The following post is by Dealbreaker reader and commenter Infinite Guest.

President Obama has nothing to gain by negotiating with Republicans in Congress in order to raise the debt ceiling. The Department of Treasury doesn’t need Congressional approval to issue more debt and it will be a long time before Treasury actually needs to exceed the debt ceiling.

The analyses I’ve read on the topic are nothing if not variable, but they all assume at some level an agreement by all parties on the basic necessity of raising the debt ceiling and the general wisdom of reducing the deficit. The President knows what needs to be done, the Congress knows and so does the electorate. Based on this shared understanding, it follows that those who act in the spirit of compromise will be rewarded and those who act to obstruct
progress will be punished.

Never mind the compelling absence of evidence that any such shared understanding exists; that’s just not how things work.

The President, and this President in particular, is not answerable to Congress. The President is answerable to history, to the voting public, to our allies, to business interests including bond markets and in relatively rare cases to a 2/3 majority in the Senate. When the executive branch and the legislative branch can’t work out their differences the Supreme Court acts as referree. If Congress failed to raise the debt ceiling, history would not be kind to a President who on their advice failed to honor our debts. The bond markets would not be kind, our allies would not be kind and consequentially neither would the voting public. But a President who stood up to a hostile, inexperienced Congress and continued to honor our debts would win support from all sides. There will have been sufficient turmoil and pain following Congressional failure to raise the debt ceiling that everyone on earth will understand who the heroes and villains are.

If Congress failed to raise the debt ceiling, the President could stand up to Congress on Constitutional grounds, in which case he could count on a fairly corporatist Supreme Court to eventually rule in his favor. He could stand up to Congress on National Security grounds, in which case he might even be able to secretly issue fresh debt. He could stand up to Congress on technical grounds for a very long time without provoking a Constitutional crisis or raising the debt ceiling simply by draining the Treasurys out of trust funds and replacing them with other assets. And if he had to break the law, as President, in order to stand up to Congress, then he could break the law on moral grounds, secure in the knowledge that if he is impeached, the Senate doesn’t have enough votes to convict.

What would the electorate think of a President who defies Congress on any or all of those grounds? The Democrats would rally behind him, the Republicans would still oppose him and the independents would admire him for acting independently.

Now alternatively he can compromise to avoid a direct conflict but what’s in it for him? He could give away everything his constituents like and it still wouldn’t be enough to balance the budget. By compromising he snatches defeat from the jaws of victory. Democrats will hate him. Republicans will (rightly) say that they won. Without any drama to overcome through courageous and decisive action, independents will conclude that he’s a weak leader who stands for nothing.

Politics is not about forethought, compromise and the public good. Politics is about personalities and political narratives and the balance of power. This narrative has yet to be written, but in the politics of the debt ceiling, President Obama has all the power and his opponents in Congress have none.

Article courtesy of Dealbreaker

$$$ House Prices Fall to New Post-Bubble Low as More Rent (NYT)

$$$ Consumer confidence drops in May (Reuters)

$$$ House Set to Reject Debt Ceiling Hike Democrats Dismiss as “Political Charade” (ABC)

$$$ Bernie Madoff Is Ruining Divorces Now, Too (Daily Intel)

$$$ Obama names Bryson as commerce chief (WaPo)

$$$ Primary Global Shuts Offices, but Says It’s Still Open (Dealbook)

$$$ Spain Cuts Budget Deficit in Half (WSJ)

$$$ Goldman shares climb on JPMorgan upgrade (Reuters)

$$$ Ex-Galleon trader presents no defense at NY trial (Reuters)

$$$ A Securities and Exchange Commission worker gave investors false and misleading information about an alleged Ponzi scheme that could have hindered investigation of a fraud in which he also was a victim, the agency’s watchdog said. The employee, based at SEC headquarters in Washington, shared nonpublic information with several investors during the SEC’s investigation and litigation of the case, SEC Inspector General H. David Kotz said in his semiannual report to Congress released today. The report didn’t identify either the SEC employee or the firm accused of conducting the fraud. Kotz opened his probe in February after a senior official said the employee had contacted fellow investors and told them that the company was legitimate and that investors “would be receiving considerable sums of money,” according to the report. (Bloomberg)

