Monday, October 31, 2011
Germany Finds 55 Billion Euro After Accountancy Error
October 29, 2011, 7:55 am EDT
BERLIN (Reuters) - Germany is 55.5 billion euros ($78.7 billion) richer than it thought due to an accountancy error at the bad bank of nationalized mortgage lender Hypo Real Estate (HRE), the ﬁnance ministry said.
As someone who has difficulty grasping the concept of trillions of dollars (an amount being tossed about these days) I don’t possess a particularly keen understanding of international monetary affairs. However, I think I’m safe in assuming this was indeed a very bad accounting error. Would a $78.7 billion error be the equivalent of my being out by $7.87 in my banking? Or .78? Or .07?
Europe's largest economy now expects its ratio of debt to gross domestic product to be 81.1 percent for 2011, 2.6 percentage points less than previously forecast, it said.
This sort of makes sense to me.
The HRE-linked bad bank FMS Wertmanagement was set up after HRE was nationalized in 2009, so that HRE could transfer the worst non-performing assets to an off-balance sheet bank guaranteed by the German state.
I have trouble comprehending this kind of financial maneuvering. Don’t attempt to explain it to me.
The government nonetheless welcomed the news which pointed to a further reduction of Germany's debt mountain, which remains above the European Union's Maastricht requirement for 60 percent of GDP.
I sort of get this but I’m ticked off that the European Union’s financial woes and (vain?) attempts to solve them affect my paltry RRSP investments.
However, the opposition Social Democrats (SPD) expressed astonishment at the extent of the accountancy error, for which they see the government as responsible.
"This is not a sum that the Swabian housewife hides in a biscuit tin and forgets," said SPD parliamentary leader Thomas Oppermann. "To overlook such a sum is completely irresponsible."
I wholeheartedly agree. But I never forget about money I hide in a biscuit tin.
FMS Wertmanagement was created when toxic loans and securities with a face value of 173 billion euros were transferred from HRE in October last year, creating Germany's largest bad bank. ($1 = 0.705 Euros)
I understand the words “bad bank.”
Although I have – up until now – trusted Canadian banks, I’m wondering if I should withdraw my money and hide it. (Not in a biscuit tin.) But can you pay bills in cash these days?