Newspaper

• Jefferies to be bought by Ian Cumming's Leucadia in an all-stock deal for $3.59 billion or about $17/share (WSJ)
• FBI Scrutinized on Petraeus (WSJ)
• Identity of second woman emerges in Petraeus' downfall (Reuters)
• SEC staffers used government computers for personal use (Reuters)
• Japan edges towards fifth recession in 15 years  (FT)
• Europe Finance Chiefs Seek Greek Pact as Economy Gloom Grows (BBG)
• Americans Say Europe Lesson Means Act Now as Austerity Will Fail (BBG) - of course it would be great if Europe had ever implemented austerity...
• Greece battles to avert €5bn default  (FT)
• You don't bail out the US government for nothing: No Individual Charges In Probe of J.P. Morgan (WSJ)
• Israel Warns of Painful Response to Fire From Gaza, Syria (BBG)
• Greece's far-right party goes on the offensive (Reuters)
• Don’t fear fiscal cliff, says Democrat  (FT)
• Apple Settles HTC Patent Suits Shifting From Jobs’ War (BBG)
• Man Set on Fire in Argentina Over Debt (EFE)
• Iraq cancels $4.2-billion weapons deal with Russia over corruption concerns (Globe and Mail)
• An Honest Guy on Wall Street (Bloomberg)

As the Greek government voted on their austerity plans (and prepare to vote on the budget), most of the media is focused on the molotov-cocktail-throwing malarkey that is occurring outside of the parliament. However, as Reuters reports, it was the band-of-brothers inside the building that may just have sparked the largest anger among the public. The government workers, who have enjoyed the "kind of lavish pay and benefits that have become emblematic of the public sector excess at the heart of Greece's debt crisis", suddenly discovered that in the 500-page draft of cost cuts and tax hikes that they themselves were expected to share in that sacrifice. This was entirely not acceptable and thus - they walked off the job, with police having to be called to prevent the shut off of power to the parliament building. Dubbed "The Princes of Parliament", these 'unsackable' staff who have enjoyed 16-month-per-year salaries, seem happy to draft the cuts for others but when it is their own..."we will stop it... Maybe forcefully this time" is response.

With Spanish unemployment at record levels over 26% (and youth unemployment over 50%), even the bailout-avoiding prime minister is now recognizing the "terrible things and inhumane situations" that many real people are dealing with. To wit, a 53-year-old woman died after she threw herself from a window of her apartment when representatives of Spanish bank La Caixa arrived with locksmiths to evict her yesterday morning. The suicide (following another last month in Granada) has prompted Rajoy to temporarily halt evictions of the most vulnerable families as the government devises measures to help people stay in their homes. And yet, we are told again and again by Juncker, Barroso, van Rompuy et. al that the corner has been turned... we suspect not!

"I don't think the US government even realized how far it had spread" is how the collateral damage from the Iran-attacking Stuxnet computer virus is described by Chevron. The sleep San-Ramon-based oil giant admitted this week that from 2010 on "we're finding it in our systems and so are other companies... so now we have to deal with it." It would seem that little consideration for just how viral this cyber warfare tactic has become and this news (reported by Russia Today) is the first time a US company has come clean about the accidental infection. On the record, the federal government maintains ignorance on the subject of Stuxnet, but perhaps Chevron sums up the impact of Stuxnet best (given the escalating Iranian enrichment program): "I think the downside of what they did is going to be far worse than what they actually accomplished." As more truth comes out so it would appear the probability of copycat attacks is rising as the shadowy Iranian-based hacking group called The Qassam Cyber Fighters took credit for launching a cyberattack on the servers of Capital One Financial Corp. and BB&T Corp just last month.

When you strip all the politically correct rhetoric, and the carefully sculpted facade is taken off for the night, this is what remains: Via Germany's most popular financial newspaper Spiegel: "There is hardly an issue about which Germans as so united as they are by their desire to see America on its knees. It unites both the left and the right. Wherever they look, they see decay, a lack of culture and ignorance. "A perverse mixture of irresponsibility, greed, and religious zealotry".  With a bit of luck, the specter across the Atlantic might even take care of itself. It can't be ruled out. When they are not shooting each other or being fried by dangling power lines then the Americans might simply pop. Two out of every three US citizens are overweight, or even obese! Every child in Germany knows the numbers. The childish excitement over Obama, that once again took hold over Germans during this election -- fully 93 percent of the country would have voted for him in this election -- is the flip side of this desire for America's demise. That the Germans, of all people, should see themselves in a black civil rights attorney from Chicago can only be explained by the fact that they see him as the opposite of what they consider to be normal Americans."

This is what complete social collapse looks like. First, the local Neo Nazi party has soared in the polls and is now the third most popular Greek party. Then, in lieu of other sources of capital, a local brothel became the head sponsor of a minor-league soccer club from Larissa. Now, the same brothel which appears to have seen a substantial return on its advertising spend, has decided to branch out. Straight into a local school. That's right: a whorehouse is advertising its "services" to children in an elementary school. In exchange for what? Money to purchase a Xerox machine and a library.

Equity markets kick started the week on a negative footing, with the troubled Iberian giant back in focus after it was reported that the ECB is checking whether it may have contravened its own strict rules by lending to Spanish banks on overly generous terms, an ECB spokesman said on Sunday. According to press reports, Spanish banks had borrowed funds from the ECB at a preferential interest rate of 0.5% even though the creditworthiness of the T-bills they provide as collateral should have required them to pay 5.5%. The never-ending Greek drama is another factor for the risk-averse sentiment, with only weeks before the country runs out of cash and still no evidence that lawmakers will find a solution to diffuse the situation, there is a risk of another speculative attack on weaker EU states. As a result, credit and bond yield spreads widened, led by Italian and Spanish bonds, both wider by around 9bps in 10s. Despite the evident distress in credit markets, EUR/GBP is essentially flat, with GBP underperforming following the lacklustre PMI report from the UK.

