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As Low Rates Depress Savers, Governments Reap Benefits - (www.nytimes.com) A consumer complaint is
ricocheting around the world: low interest rates are eating away at savings. Bill
Taren, a retiree near Orlando, Fla., discovered in August that his credit union
would pay only 0.4 percent annual interest on his saving account, even though
inflation averaged 2.8 percent over the last year. So he and his wife decided
to just stuff their money in the mattress, he says, because at least there “we
can see the cash when we want.” Jeanne and André Bussière, in Annecy, France,
have a stable pension and a bank account that pays 2 percent interest — “almost
nothing,” they say — even though the consumer
price index rose an average of 2.5
percent over the last year.
Big Banks Hide Risk Transforming Collateral for Traders - (www.bloomberg.com) JPMorgan Chase & Co. (JPM) and Bank of America Corp. are helping
clients find an extra $2.6 trillion to back derivatives trades amid signs that
a shortage of quality collateral will erode efforts to safeguard the financial
system. Starting next year, new rules designed to prevent another meltdown will
force traders to post U.S. Treasury bonds or other top-rated holdings to
guarantee more of their bets. The change takes effect as the $10.8 trillion
market for Treasuries is already stretched thin by banks rebuilding balance
sheets and investors seeking safety, leaving fewer bonds available to backstop
the $648 trillion derivatives market. The solution: At least seven banks plan
to let customers swap lower-rated securities that don’t meet standards in
return for a loan of Treasuries or similar holdings that do qualify, a process
dubbed “collateral transformation.” That’s raising concerns among investors,
bank executives and academics that measures intended to avert risk are hiding
it instead.
Germany Says 'Great Uncertainty' About US Debt - (www.reuters.com) German Finance Minister
Wolfgang Schaeuble questioned on Tuesday how the United States could deal with
its high levels of government debt after November's presidential election. In a speech to the Bundestag lower house of parliament to
open a debate on the 2013 German budget, Schaeuble said worries about U.S. debt
were a burden for the global economy, hitting back at
Washington which has criticized Europe for failing to get a grip on its own
debt crisis. In private, German officials often express concern about U.S. debt
levels and the inability of politicians there to reach a consensus on how to
reduce it, but Schaeuble's public remarks underscore the extent of the worries
in Germany.
Outlook grim for middle-income workers, report says - (www.washinngtonpost.com) Middle-income workers have
endured a “lost decade” of stagnant wages and are teetering on the brink of
another, the consequence of both the recent recession and a long series of
policy choices that have eroded their leverage in the job market, according to
a report.
In its 12th edition of the “State of Working America,” the Economic Policy
Institute, a liberal research organization, points out that inflation-adjusted
pay has slipped for most workers — including college graduates — over the past
decade. With the nation’s unemployment rate at 8.1 percent and projected
to remain unusually high for several years, there will be little pressure for
employers to increase pay for many workers, the report added.
The
French are having serious regrets about electing François Hollande - (www.businessinsider.com) France is mired in a
stagnating economy. The private sector is under pressure, auto manufacturing is
heading into a depression. Unemployment hit a 13-year high of 10.2%, leaving
over 3 million people out of work. Youth unemployment of 22.7%, bad as it is,
belies the catastrophic jobs situation for young people in ghetto-like
enclaves, such as the northern suburbs of Paris. Gasoline and diesel prices are
hovering near record highs. So there are a lot of very unhappy
campers. In a BVA poll, 55% of the respondents were
dissatisfied with President François Hollande’s efforts to tackle the economic
crisis.
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