LyrArc Article Gist
Spain's newly elected prime minister, Mariano Rajoy, appointed Luis de Guindos, a former deputy finance minister in the governments of prime minister Jose Maria Aznar during 1996-2004, to be the new finance minister. Guindos is not a member of the governing Partido Popular, and is perceived as independent in Spain. A new Budget ministry was added, to be headed by the Partido Popular's economic spokesman, Cristobal Montoro. Montoro was formerly a budget minister in the Aznar government. Jose Manuel Garcia-Margallo, member of the European parliament for 17 years, will head the Foreign Ministry. Madrid's mayor, Alberto Ruiz-Gallardon, who has wide appeal, will be the new Justice minister.

LyrArc Article Gist
The investigation into the airstrike by the U.S. on a Pakistani border position inside Afghanistan largely upholds the Pakistani account of events according to the Wall Street Journal.

LyrArc Article Gist
British Airways and Iberia Airlines made the winning bid for British Midland International (BMI) from Lufthansa for 172.5 million pounds. The acquisition is only for BMI's mainland carrier which serves Europe, the Middle East and Africa. This gives British Airways 56 additional daily takeoff and landing slots at Heathrow airport where it has 45% of commercial airtraffic. Lufthansa paid 223 million pounds for BMI in 1999 and when it purchased the remaining 50% of founder Michael Bishop's share in the airline in 2008.

LyrArc Article Gist
Changes Republican Governor Sam Brownback is making in the state of Kansas, which focus on conservative values, lower taxes, and major cuts to spending to reduce the footprint of government in the state. Kansas has a large Republican majority in the House of Representatives and strong tea party fervor, giving Brownback an opportunity to remake government in the state. Yet there is some skepticism about how lasting these changes can be with the cuts in government services. Some Republicans say the question is how much in government services do the people of Kansas want- if the cuts are too steep the people of Kansas may find too many services have been cut. Over the the last century Kansas has usually voted for moderate Republican governors, making this a major change.

LyrArc Article Gist
Floyd Norris says the announcement by the ECB on Dec. 20, 2011, that 523 banks borrowed 489 billion euros under the newly created Long Term Financing Operation goes a long way towards giving Europe time to address the debt crisis. A major problem is recapitalization of European banks and the ECB's action helps address this problem. This is one of the achievements of the December summit of European leaders, though it was not the way markets had expected. Markets were focussed on large scale bond buying by the European Central Bank or issuance of euro bonds. ECB head, Mario Draghi, aware of widespread opposition in Germany to such proposals made it clear this was not going to happen. The Long Term Financing Operation of the ECB provides unlimited amounts of loans to European banks at 1% for 3 years, and accepts sovereign government debt as well as other types of securities as collateral. The result of this action was to lower the yield on a recent Spanish bond auction to 1.7% for three month bills from 5.1% the prior month. Spanish and Italian banks can now buy government debt of their countries and use the bonds as collateral at the ECB for three year loans at 1%. This Norris estimates will generate profits of about 37 billion euros for European banks from the difference between the ECB rate of 1% and the rate on two year bonds of Spain and Italy of 3.6% and 5.1% respectively for the bond purchases of 489 billion euros- calculated on a spread of 2.5 percentage points over three years. Another infusion of funds from the ECB will occur in February 2012. The new capital infusion gives European banks less reason to reduce lending in the eurozone as they work to meet the higher capital reserve requirements set under new Basel III rules. This is especially important given the austerity measures being implemented across the eurozone countries and Britain to reduce government deficits, and in light of the lower growth expected as a result....

LyrArc Article Gist
Simon Nixon points out that most of the 490 billion in euros borrowed by European banks under the Long Term Refinancing Operation of the ECB in Dec. 2011 is for rolling over maturing debt, rather than buying of government bonds. European banks financing needs based on figures from Barclay's Capital are over 300 billion euros for the 1st quarter of 2012. This suggests huge demand for the Long Term Financing Operation in the next quarter. For Spain and Italy the newly created lending facility should lead to higher bond buying by small and midsized Spanish banks and Italian banks, as this will boost their profitability. Spanish bonds yield 5% and Italian bonds yield 6.5% and loans from the ECB using the bonds as collateral are available at 1% for three years, which makes this an opportunity for these banks to boost profitability. The proportion of government bonds of Spain of Spanish banks bank assets is 7% and the figure for Italian banks is 9%. Nixon says an increase of this ratio by three percentage points by Spanish banks would created additional demand for Spanish government bonds of 45 billion euros, which is a third of the issuance for 2012....

LyrArc Article Gist
The breakup fee of $4 billion and the $1 billion in "book value" of spectrum AT&T is giving to T-Mobile as part of the fee are part of the cost of the failed acquisition of T-Mobile. Other costs are that this puts AT&T at a significant disadvantage in relation to competitor Verizon, because Verizon is at least one year ahead in bringing out its next generation LTE network. By the end of 2011 Verizon's LTE network will reach 200 million Americans compared to AT&T LTE coverage of 70 million. Apple's next iPhone in 2012 will be an LTE model. AT&T's network congestion will mean it will have to do more capital spending than Verizon in the years ahead. Verizon has early mover advantages from its early investments in LTE network. From 2008 through the first 3 quarters of 2011, Verizon invested $29.3 billion in its wireless network compared to AT&T's $28.1 billion.