Germany able to reduce its debt by miracle

Dear readers,

believe or not ... Germanys public is astonished to find its national debt reduced since last friday (when stern.de newspaper broke the story) by 55,5 bn € which also means its debt to gdp ratio has declined from 83,7 % to 81,1 %  now. (quarter of EFSF guarantees just passed by Bundestag or about 1/6 of german budget)

What happened ? Was it a financial wizard lured to come rescuing the eurozone by enhancing Germanys public finances ? Trolls perhaps ?

No much simpler than that ! Although not less mysterious then trolls from polar circle. Rather just discovered mistakes in accounting (balance sheet) of FMS Wertmanagement which is euphemestic new german description of HRE (Hypo Real Estate) bad bank or in colloqial language named just Schrottbank (=junk/scrapbank)
Since german weekly "Der Stern" broke the story of maybe just incompetent creative accounting or just book cooking by the "experts" of FMS Wertmanagement and its external accounting "experts" doing their job and also testifying the results to be correct.

Well such a judgement came premature since it now emerged that this bad bank of former HRE did hold much less junk in its books than previously though of and also was reported to Eurostat. The total amount of reduction is so huge that the german debt pct ratio was able to make a dip and also the needs of future restraints on german budget spending or the need for rises in taxation. Whoever transferred the balance sheets of defaulted HRE bank into FMS Wertmanagement did not deduct one figure from another ut insteaded added them .. So instead of  the sum resulting to ZERO it blew up the balance sheet by 55,5 bn € ! Mr. Schäuble already quitely reported corrected numbers to Eurostat days ago.

Since Stern reported on the story during the weekend many if not all eyes of german press is focussing on this biggest blunder ever in german finances (to my recollection) EVER.  Now over the weekend the witchhunt for those guilty of the outrageous blunder went on its way ... perhaps is already taking place for weeks now because it is rumoured events are known to FM Schäuble since +-4 weeks now. Opposition parties have their field day and further grilling of Schäuble and his experts of his ministry seems likely to happen in the forthcoming working week. Schäuble himself has just announced to invite HRE boardmembers to make their explanations to him how this could happen in the next days.

Although many members of german coalition goverment are delighted to have debts reduced so easily embarrassment remains over how this could happen.

Some bloggers in german political blogs already speculate on greek debts to be nonexistant in reality but be only results of unwitting greek accountants and lack of thorough investigation in this matter ;-)

So it turns out once again that fiscal policy or reporting on it rather can also be some kind of amusement although matters themselves are most serious.

HRE Die 56-Milliarden-Euro-Panne (ger)
Finanzausschuss will gegen Bankmanager vorgehen (ger)
Fehlbuchung von 55,5 Milliarden Euro hat Nachspiel (ger)