Cash-strapped Berlin stalked by 450-year-old Trillion dollar debt

[Syt]

Ok, according to this article from May this year:
http://www.maerkischeallgemeine.de/cms/beitrag/12333847/62129/Berlin-und-Mittenwalde-legen-die-Diskussion-um-ein.html

There was a law suit over the debt in 1893, but this went nowhere because the IOU wasn't properly signed.

Mittenwalde delegates discussed claiming he debt again in 1899 but decided against it.

Meanwhile, they've been symbolically recompensated by receiving one gold guilder for their local museum.

[Josquius]

Ok, according to this article from May this year:
http://www.maerkischeallgemeine.de/cms/beitrag/12333847/62129/Berlin-und-Mittenwalde-legen-die-Diskussion-um-ein.html

There was a law suit over the debt in 1893, but this went nowhere because the IOU wasn't properly signed.

Mittenwalde delegates discussed claiming he debt again in 1899 but decided against it.

Meanwhile, they've been symbolically recompensated by receiving one gold guilder for their local museum.

That 16th century lawyer is so gonna get his arse kicked in the afterlife.

[alfred russel]

How they turn 400 guilders into 11,200 guilders into 112,000,000 euro baffles me.

The first one is 400+24*450 (24 being 6% of 400). I.e. whoever calculated it fails at understanding compound interest.

Probably depends on how the loan agreement was worded? Did they use compound interest back then? I have no idea.

The article says

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

so presumably compound interest in included in the deal.

I'm not following why you would adjust for inflation. Since there have been a few bouts of inflation in Germany since this time, the total debt may not be so bad if not adjusted. Which would make for a less compelling newspaper article.

[Viking]

I'm not following why you would adjust for inflation. Since there have been a few bouts of inflation in Germany since this time, the total debt may not be so bad if not adjusted. Which would make for a less compelling newspaper article.

hmm.. if there is a legal chain of legal tender going through the Reichsmark of the 1920s from the guilder to today then the debt is worth nothing.

In which case the Weimar Republic may have just saved Berlin 

[The Minsky Moment]

Ok, according to this article from May this year:
http://www.maerkischeallgemeine.de/cms/beitrag/12333847/62129/Berlin-und-Mittenwalde-legen-die-Diskussion-um-ein.html

There was a law suit over the debt in 1893, but this went nowhere because the IOU wasn't properly signed.

Res judicata.

[Valmy]

In which case the Weimar Republic may have just saved Berlin

It's creation saved Berlin from Allied occupation so that is two Berlin owes it.  I suggest they name a street after Friedrich Ebert.

[Zanza]

In which case the Weimar Republic may have just saved Berlin

It's creation saved Berlin from Allied occupation so that is two Berlin owes it.  I suggest they name a street after Friedrich Ebert.

The road that runs in front of the Brandenburg Gate is named for him.

[Zanza]

Debt denominated in a non-existing currency is pretty easy to pay, no? Just send a piece of paper that has a very large number on it.

You are probably wrong - when a currency is withdraw in the modern era

Maybe. But we are talking about 1563 here.

it is almost always converted into another, surviving currency - otherwise any currency exchange or withdrawal would mean a de facto abolition of debts and property, which would be disastrous and against any principles of rule of law. For example, the German mark may no longer exist, but any debt denominated in the German mark would be enforceable, because it can be converted into Euro.

Yes, and guilders can't be converted into Euro.

[Viking]

In which case the Weimar Republic may have just saved Berlin

It's creation saved Berlin from Allied occupation so that is two Berlin owes it.  I suggest they name a street after Friedrich Ebert.

The road that runs in front of the Brandenburg Gate is named for him.

Yes, but is there a Havenstein Allé or Strasse? I think not. Failed presidents and prime ministers still get streets named after them. There are streets and schools named after Buchanan and Harding.

[Zanza]

Yes, there is a Havensteinstraße in Berlin. It's nowhere near as prominent as the Ebertstraße though. Looks like a random street in some residential area.

[dps]

I'm not following why you would adjust for inflation. Since there have been a few bouts of inflation in Germany since this time, the total debt may not be so bad if not adjusted. Which would make for a less compelling newspaper article.

I've never heard of adjusting debts owed for inflation before, either.  Which is why inflation is generally considered a good thing for debtors and a bad thing for creditors.

[Viking]

Yes, there is a Havensteinstraße in Berlin. It's nowhere near as prominent as the Ebertstraße though. Looks like a random street in some residential area.

well.. I'll be...

unsurprisingly it is a one way street....

[grumbler]

I'm not following why you would adjust for inflation. Since there have been a few bouts of inflation in Germany since this time, the total debt may not be so bad if not adjusted. Which would make for a less compelling newspaper article.

Exactly.  Besides the inflation bit of dishonesty, the matter was apparently dismissed in 1893 because the document was never legally signed, and then there is the fact that, even had the other matters not intervened, the town apparently accepted compensation in the form of "one gold guilder for their local museum."

In short, a non-story posing as a story in order to sell papers/clicks/whatever.

[derspiess]

I'm not witty enough to make a good "Take it from Grumbler-- he was there" joke, so someone else please go ahead

[Syt]

I'm not following why you would adjust for inflation. Since there have been a few bouts of inflation in Germany since this time, the total debt may not be so bad if not adjusted. Which would make for a less compelling newspaper article.

Exactly.  Besides the inflation bit of dishonesty, the matter was apparently dismissed in 1893 because the document was never legally signed, and then there is the fact that, even had the other matters not intervened, the town apparently accepted compensation in the form of "one gold guilder for their local museum."

In short, a non-story posing as a story in order to sell papers/clicks/whatever.

Astute summary. A usual summer non-story for slow news days.