German Central Bank Doubles Reserves

FRANKFURT — Germany’s central bank said Tuesday that it nearly doubled the reserves it holds to cover possible losses, in a not-so-subtle expression of its uneasiness with emergency measures the European Central Bank has taken to combat the euro crisis.The Bundesbank said it raised its risk provisions, money it sets aside to cover losses such as a default on euro zone bond holdings, to 14.4 billion euros, or$18.7 billion, from 7.7 billion euros a year earlier. The bank’s profit for the year, which it transfers to the German government, was little changed, rising to 664 million euros from 643 million euros.
Jens Weidmann, the Bundesbank president, saidthe increase in loss reserves “takes appropriate account of the risks on the Bundesbank’s balance sheet.”
But the decision to set asidefurther billions may also be interpreted as a verdict by Mr. Weidmann on the European Central Bank’s measures he has long criticized, such as purchases of Italian and Greek government bonds to try tokeep those countries’ borrowing costs under control.
Mr. Weidmann, a member of the European bank’s governing council, has played the role of Cassandra as Mario Draghi, the bank’s president, has led a vast expansion of the central bank’s powers.
Fears the euro zone will crumble have receded since Mr. Draghi promised last year to buy bonds of troubled euro zone countries to contain their borrowing costs. But Mr. Weidmann has often complained that the E.C.B. has gone too far, endangering its independence from political leaders and its mandate to guard price stability above all else.
On Tuesday Mr. Weidmann repeated his contention thatthe best solution to the eurozone crisis is for countries to get government spending under control and improve the performance of their economies. He said that relative calm on financial markets was due not only tobank policy, but also to progress by political leaders.
“The reduction of tension on financial markets should by no means lead to neglect of the necessary structural reforms,” Mr. Weidmann said in a statement.
The Bundesbank decision to bolster its reserves may also reinforce fears among Germans that their money isat risk because of European bank policies designed to keep the euro zone from falling apart. The Bundesbank is one of Germany’s most respected institutions, widely regarded as a bulwark against less prudent members of the euro zone.
Since 2010 the E.C.B. has acquired bonds from troubled euro zone countries valued at 209 billion euros, with Italian government bonds accounting for nearly half ofthat amount. In an attempt to encourage lending to businesses and consumers, the E.C.B. has also vastly expanded the collateral that commercial banks can post in return for cheap central bank loans.
The 17 national central banks in the euro zone, which carry out much of thework involved in running a currency union, would share the losses if a country were to default on its bondsor if collateral posted by a bank were to lose value.
Among Germans, there is widespread fear that Germany would bear much more than its share of the cost if the euro zone fell apart. The Bundesbank acts as the clearinghouse for large transactions in the currency zone, and other central banks have what amount to large overdrafts.
At a press conference to present the Bundesbank’s annual results, Mr. Weidmann repeated warnings that France was slipping behind because of its failure to make economic reforms. But he acknowledged that E.C.B. policies had not yet led to an increase in inflation.
“In the short term, we in the euro area have, if anything, declining inflationrisks,” he said. Mr. Weidmann also said the German economy was in good shape.
The Bundesbank, like othercentral banks in the euro zone, continues to do much of the day-to-day work of the euro zone, including making sure there is enough money in circulation, storing gold reserves and acting as go-between for large payments between commercial banks.

Sprint has just released its financial report for Q4 2012. Compared to Q3's net loss of $767 million

America's third-largest carrier added 401,000 postpaid customers over the quarter, but lost 644,000 from its Nextel network. Over 2012 as awhole, Sprint added a total of 1.5 million postpaid subscribers, and when offset against losses from the Nextel network, added a total of 605,000 new customers over its entire network — that includespostpaid, prepaid, and wholesale. The Nextel network is set to close down later this year, and Sprint has failed to convince a large number of Nextel subscribers to switch to its network.
The fourth quarter of 2012 is the first full quarter to close since Sprint's acquisition by Japanese carrier SoftBank was announced, but since that deal hasn't yet closed, it has yet to dramatically affect Sprint's business. Sprint says the deal is still tracking to close by the middle of this year, so we should see the effects of SoftBank in thenot too distant future.

AGENCY

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ALIEN, TAX TREATMENT OF

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ALIENATION OF INCOME

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ALIENATION OF INCOME

ALIENATION OF INCOME -- Term generally used to describe the transfer of theright to receive income from a source while not necessarily transferring the ownership of that source tothe same person.

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