$$$ Falcone Venture Said Weighing Deal With AT&T (Bloomberg)

$$$ RBS moves to tap into Chinese IPO market (FT)

$$$ Muni-Bond Group Bans Dual Adviser-Underwriter Roles (WSJ)

$$$ Asian Markets Draw Private-Equity Sales (WSJ)

$$$ Buyout Firms Morphing Into Asset Managers as Takeovers Dwindle (Bloomberg)

$$$ Lehman Presses Big Banks on Derivatives Settlement (WSJ)

$$$ Is bond trading dying? (Reuters)

$$$ Apple’s Jobs to Unveil iCloud Service (WSJ)

$$$ Japan pensioners volunteer to tackle nuclear crisis (BBC)

$$$ Sarah Palin, Donald Trump To Meet In New York City Tuesday Night (ABC)

Article courtesy of Dealbreaker

“I hope something happens before the 2nd of August because if that comes and brinkmanship continues between the Republicans and Democrats, between Congress and the President, that’s a time bomb…You cannot play games with this. This is gambling. This is the United States. You’re leading the whole world, economically-speaking. I hear a lot about China and India. They’re all good run but they’re not the United States. The financial community of all the economies in the world is the United States. This remains for many years to come. You cannot play games with that at all.”

Article courtesy of Dealbreaker

Goldman Braces for Federal Subpoenas (WSJ)
Goldman Sachs executives expect to receive subpoenas soon from U.S. prosecutors seeking more information about the securities firm’s mortgage-related business, according to people familiar with the situation. Officials at the New York company believe the Justice Department will demand certain documents and other information, possibly within days, these people said.

FrontPoint Partners to Close Funds After Redemption Requests (Bloomberg)
FrontPoint Partners LLC will close some of its hedge funds after clients asked to withdraw money amid charges a manager benefited from an illegal stock tip. “We have received capital redemption requests from some of our clients,” Steve Bruce, a spokesman for Greenwich, Connecticut-based FrontPoint said in a statement today. The firm “will be winding down select strategies.” FrontPoint oversaw $7 billion at the start of November before Chip Skowron, a co-portfolio manager of its health-care funds, was tied to claims by prosecutors that the firm got advance notice on drug-trial results. U.S. officials are pursuing a crackdown on insider-trading at hedge funds, with more than 40 people pleading guilty or facing criminal charges or civil lawsuits for benefiting from non-public information.

Flood of Fees Flows Into Bank Coffers (WSJ)
Fees from IPOs already total $1 billion this year, double the level of last year, and are on pace to hit $2.5 billion, said Richard Peterson, an analyst at Standard & Poor’s Corp. Except for 2006, it would be the biggest year for IPOs in the U.S. since the tech boom ended in 2000.

At I.M.F., Men on Prowl and Women on Guard (NYT)
The laws of the United States do not apply inside its walls, and until earlier this month the I.M.F.’s own rules contained an unusual provision that some experts and former officials say has encouraged managers to pursue the women who work for them: “Intimate personal relationships between supervisors and subordinates do not, in themselves, constitute harassment.” “It’s sort of like ‘Pirates of the Caribbean’; the rules are more like guidelines,” said Carmen M. Reinhart, a prominent female economist who served as the I.M.F.’s deputy director for research from 2001 to 2003. “That sets the stage, I think, for more risk-taking.”

Long-Ago Affair Might Damage Turkish Candidate’s Chances to Lead I.M.F. (NYT)
But, [Kemal] Dervis, it turns out, has a secret that could disqualify him from being considered for the job. Years ago, while a senior executive at the World Bank, he had an affair with a female subordinate who now works at the I.M.F., according to a person with direct knowledge of the affair.

