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Big Depositors Seek a New Safety Net - (www.nytimes.com) On the first day of the New Year, $1.5 trillion of bank deposits will
lose an unlimited government guarantee that was granted during the financial
crisis to assure skittish customers that their cash was safe. For a handful of
boutique firms that service banks, it’s a boon for business. The accounts
losing the insurance are used by businesses, municipalities and other entities
like nonprofits that are willing to forgo any interest in order to have
immediate access to their large pools of cash. These accounts hold about 20
percent of all deposits in United States banks. Starting Jan. 1, only $250,000
in each noninterest bearing account will be backed by the Federal Deposit Insurance Corporation.
Now a scramble is under way to make sure these customers do not withdraw large
sums out of banks, particularly community banks that have benefited from the
guarantee.
China Warns Local Governments on Financing - (online.wsj.com) China has issued a fresh warning to its local governments to control
risk and stop using unauthorized fundraising methods to pay for the building of
infrastructure and other projects. The finance ministry, in a statement jointly
issued with other government agencies and published on its website Monday, said
there has been an increase of unauthorized funds by local governments and
reiterated existing restrictions on the use of leasing, trust, and
build-and-transfer arrangements to pay for public works. The statement—issued
with the People's Bank of China, the China Banking Regulatory Commission and
the top planning agency the National Development and Reform Commission—is the
latest sign of mounting concern over local government debt, particularly as the
property market remains sluggish. Local governments are heavily reliant on land
sales for revenue, and slowing land sales may jeopardize their ability to repay
loans.
Merkel Calls for German Patience as Euro Crisis ‘Far From Over’
- (www.bloomberg.com) German Chancellor Angela Merkel said
the economic environment will be more difficult in 2013 than this year, and
that Europe’s sovereign debt crisis is “far
from over,” though progress has been made. “The reforms that we’ve agreed on
are starting to take effect,” Merkel, who faces federal elections in September,
said in a New Year’s television speech to the nation, sent today in advance by
e-mail. “Nevertheless, we still need a lot of patience. The crisis is far from
over.” Financial-market tensions have abated after the European Central Bank unveiled
its Outright Monetary Transactions bond- buying plan on Sept. 6, pledging to
spend as much money as needed to restore confidence in bond markets. The
program provides support to debt-strapped nations as long as they sign up to
economic reforms.
UN Envoy Warns of Syria ‘Hell’ as Beheaded Bodies Found - (www.bloomberg.com) UN special envoy Lakhdar Brahimi warned yesterday that the war in Syria is spiraling into “hell” and giving rise to
warlords. The Syrian army killed 143 people across the country yesterday, the
opposition Local Coordination Committees said in an e-mailed statement. Fifty
unidentified beheaded corpses with signs of torture were recovered behind
Tishreen Military Hospital in Damascus, the group said. “The situation is bad
and it’s getting worse,” Brahimi said in Cairo. “I can’t see anything other
than these two paths: Either there will be a political solution that will meet
the ambitions and legitimate rights of the Syrian people, or Syria will turn
into hell.”
Spain's house prices to fall another 30% as glut keeps growing
- (www.telegraph.co.uk) Spain's property slump will deepen for much of the next decade, and
tracts of buildings along the Mediterannean coast will have to be demolished,
the country's top consultants have warned. Fresh losses could reach 50pc and
drag on for 10 to 15 years in those places where construction ran wild during
the bubble, bringing the total decline from peak to trough towards 75pc. "The
market is broken," said Fernando Rodríguez de Acuña, the group's vice-president.
"We calculate that there are almost 2m properties waiting to be sold. We
have made no progress at all over the past five years in clearing the
stock," he said.
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