversion?

 

[PingviN]

but whats the guilder to euro conversion?

€10.000/1 Guilder

According to article.

edit: also, you seem to have forgotten the "1" that needs to go in front of the "0.6".

 

[Thump553]

No statue of limitations in Germany? That's pretty unusual, certainly wouldn't be the case here. I note that the town has been unsuccessfully demanding payment of the alledged note since at least 1820-talk about sleeping on your rights!

Also presuming that this debt wasn't paid centuries ago under some sort of lost instrument provision and assuming the instrument was valid in the first place (not a forgery or the like-I note the article says the document lacks a town seal).

This article tends to prove a pet peeve of mine-the vast majority of mainstream media articles about legal issues lack even a rudimentary understanding of the issues involved.

 

[rudder]

Funny... but if this were the U.S. a team of lawyers would have smelled blood in the water and quickly on their way to bankrupting the city where this was found.

 

[fskimospy]

Funny... but if this were the U.S. a team of lawyers would have smelled blood in the water and quickly on their way to bankrupting the city where this was found.

No they wouldn't. Statute of limitations.

 

[simpletron]

€10.000/1 Guilder

According to article.

edit: also, you seem to have forgotten the "1" that needs to go in front of the "0.6".

look up simple interest...
interest equals principal(400) * rate(.06) * time(450) or 10800
amount owed is interest(10800) plus principal(400), which equals 11200.

I was more curiosity on how the RBB converted a 1500s currency that doesn't existed anymore into euros. Guilders => ??? => Marks => Euros

 

[actuarial]

I get 976,560,964,452,165,000 Euros.

 

[The-Noid]

Assuming the bond indenture was unlimited and there wasn't some sort of payment in kind mechanism. The holder would receive interest of 400(.06) or 24 guilders a year * 450 is 10,800 guilders of deferred payments plus the original principal of 400. The interest payments would not be compounded and this would be a simple clipping the coupon type problem.

11,200 guilders assuming the indenture specifically stated that it was indefinite; most however have a finite term and if you do not turn them in it is buyer beware.

 

[PingviN]

I was more curiosity on how the RBB converted a 1500s currency that doesn't existed anymore into euros. Guilders => ??? => Marks => Euros

Maybe they ask Paul the Octopus

 

[ElFenix]

€10.000/1 Guilder

According to article.

edit: also, you seem to have forgotten the "1" that needs to go in front of the "0.6".

he added the 400 in at the end of the operation.

 

[zephyrprime]

I get 976,560,964,452,165,000 Euros.

That's what I get too. That's 976 QUADRILLION Euros. That's much more than the entire value of everything on earth.

 

[MovingTarget]

Interesting historical find, but once you hit the 'reset' button on your government, debts like those aren't valid. IIRC, a lot has happened in that area of Europe since then....

 

[Darwin333]

http://www.reuters.com/article/2012/07/18/us-germany-berlin-debt-idUSBRE86H10720120718

Cash-strapped Berlin stalked by 540-year-old debt

The sleepy hamlet of Mittenwalde in eastern Germany could become one of the richest towns in the world if Berlin were to repay it an outstanding debt that dates back to 1562.

A certificate of debt, found in a regional archive, attests that Mittenwalde lent Berlin 400 guilders on May 28 1562, to be repaid with six percent interest per year.

According to Radio Berlin Brandenburg (RBB), the debt would amount to 11,200 guilders today, which is roughly equivalent to 112 million euros ($136.79 million).

Adjusting for compound interest and inflation, the total debt now lies in the trillions, by RBB's estimates.



Trillions in debt?

umm, don't you get one or the other but never both?

 

[Genx87]

That silly hamlet of Mittenwalde is lucky this isnt Germany from another time. They may become the next arty range for the army.