The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

By Marc Chandler

NEW YORK ( BBH FX Strategy) -- It appears that an accounting error at FMS Wertmanagement, the bad bank for government-owned Hypo Real Estate may have overstated the institutions' debt by 55.5 billion euros (about $77.7 billion).

FMS has reportedly corrected its figures, to lower the debt by 24.5 billion euros in 2010 and by 31 billion euros for this year.

The accounting adjustment will reduce Germany's debt/GDP by a couple of percentage points (to 81.1% from 83.7%), but before you think that Germany can come up with new ways to spend the money, such as increasing the contribution to European Financial Stability Fund or other international aid packages, recall that what we are discussing here is a smaller loss. Plus, Germany's government says there will be no impact on the nation's next budget from the error, according to The Wall Street Journal.

The borrowing figure for FMS stands at a whopping 161 billion euros. The source of the error appears to be derived from the fact that the collateral for derivatives was not netted between the asset and liability side. Rather than subtract funds, apparently they should have added funds. FMS will account for 161 billion euros of Germany's debt, down from 216.5 billion euros last year.

While there will be an investigation into the accounting error with talks scheduled for Wednesday, the political fallout might be greater than the economic consequences. The local press seems to be playing this story up even if the international press isn't.
This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.