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On December 14, FT writer Ajay Makan headlined, "Dive in deposits at foreign-owned banks in US," saying:
"Foreign-owned banks (in America) suffered their largest six month fall in deposits on record." Analysts call it a "flight to safety."
Deposits fell $291 billion, or 25%, from end of May to December 1. US banks benefitted. Whether the trend continues bears watching. Clearly, it shows heightened European risks, and what happens there spreads globally.
On December 13, FT's Martin Wolf headlined, "A disastrous failure at the summit," saying:
"Whom the gods wish to destroy they first make mad. That was my reaction" to last week's summit. EU leaders failed "to devise a credible remedy for the ills of the currency union."Instead of focusing on economic growth, they proposed "tighten(ing) the screws on fiscal deviants" when stimulus is needed.
What Germany's Merkel and France's Sarkozy called a "stability and growth union," Wolf describes as "instability and stagnation."
In fact, few details emerged in Brussels, except to say "general government budget deficits shall be balanced or in surplus: this principle shall be deemed respected if, as a rule, the annual structural deficit does not exceed 0.5% of (GDP.)"Second, "such a rule will also be introduced in member states'....legal systems. The rule will contain an automatic correction mechanism that shall be triggered in the event of deviation."
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