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

Started by jimmy olsen, July 20, 2012, 01:55:28 AM

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jimmy olsen

July 20, 2012, 01:55:28 AM Last Edit: July 20, 2012, 02:00:18 AM by jimmy olsen
Behold the power of Compound Interest!  :lmfao:

Good luck getting that paid!
http://in.reuters.com/article/2012/07/19/uk-germany-berlin-debt-idINLNE86I00M20120719

QuoteCash-strapped Berlin stalked by 450-year-old debt

BERLIN | Thu Jul 19, 2012 6:13pm IST

(Reuters) - 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.L, the debt would amount to 11,200 guilders today, which is roughly equivalent to 112 million euros.

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

Town historian Vera Schmidt found the centuries-old debt slip in the archive, where it had been filed in 1963. Though the seal is missing from the document, Schmidt told Reuters that she was certain the slip was still valid.

"In 1893 there was a debate in which the document was examined and the writing was determined to be authentic," Schmidt said.

Schmidt and Mittenwalde's Mayor Uwe Pfeiffer have tried to ask Berlin for their money back. Such requests have been made every 50 years or so since 1820 but always to no avail.

Reclaiming the debt would bring significant riches to Mittenwalde, a seat of power in the middle ages, which now has a population of just 8,800. Red brick fragments of medieval fortifications still dot the leafy town centre.

The town's Romanesque church was once the provost seat for Paul Gerhardt, one of Germany's most prolific hymn writers. Gerhardt, who lived there briefly in the 17th century, is the only noted Mittenwalde resident to date.

Schmidt and Pfeiffer met with Berlin's finance senator Ulrich Nussbaum, who ceremonially handed them a historical guilder from 1539. The guilder was put in a temporary display at the Mittenwalde museum.

"This case shows that debts always catch up with you, no matter how old they are," Nussbaum told the Berliner Zeitung paper.

The debt-laden German capital would have difficulty meeting Mittenwalde's demands anyway. According to a report released by the senate finance administration in June 2012, Berlin is already close to 63 million euros in the red. (Reporting by Sophie Duvernoy, editing by Paul Casciato
It is far better for the truth to tear my flesh to pieces, then for my soul to wander through darkness in eternal damnation.

Jet: So what kind of woman is she? What's Julia like?
Faye: Ordinary. The kind of beautiful, dangerous ordinary that you just can't leave alone.
Jet: I see.
Faye: Like an angel from the underworld. Or a devil from Paradise.
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sbr

#1
July 20, 2012, 02:01:31 AM
Did you finish reading the article this time?

jimmy olsen

#2
July 20, 2012, 02:06:35 AM
Quote from: sbr on July 20, 2012, 02:01:31 AM
Did you finish reading the article this time?
Yeah
It is far better for the truth to tear my flesh to pieces, then for my soul to wander through darkness in eternal damnation.

Jet: So what kind of woman is she? What's Julia like?
Faye: Ordinary. The kind of beautiful, dangerous ordinary that you just can't leave alone.
Jet: I see.
Faye: Like an angel from the underworld. Or a devil from Paradise.
--------------------------------------------
1 Karma Chameleon point

Zanza

#3
July 20, 2012, 02:09:20 AM
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.

Martinus

#4
July 20, 2012, 02:16:48 AM
Quote from: Zanza on July 20, 2012, 02:09:20 AM
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, 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.

If I were to defend against an age-old debt, the statute of limitation would probably be a better venue.

Solmyr

#5
July 20, 2012, 02:56:48 AM
Since when is a guilder worth 10000 euros? :huh:

Maladict

#6
July 20, 2012, 03:06:34 AM
Quote from: Solmyr on July 20, 2012, 02:56:48 AM
Since when is a guilder worth 10000 euros? :huh:

Since southern Europe joined the eurozone.  <_<

Viking

#7
July 20, 2012, 04:50:04 AM
A Guilder is presumably a kind of coin with a fixed worth. But the math here is just stupid. 450 years of compound growth of 6% gives 97 trillion guilders owed in 2012.

