Something Is Rotten In The State Of Luxembourg

Luxembourg

Photo: AP

It’s got the world’s highest GDP per capita, great state funding and more investment funds than anyone else save the U.S.But it’s also got debt. Lots of it. 80-four times more than America’s debt per capita.

And some of its banks are corrupt. Very corrupt.

And there haven’t been too many big political changes for a little while. 

Still, the scenery is nice. And the wine’s good.

Welcome to the Grand Duchy of Luxembourg…

Where is it?

If you squint, you'll be able to see Luxembourg on a map sandwiched between Belgium, France and Germany.

It has a population of just 503,000, who spread themselves over just about 1,000 square miles of the country.

It's so small the country just calls its capital city 'Luxembourg.'

Its only had its own official language since 1984

Lëtzebuergesch is the official native language for Luxembourgers.

French and German are also both official languages for the country. German and English are used widely for business, especially in the country's banking sector.

There's political stability and then there's...

Luxembourg's Prime Minister, Jean Claude Juncker has been ruling since 1995, making him the longest ruling political leader in Europe.

The Grand Duke of Luxembourg, Henri, ultimately oversees government and has the authority to dissolve parliament if he wants. The Grand Duke has moved to distance himself from legislative power in recent years but he still holds complete authority over government.

Its GDP per capita is the world's highest

That's right. Luxembourg's GDP per capita of $108,832 is the highest in the world. Not too surprising when there's a lot of banks and not too many people. In fact, only the U.S. has more investment funds than Luxembourg.

But, it's got debt. A lot of it.

The country has $3.76 million of debt for every person. That's 84 times the figure for American debt per capita. How has this happened? It may have something to do with...

State supported salaries and government spending are high

A elementary school teacher can earn $100,000 a year easily. Government spending rose 8.3 per cent in the first six months of 2011, rising up to $8.4 billion. The standard of life remains high in Luxembourg and little is being done to curtail spending or address the debt.

Taxes have been raised to deal with public financial problems...kinda...

The Luxembourg government did introduce a tax hike on its richest citizens during the financial crisis. Taxes rose by a gargantuan one per cent.

The national debt was hardly dented.

For some reason it's popular with foreigners, for more reasons than one...

40-four per cent of Luxembourg's population is foreign born. Another 25 per cent equivalent of the population come into the country from surrounding nations every day to work. The lack of tax hikes and plush government spending may be a pull factor, but there's certainly another element here as well.

Luxembourg has a reputation for being a secret banking hotspot. North Korean leader Kim Jong-il reportedly kept billions of dollars in the country under the radar. The prospect of hiding your money is sure to draw some expats.

But not everyone is happy

Despite the high quality of life Luxembourg's population has the lowest happiness rating of all European countries. It has the same Global Happiness Index score as Sudan. And Luxembourg doesn't have any war to contend with.

...Which may go some way to explaining the country's drinking problem.

Luxembourgers buy more cigarettes and alcohol per capita than any other country on earth.

To put into perspective how much alcohol is consumed in Luxembourg, consider that the population imbibe 84.4 litres of beer per year. Then take into account that beer only constitutes 14 per cent of alcohol consumption in Luxembourg. Based on this the average Luxembourger consumes 603 litres of alcohol a year. That's enough to forget about all life's problems, including the public debt apparently.

Now check out another country in big trouble...

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