Fed Sells Out Latest AIG Bond Offering (WSJ)
The Federal Reserve Bank of New York on Thursday sold all 29 subprime mortgage bonds on offer in its latest sale from a portfolio of securities acquired from American International Group. The securities, held in a legal entity called Maiden Lane II, sold for what the Fed had estimated their fair current value to be, $878.6 million. The debt was part of a clutch of so-called toxic bonds the central bank acquired when it rescued the failing insurer in 2008.

Contrarian Investor Shuns Hot Idea for Bigger Picture (DealBook)
Mr. Thiel is shunning the most popular Internet start-ups because they are not “taking civilization to the next level.” Instead, he’s placing bets in health care, biotechnology and artificial intelligence companies — areas most of his peers have shied away from…According to Mr. Thiel, not enough energy is spent tackling big, challenging problems, like space exploration. Instead, many people are chasing incremental progress and short-term gains.

Citigroup Adds Wolfe to Lead Venture Capital in Tech, Media (Bloomberg)
Wolfe is taking a newly created position at the New York- based bank after working at Union Square Advisors LLC, where he managed venture capital and private equity sponsor coverage, according to a memo to Citigroup employees obtained by Bloomberg News. Citigroup added Union Square co-founder Ethan Topper in April to head global technology banking.

Bank of Japan Refrains From Adding Stimulus (Bloomberg)
The Bank of Japan’s policy board unanimously voted to maintain monetary policy even after a report yesterday showed the country slipped into a recession following a record earthquake. Governor Masaaki Shirakawa and his eight colleagues decided to maintain a 30-trillion yen ($370 billion) credit program and a 10-trillion yen asset-purchase fund that represent the bank’s main policy tools.

Bundesbank Says German Economy to Weaken (Bloomberg)
“Growth is likely to ease somewhat in the foreseeable future,” the Frankfurt-based Bundesbank said in its monthly bulletin published today. The economy’s 1.5 percent growth rate in the first quarter from the previous three months “considerably overstates the underlying economic momentum. Output growth was clearly lifted during the reporting period by backloading and catching-up effects.”

Senate Democrats won’t release their spending plan (WaPo)
Senate Democrats decided Thursday not to release their spending plan to counter the budget blueprint approved last month by House Republicans, saying they will wait to see whether talks at the White House produce a compromise plan for reining in the national debt.

Tepco chief quits after $15 billion loss on nuclear crisis (Reuters)
Tokyo Electric Power Co reported a net loss of $15 billion on Friday to account for the disaster at its Fukushima nuclear power plant, marking Japan’s biggest non-financial loss, and it warned its future was uncertain.

Liberty Media Bids for Barnes & Noble (WSJ)
John Malone’s Liberty Media Corp. made an offer Thursday to acquire Barnes & Noble Inc. for $1.02 billion, a dramatic turn for the nation’s largest bookstore chain—which put itself up for sale last summer but struggled to find a buyer as the outlook for traditional booksellers soured. The proposed deal represents a 20% premium over Barnes & Noble’s share price in 4 p.m. New York Stock Exchange trading Thursday.

Ex-Teammate: I saw Lance Armstrong use EPO (CBS 60 Minutes)
A former teammate of perhaps the world’s greatest cyclist, Lance Armstrong, says he used banned performance-enhancing substances with Armstrong to cheat in pro races, including the Tour de France, the sport’s ultimate event…[Tyler] Hamilton says Armstrong used EPO, a drug that boosted endurance by increasing the amount of red blood cells in his body, to win the 1999 Tour de France, the race he won an astonishing seven times. “I saw [EPO] in his refrigerator…I saw him inject it more than one time like we all did, like I did many, many times.”

Harold Camping: The Man Behind ‘Judgment Day,’ May 21, 2011 (HuffPo)
He made a similar prediction in the 1990s but later said he didn’t look close enough at the Book of Jeremiah. This time around, he’s absolutely certain.