How they turn 400 guilders into 11,200 guilders into 112,000,000 euro baffles me. Math people, MATH!!!!!!111on3oneoneoenoen
First Maxim - "There are only two amounts, too few and enough."
First Corollary - "You cannot have too many soldiers, only too few supplies."
Second Maxim - "Be willing to exchange a bad idea for a good one."
Second Corollary - "You can only be wrong or agree with me."

A terrorist which starts a slaughter quoting Locke, Burke and Mill has completely missed the point.
The fact remains that the only person or group to applaud the Norway massacre are random Islamists.

Solmyr

#8
July 20, 2012, 04:52:29 AM
They should just mint some devalued 17th century guilders with minimal gold content and give those back. :P

Viking

#9
July 20, 2012, 05:11:20 AM
There are a total of 5 billion troy oz. of gold on earth.

each troy oz. is 31 grams. The normal content of Rheinish Guilders (minted by the emperor under the golden bull) of the period was supposedly about 1.75 grams (50% devaluation of the 14th century coin).

97 trillion guilders means 169,75 trillion grams or 5,5 trillion troy oz. Or about 1000 times the total amount of gold on planet earth. Even for the heavily adulturated coin of the 16th century.

Berlin couldn't afford to pay the raw materials cost of that many coins made of iron not to mention to the minting costs.
First Maxim - "There are only two amounts, too few and enough."
First Corollary - "You cannot have too many soldiers, only too few supplies."
Second Maxim - "Be willing to exchange a bad idea for a good one."
Second Corollary - "You can only be wrong or agree with me."

A terrorist which starts a slaughter quoting Locke, Burke and Mill has completely missed the point.
The fact remains that the only person or group to applaud the Norway massacre are random Islamists.

Solmyr

#10
July 20, 2012, 05:21:58 AM
Quote from: Viking on July 20, 2012, 04:50:04 AM
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.

Viking

#11
July 20, 2012, 05:29:59 AM
Quote from: Solmyr on July 20, 2012, 05:21:58 AM
Quote from: Viking on July 20, 2012, 04:50:04 AM
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.


sigh.. the 10,000 euro per guilder is probably the collectors book price, not the gold content... we seriously need a Ben Goldacre of math.
First Maxim - "There are only two amounts, too few and enough."
First Corollary - "You cannot have too many soldiers, only too few supplies."
Second Maxim - "Be willing to exchange a bad idea for a good one."
Second Corollary - "You can only be wrong or agree with me."

A terrorist which starts a slaughter quoting Locke, Burke and Mill has completely missed the point.
The fact remains that the only person or group to applaud the Norway massacre are random Islamists.

Syt

#12
July 20, 2012, 05:39:15 AM
Quote from: Solmyr on July 20, 2012, 05:21:58 AM
Quote from: Viking on July 20, 2012, 04:50:04 AM
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.
I am, somehow, less interested in the weight and convolutions of Einstein's brain than in the near certainty that people of equal talent have lived and died in cotton fields and sweatshops.
—Stephen Jay Gould

Proud owner of 42 Zoupa Points.

The Brain

#13
July 20, 2012, 05:40:03 AM
As retarded as the calculations are in the article they do arrive at trillions when including compound interest (and inflation wtf).
Women want me. Men want to be with me.

Viking

#14
July 20, 2012, 05:41:01 AM
Quote from: Syt on July 20, 2012, 05:39:15 AM
Quote from: Solmyr on July 20, 2012, 05:21:58 AM
Quote from: Viking on July 20, 2012, 04:50:04 AM
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

QuoteAdjusting 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.
First Maxim - "There are only two amounts, too few and enough."
First Corollary - "You cannot have too many soldiers, only too few supplies."
Second Maxim - "Be willing to exchange a bad idea for a good one."
Second Corollary - "You can only be wrong or agree with me."

A terrorist which starts a slaughter quoting Locke, Burke and Mill has completely missed the point.
The fact remains that the only person or group to applaud the Norway massacre are random Islamists.
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