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Spanish deposits fall as crisis deepens - (www.ft.com) Capital flight from the Spanish banking sector
continued in August, data released on Thursday showed, putting more pressure on
the prime minister, Mariano Rajoy, as he unveils his crucial budget for the
next year amid rising
borrowing costs and growing public discontent with austerity. Private
sector deposits fell more than 1 per cent to €1.49tn at the end of August from
€1.51tn in the previous month, hitting their lowest point since April 2008,
according to the European Central Bank. The rate of flight slowed slightly
compared with July, however. As protesters descended on Spain’s parliament for
a second night on Wednesday, Mr Rajoy called on Spaniards to ignore “short-term
interests”. His government is also preparing to unveil a new reform programme
and the results of a banking stress test.
Fed Virtually Funding the Entire US Deficit: Lindsey - (www.cnbc.com) The latest round of extraordinary Federal
Reserve stimulus is risky and leaves little room to maneuver should another
crisis hit, economist Lawrence Lindsey told CNBC’s “Squawk Box” on Wednesday. Lindsey said that with
the Fed purchasing at least $40 billion a month in mortgage debt through QE3,
“they are buying the entire deficit.” (Read more: Fed Pulls Trigger, to Buy
Mortgages in Effort to Lower Rates.) “I have no problem doing
extraordinary things in extraordinary times,” said Lindsey, a former White
House economic advisor under former president George W. Bush who now runs his
own consulting firm. Lindsay said he agreed with the Fed’s first two rounds of quantitative easing. Now, with the economy now growing
closer to its trend rate, “doing something that’s really out of the ordinary is
risking things.”
Spain’s Boom-Era Building Gear Sold as Developers Cut Off -
(www.bloomberg.com) Angel Fernandez used to
travel to the Netherlands to buy equipment for Spanish homebuilderswhen they were powering Europe’s
third-biggest construction market. Now he watches as buyers come to take
diggers, excavators and trucks to countries where they won’t just gather dust. Standing
in a sunburned field in Ocana, a 90-minute drive south of Madrid,
41-year-old Fernandez looks on as never-used construction equipment is sold at
discounts of as much as 20 percent through Ritchie Bros. Auctioneers Inc.
Business is brisk for the world’s largest industrial-equipment auctioneer, a sign
that time has run out for Spanish builders that were propped up by banks for
years after the machines fell silent. “My business is being made obsolete,”
said Fernandez, who bids for equipment on behalf of Spanish construction
companies. “When the crisis began in 2008, we all thought that it would be over
in two or three years, but we got to 2011 and realized we were in worse shape.”
One-Fifth
of Households Slammed by Student Debt - (www.cnbc.com)
A record number of American
households carry student loan debt, while the average outstanding loan balance
is the highest it's ever been, according to a new report from the Pew Research
Center. The Pew analysis found that about one out of five (19 percent)
households, or around 22.3 million, were burdened with student debt in 2010.
That figure is more than double the 9 percent it was in 1989, and it marks a
big jump from 15 percent in 2007.
ECB’s Weidmann Says Banking Union Can’t Cover Bad Debts - (www.bloomberg.com) European Central Bank Governing Council member
Jens Weidmann said the proposed banking union can’t take responsibility for
existing bad debts. “In order to keep liability and control in balance, only
risks that have arisen after common supervision is established can be taken
under joint liability,” Weidmann, who heads Germany’s
Bundesbank, said at a speech in Berlin today. “The legacy burdens on bank
balance sheets have to be underwritten by the countries under whose supervision
they have arisen.” Weidmann’s comments come after finance chiefs from Germany,
the Netherlands and Finland said this week that direct
recapitalization of banks by the euro area’s permanent bailout fund should be a
last resort and that legacy debts should remain the responsibility of national
authorities. European leaders agreed in June that, as part of a prospective
banking union, banks would qualify for direct aid once an ECB-led supranational
supervisory mechanism has been established.
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