Alistair Darling

• Draghi Says Next Move Not His as Spain Resists Bailout (Bloomberg)
• EU Doubts on Deficit Cutting May Hinder Spain’s Path to Bailout (Bloomberg)
• Merkel to Visit Greece for First Time Since Crisis Outbreak (Bloomberg)
• Fed's Bullard warns inflation won't ease U.S. debt burden (Reuters)
• Walmart Workers Stage a Walkout in California (NYT)
• Natural Gas Glut Pushes Exports (WSJ)
• BOJ Refrains From More Stimulus as Political Pressure Mounts (Bloomberg)
• Big funds seek to rein in pay at Wall Street banks (Reuters)
• Hong Kong Luxury Sales Fall as Chinese Curb Spending (Bloomberg)
• Dave and Busters Pulls IPO due to "Market Conditions" (Reuters) - so market at anything but all time highs now is market conditions?
• Weak U.S. labor market looms ahead of elections (Reuters)
• Glut of Solar Panels Poses a New Threat to China (NYT)

All you need to read.

All you need to know.

All you need to read.

As the truth unfolds concerning the financial condition of the UK, those states in the Mediterranean south don't seem so bad now, do they???

How many of those Greek, Portuguese, Irish and Spanish bondholders have factored the near guaranteed "additional" haircut (/scalping) they will receive having to stand behind the IMF in the event of a (probably guaranteed) default or restructuring? Do you think the investors of European banks (that includes central banks) that are holding/and currently still buying a boat load of these bonds have factored this into their valuations?

If you’re of a certain age, chances are you remember exactly where you were when JFK was assassinated. Similarly, if you’re from Canada or the United States and have an even remote interest in hockey, it’s highly likely that you remember exactly where you were when ‘Sid the Kid’ scored the winning overtime goal in the Olympic gold medal game. These were both "significant events", albeit for different reasons. We wonder, however, if any of you recall where you were on September 18th, 2008? Do you remember that day? We can’t seem to recall it either, which is strange, because it was one of the most important days of the decade. October 7, 2008 is another day that should stick out in our memories, but we’re sure you don’t remember that day either – and we’re in the same boat. How is it, then, that we can’t recall where we were or what we were doing on the two days the entire financial system almost collapsed?!? It boggles our mind. These dates should have been emphasized in every "review of the decade" written at the end of 2009, but we’ve been hard pressed to find them mentioned in any mainstream publication. This is troubling to us, and makes us wonder if people are even aware of the incredible events that took place on those fateful days only eighteen months ago. - Eric Sprott And David Franklin

Just headlines for now. Headlines will turn to headaches for Goldman longs shortly. And what will really set off the migraine is the just released announcement that the European Commission will back a Tobin Tax on financial institutions. We are fairly confident that this would not be proposed without at least a preliminary nod from their counteparts across the Atlantic. We believe that the slow but certain conversion of the banking sector into a utility industry is now reality. And yes, bonuses in utilities max out at 25% of the base, not 2,500%.

When psychologists evaluate human behavior, one of the most prevalent observations regarding any activity is the all too often flawed basis of perceived versus realistic outcomes that dictates our every action. As imperfect creatures, we tend to construct theories that conform with our worldview, which are subsequently reinforced by our confidence (or lack thereof) in the future. This is true in any discipline: finance, politics, gambling, mating, etc. There is hardly a better example of this than the very basis of modern economic theory where assumptions about the validity of fiat currencies determine the actions of central banks, which in turn spill over into every aspect of modern society . Yet what if the very basis of core assumptions is wrong? What if every activity exhibited by humans in the post gold-standard world has a flawed assumption at its core? Austrian economists have, of course, claimed this for ages, usually seeing their efforts conclude with a dead-end as the attempt to change the status quo hits the brick wall of quadrillions of (arguably worthless) pieces of paper which dictate the status quo. However, with the recent turn for the worse, courtesy of sovereign bail outs (as confused as they may be) could the day of reckoning be fast approaching? With each passing the day an affirmative answer seems closer at hand. Today SocGen's Dylan Grice shares his perspectives on popular delusions, and why these may soon be coming to an abrupt end.

All the posturing that the US would never repeat the UK's "collosal mistake" of levying banker taxes, is about to be unwound. Senate Democrats Barbara Boxer and James Webb have proposed a 50% tax on bonuses of more than $400,000 in all financial firms having received TARP assistance (yes, that includes Goldman). Look for the market to plunge now as Wall Street fires a warning shot against this proposal from ever seeing the light of day.

Now that's some serious pocket change you can believe in. If correct, Blankfein's 2009 bonus will be over 30% greater than his $68 million take home in 2007, the previous all time record year for Wall Street. Check to you, Mr. President: surely this will merit some more populist rhetoric and even more decisive complete lack of action on your behalf.

Are bond markets signaling the start of the Great Transition? Will inflationists or deflationists get the last laugh?

"Last week I was a participant in the Wall Street Journal's Future of Finance Initiative in England. WSJ has written a summary of the conference highlights, and missed some key points. Allow me to fill in the blanks." - Janet Tavakoli

In his pre-budget report, British Chancellor Alistair Darling said that he will now levy a 50% tax on banker bonuses. The new tax will be effective from today until April 5.The tax will hit virtually all financial companies, including subsidiaries of foreign banks . Thus a Goldman banker working in London will suddenly be faced with a much higher marginal tax rate that his associate in New York. This will either generate much transatlantic resentment, or expect a comparable move to the replicated by the IRS with the President's blessing, who has already lost control of the unemployment picture, so the last thing he can do to regain some popularity is to take Main Street's outcry direct to the southern tip of Manhattan.

Yet even as the likelihood of a copycat tax in the U.S. is increasing, the question is do the domestic trading desks now drop the market and show the administration who is really in charge? Because even the President's working group can not survive a concerted attack from every single financial entity in the world. And bankers are nothing if not efficient at marking their territory in the protection of take home pay. If that requires a 200 point drop in the S&P, so be it.

These are some of the more important headlines coming from around the World this morning.