Oct. 28 (Bloomberg) — Teachers at the Clara Zetkin Middle School in Freiberg, Germany, were counting on a budget surplus to ease staff shortages across the state of Saxony.
Those hopes have faded as a result of bets made by state- owned Landesbank Sachsen Girozentrale on structured investments backed by mortgages in the U.S. The German lender loaded up on asset-backed securities and derivatives manufactured and sold by Wall Street amounting to more than 27 times the bank's equity. Now Saxony, which pledged taxpayer money as a guarantee against losses, is on the hook for 2.8 billion euros ($3.5 billion).
This is a very long article, but well worth the read if you are in the least bit interested in how the tangled web of dodgy finance spread worldwide.
One of now many examples, alas. I would like to see some of the folk behind this fiasco punished, but it's not likely. 😦