And for a second there we thought financial publications were supposed to at least pretend they are impartial. It appears that is not the case. Now we eagerly await to learn whom Playboy, the National Enquirer, and TMZ endorse...

It is cloudy out there as Sandy enters the mid-Atlantic region, although for all the pre-apocalypse preparations in New York, the Frankenstorm may just be yet another dud now that its landfall is expected to come sufficiently south of NYC to make the latest round of Zone 1 evacuations about overblown as last year's Irene hysteria (of course it will be a gift from god for each and every S&P company as it will provide a perfect excuse for everyone to miss revenues and earnings in Q4). That said, Wall Street is effectively closed today for carbon-based lifeforms if not for electron ones, and a quick look at the futures bottom line, which will be open until 9:15 am Eastern, shows a lot of red, with ES down nearly 10 ticks (Shanghai down again as the same old realization seeps day after day - no major easing from the PBOC means Bernanke and company is on their own) as the Friday overnight summary is back on again: Johnny 5 must defend 1400 in ES and 1.2900 in EURUSD at all costs for just two more hours.

There is a possibility that the realm of monetary policy could increasingly merge with that of fiscal policy and national debt management policy. Globally, UBS believes, central banks are edging down monetary policy paths that can be viewed as increasingly backstopping budget deficits as lawmakers of respective governments continue to fail to make progress toward fiscal consolidation. As we have vociferously stated, a progression down this road could lead to many unsavoury outcomes, as fiscal and monetary policies entwine themselves in an increasingly negative dynamic -  coining the term “Fonetary-policy” – fiscal policy plus monetary policy.

The primary reason the U.S. economy is stagnating is that it is dominated by an increasingly dysfunctional Central State and the private cartels it protects. The solutions, therefore, cannot come from State central-planning or from global corporate cartels. The solution is to develop alternative models that reinvigorate the local, community-based economy and that leverage the new tools of productivity: the Internet, freely available software tools and new technologies such as desktop fabrication. One sure way to improve the local economy is to keep more of the community's income in the community itself rather than send it to distant corporate cartel headquarters. Guilds can play a dynamic role in that relocalization movement.

Government programs created in the 1960s created a culture of dependency, government control, relentlessly higher debt, materialism, and willful ignorance. The incompetence, arrogance, ineptitude and insanity of government officials at the Federal, State, and Local level are stunning to behold. We need to ask ourselves whether we the people are getting better government service and efficiency today; with government spending at 35% to 40% of GDP, than we did in the 1950’s and early 1960’s when government spending was 20% to 25% of GDP. We doubt that most people are getting 60% more value from our benevolent government today than they did in the 1950’s. By encouraging dependency and reliance upon the all-powerful government, the motivation to educate yourself, get married before having children, work hard, and pull yourself out of poverty is diminished. Can a small minority of critical thinking citizens lead a revolution that topples the existing social order and restores the Republic to its founding principles of liberty, self-responsibility, civic duty, and mutual obligation to future generations?

Usually the Troika is held responsible for all things evil in Europe, but as Die Welt notes, the latest demand that all senior officials at the Ministry of Finance (including all current Greek tax inspectors) be fired by Friday (over corruption and incompetence concerns) has been greeted more positively by many. "The Troika is the only hope to purge this country of the gangs that plunder it - the ONLY hope!" is how one Skai TV commentator summed up the move, adding that "it would be nice if we could read one day that all presiding judges are dismissed." The plan to "collect record amounts of money in record time" involves the interviewing of 2235 new tax investigators (with no written exam!) who will be judged on how much money they bring in (with minimum quotas) and maximum tenure of one year before re-applying. The new plan is likened to 'medieval tax collectors' and the tax-collectors union, unsurprisingly upset at this new plan, added that the Troika never had to face "a destitute pensioner who cannot pay his tax bill." With rumors of government resignation and re-election, the external pressure and internal strife are coming to a head rapidly.

Two weeks ago we reported that the first unintended but perfectly expected consequence of the French socialist revolution, was the plunge in Paris luxury real estate prices as in the aftermath of Hollande's plan for a 75% millionaire tax, the wealthy promptly decided it is time to seek greener pastures and have launched a housing firesale, flooding the market with expensive (but getting cheaper by the day) housing. Now, we find that another consequence of Hollande's creeping government-enforced subsidies to uncompetitive sectors (coming soon to an insolvent country near you) may be none other than the French internet, as the world's biggest agregator of content, Google, is threatening to boycott French media websites if France demands it start paying for linked content.

The World Gold Council issued a summary on gold’s price performance in various currencies during the third quarter.  The report looks at influences that monetary policies and central bank actions have on gold. Gold’s 11.1% USD/oz return in 3Q was in response to central bank stimulus measures. Volatility decreased and generally correlated with other assets. Central banks announced a continuation of their unconventional monetary policy programmes in Q3 which mainly are used to lower borrowing costs and supporting financial markets.Financial assets have responded to central bank policy announcements, but gold's reaction has been the strongest. There is a consensus that these policies drive investment into gold purely due to inflation-risk impact. The World Gold Council believes that there are not one but four principal factors that provide further support to the investment case for gold: Inflation risk, Medium-term tail-risk from imbalances, Currency debasement and uncertainty, and Low real rates and emerging market real rate differentials.