LyrArc Article Gist
The U.S. Fed's plans for reinvestment of $216 billion in Treasuries that will mature in 2016. The numbers are smaller in 2014 and 2015. The Fed's William Dudley, president of the Federal Reserve of New York, supports continued reinvestment. He says ending reinvestments risks inadvertently tightening credit and financial conditions, inconsistent with the Fed's intentions. Reinvesting would provide stimulus, even as the Fed gradually reduces its bond buying program, by keeping borrowing costs low.

LyrArc Article Gist
Peggy Noonan in the WSJ comments on U.S. president Trump's effort to work in a bipartisan way with Democrats on government spending, raising the debt ceiling, and hurricane aid. Noonan says this may not last, because president Trump lacks steadiness or the understanding and depth needed to make it work. A major problem is the eight months of policy wavering moving in different directions, and endless tweets showing a lack of depth, that have alienated many. This has hardened opinion in some ways says Noonan, and is a hurdle to making things work in a bipartisan spirit. Not much is predictable in the Trump administration as lack of steadiness is a singular feature.  Other problems for this bipartisanship to work is that it could alienate the right wing of the Republican party and the Freedom Caucus, as well as the growing left wing of the Democratic party.  In this zany atmosphere things could soon be back where they were. 

LyrArc Article Gist
Spanish banks conversion of deposit holders into equity holders and risk. Because preference shares counted as core capital Spanish banks issued 32 billion euros of such securities in 2007-2010. Depostors were given these shares in place of low interest bearing accounts. Now that these illiquid shares no longer count as core capital under Base III rules, banks are asking investors to convert these shares into common stock which helps banks boost their capital ratios.

LyrArc Article Gist
Bloomberg Business Week's Matthew Winkler interviews Greece's prime minister George Papandreou.

LyrArc Article Gist
Douglas Peterson, chief operating officer of Citibank, will become the new president of Standard & Poor's. He brings useful experience facing a parliamentary inquiry in Japan, after Citibank ran into trouble with Japan's securities laws. He was also the bank's chief auditor and worked with regulators for the introduction of major accounting rules.

LyrArc Article Gist
Spain's deficit as a percentage of GDP is expected to be 6.0 percent for 2011. The target set by the Rajoy government is for the deficit to be lowered to 4.4% in 2012. Newly elected prime minister, Mariano Rajoy, told parliament that the "outlook could not be darker," with the economy expected to contract in the fourth quarter and in 2012. Rajoy, plans to introduce emergency budget measures on Dec. 30, 2011, labor market changes in the first quarter of 2012, and a banking sector cleanup in the first half of 2012. Savings of 16.5 billion euros will be needed to meet the 4.4% of GDP deficit target for 2012. Rajoy is studying the situation before announcing budget cuts. He affirmed that pensions which were frozen in 2011, will be raised in 2012 in line with inflation. He enjoys the support of France's president Sarkozy and German chancellor Merkel, as all three leaders are heads of conservative parties in Europe, and has excellent rapport with them going back to the period when Rajoy led the opposition party in Spain....

LyrArc Article Gist
Francois Hollande becomes the first Socialist candidate to be elected president of France since Francois Mitterand 17 years ago.

LyrArc Article Gist
A sense that the policies of Hollande in France are better aligned with the Obama administration's position on economc issues.

LyrArc Article Gist
Yannis Palaiologos, a journalist at Katherimini newspaper in Greece, gives his assessment of the situation in Greece before parliamentary elections in Jan. 2015. He says Samaras's New Democracy Party coalition with Pasok has lost momentum ever since the European parliamentary elections. Yet the left party coalition led by Alexis Tsipras is unlikely to win outright and will need to ally with the centrist parties or the Communists, even with the 50 seat bonus given to the winner under Greek election rules. Tsipras will need to ally with centrist parties and moderate his policies to stay in the eurozone. Chancellor Merkel has said a Greek exit will be manageable. A majority of Greeks want to stay in the eurozone, but find the high unemployment of 25% and steep decline in the economy with a loss of 25% of GDP under continuing austerity policies difficult to accept.

LyrArc Article Gist
David Stockman, Director of the Office of Management and Budget under President Reagan tells Tom Keene that the first step to deficit reduction is to means test the 2 milllion to 5 million or 10 million people who are very affluent, and have the benefits of some part of this population eliminated entirely. The next step he suggests is for spending much less on defense. A defense budget at $800 billion he says does not make sense today, because it is 35% larger in real terms than the budget when Reagan was President and the U.S. faced the Soviet Union. The U.S. does not need to be the world's policeman.

LyrArc Article Gist
Spain's finance minister, Luis de Guindos, announced a two year plan in which Spanish banks are required to set aside 50 billion euros for losses on bad real estate and other loans. This is part of the effort to restore the flow of credit in the economy. He told a news conference: "At the moment credit is falling by around 5% or 10%." Banks have been slow in Spain to get rid of bad assets and proceed with a bank cleanup.The provisioning for losses required under the plan is by type of asset- for undeveloped land this will be raised to 80% of value from the 31% used currently, for new homes this goes to 35% from 25% used currently. The idea is to get banks to sell these properties at today's prices and give Spaniards an opportunity to buy these homes as opposed to letting this remain on the bank's books. Banks that merge will be given one year, other banks will be required to do this in one year. The cleanup will make it easier for Spanish banks to obtain financing in international markets, and in turn improve the flow of credit in the Spanish economy. ...

LyrArc Article Gist
The riots in Athens as the Greek parliament voted to support the passage of an EU plan of austerity cuts, including a 22% cut in the minimum wage, pension cuts and large cuts in the number of government employees. The Popular Orthodox Rally party in the governing Greek coalition withdrew its support, 22 members of the Socialist party and 21 members of the New Democracy party in parliament opposed the measures. Elections are planned for April, 2012. Antonio Samaras, head of the New Democracy party, told parliament that he supported the measure only so that Greece could continue using the euro and have "the possibility tomorrow to negotiate and change the policy that is being imposed on us today."

LyrArc Article Gist
Content Links 1. CANTARELL OIL FIELD LIVING UP TO WORST CASE SCENARIO OF INTERNAL PEMEX REPORT. That worst case scenario detailed in an internal oil company report suggested earlier in 2006 that the field's output could fall by about 75% by 2008. Output at Cantarell fell from 1.92 million barrels a day in January to 1.74 million barrels a day in June according to the Mexican Energy Ministry. (Mexico's total crude oil production was 3.3 million barrels a day and it exported 2 million barrels a day in 2005). 2. POLITICS AND HISTORY CONSTRAIN PEMEX EXPLORATION. The Mexican constitution bars Pemex from joining with foreign oil companies to conduct exploration in difficult environment like deep water exploration using the technology of privte oil companies. Mexico however depends on oil revenuesfor a third of its federal budget and declining oil output and future price declines could severely dent Mexico's finances. So there is a new awareness that this situation requires change and action to encourage collaboration and investment in exploration and new technologies. Felipe Calderon who won narrowly in the July Presidential election promised such changesto allow private oil companies to participate. Industry analysts believe that Mexico could find new fields in the deep waters of the Gulf of Mexico if it could use advanced exploration technology....