Art Laffer of Laffer Associates has some very good perspectives on why he sees 20 year of hell coming up for the US economy. With thoughts like "never heard of anyone spending themselves into prosperity" he is, of course, correct.

Recently uncovered critical documents disclosing details about AIG's CDO portfolio and collateral calls, indicate that during a December 5th conference call with Investors, Joe Cassano, famous for singlehandedly destroying capitalism and forcing most financial companies to be subsidized by US taxpayers in perpetuity, as well as then CEO Martin Sullivan, effectively commited 10(b) 5 fraud by misrepresenting material company conditions.

- Yield 3.329% vs. Exp. 3.360%
- B/c ratio 2.82 vs. Avg. 2.35 (Prev. 2.26)
- Indirects 67.2% vs. Avg. 31.39% (Prev. 33.07%)
- Allotted at high 13.17%

In an interesting overture to killing the current casino culture that is enveloping capital markets, none other than IBM former CEO Louis Gerstner is recommending taxing short-term (less than 1 year) capital gains at 80%. While such a proposal is sure to kill 90% of participants in the capital markets casino which lately trade only on an intraday basis and nobody cares about fundamentals that may justify a long-term buy or hold (simply because anything long-term in this economy will ultimately result in a 0 valuation).

The Bank Of England has announced that it is excluding the 5% 2014 and 8% 2021 gilts from buybacks until notice. As this is likely indicative of the major weakness in the gilt curve, the US better sell all the 5-12 year comparable Treasuries it can asap.

German Government adviser says Porsche should sell some VW (VOW GY) shares to raise cash.

In an interview with MarketWatch's Jon Friedman, Janet Robinson, CEO of embattled former media titan and now merely distressed media company scrambling to plug debt covenant holes, New York Times, has announced that she has had it with other members of the evil, speculative media world.

The following may or may not be all the emails that will be referenced at the hearing tomorrow. Oddly (or not) the $78 billion portfolio of problem positions has been redacted.

Spreads were tighter in the US as all the indices improved (though 2-3bps wider than the pre-FOMC tights in IG). Indices generally outperformed intrinsics with skews widening in general as IG's skew decompressed as the index beat intrinsics, HVOL outperformed but widened the skew, ExHVOL outperformed pushing the skew wider, XO's skew increased as the index outperformed, and HY outperformed but narrowed the skew.

Developing story from Huffington Post:

Tim Geithner, Treasury Secretary, supposedly emailed telling BofA that they couldn't back out of acquiring Merrill Lynch, according to CNBC. An email by Geithner telling BofA to close the deal would be a proverbial smoking gun, since BofA honcho Ken Lewis has said he was forced into buying the bank and not publicly revealing the poor financial shape that Merill Lynch was in, in the wake of pressure from the government.

hat tip Vaughan

The brand spanking new team (and legacy boy Craig Schmidt) that Merrill recently acquired from some other bank (I wrote about this, but frankly don't remember where these clowns came from nor do I care), just went to town all over the REIT bathroom and marked their territory effusively. ML in fact distributed a 45 page reinitiation report, which I have no intention of ever reading.

This is what direct, premeditated, overt manipulation looks like.