Article courtesy of Dealbreaker

Financiers Switch To GOP (WSJ)
Daniel Loeb, founder of Third Point LLC, was one of the biggest Obama fund-raisers in 2008, rounding up $200,000 for him, according to campaign-finance records. In the decade prior, Mr. Loeb and his wife donated $250,000 to Democrats and less than $10,000 to Republicans. But since Mr. Obama’s inauguration, Mr. Loeb has given $468,000 to Republican candidates and the GOP, and just $8,000 to Democrats. Hedge-fund kings have feelings, too, and the president appears to have hurt them…Mr. Loeb is part of a shift in political allegiance within the world of hedge funds that also includes such big names as Steven Cohen’s SAC Capital Advisors and Kenneth Griffin’s Citadel Investment Group. Managers and employees of hedge funds directed a majority of their contributions to the GOP in the 2009-2010 election season, a pattern not seen since 1996, when the industry was much smaller.

UBS Attracts Highest Inflows Since 2007 as Profit Tops Estimates (Bloomberg)
UBS rose as much as 6.1 percent in Swiss trading, the biggest gain since July, after wealth management and retail clients added a net 16.7 billion francs ($19 billion), more than double the estimate of analysts surveyed by Bloomberg. Net income was 1.81 billion francs, topping the 1.69 billion-franc forecast of analysts…“The main thing is they’re having inflows again, and that’s good,” said Dirk Becker, a Frankfurt-based analyst at Kepler Capital Markets. “The investment bank will remain a construction site for UBS for a while.”

Qaddafi’s Money Man in Vienna Loses Funds With London Friends (Bloomberg)
As Muammar Qaddafi’s forces strafed crowds of protesters in Tripoli with automatic gunfire on Feb. 21, the dictator’s money manager fled the city in a car to the airport to escape the violence. With phone lines and Internet connections down, Mustafa Zarti, vice chairman of Libya’s $65 billion sovereign-wealth fund, couldn’t buy an airline ticket in advance. As mobs of travelers at the airport jostled for seats on packed flights, Zarti scored a spot in business class on Austrian Airlines and flew to Vienna, Bloomberg Markets magazine reports in its June issue. “It was catastrophic that day,” Zarti says. “I’m very sad for Libya.”

Boehner opens door to cutting U.S. oil tax breaks (Reuters)
“It’s certainly something we should be looking at,” Boehner said in an ABC News interview. “We’re in a time when the federal government’s short on revenues. They ought to be paying their fair share.” “Everybody wants to go after the oil companies and frankly, they’ve got some part of this to blame,” he said.

Biggest Banks Beating Estimates Can’t Hide 13% Drop in Revenue (Bloomberg)
“Loans still make up half of bank revenues and loan growth is negative,” Brian Foran and Glenn Schorr, analysts at Nomura Holdings Inc. in New York, wrote in an April 14 note. “We have spent the last few weeks on the road visiting investors. The overwhelming feedback on banks has been ‘Why bother?’”

NY Jurors Can’t See Graphics Again In Insider Case (BusinessWeek)
The jurors at the trial of Raj Rajaratnam began working at midday Monday after a federal judge in Manhattan described the law they must follow. They ended four hours later and will resume Tuesday. They asked to see defense exhibits they didn’t know they already had in binders and graphs prosecutors showed during closings but they can’t see again because they’re not exhibits.

NYSE Merger Plan Tunes Out Big Board Rules (Dealbook)
Without so much as having a brief meeting or discussion with Nasdaq and ICE on their bid — which offered over 13 percent more than Deutsche Börse’s bid — the board of NYSE Euronext declared the offer “clearly not in the best interests of our shareholders.” How could the board determine that without even having a conversation?

HSBC to close retail operations in Russia (FT)
“It’s a difficult market in Russia. You can’t just come in and say, ‘I’m HSBC’, ” said an executive at a rival Russian bank.

Fight Heats Up For Lehman Remains (WSJ)
A three-way battle over the remnants of Lehman Brothers Holdings Inc. is coming to a head, as the defunct investment bank’s estate fights with big-name hedge funds like Paulson & Co and Lehman’s former archrival Goldman Sachs. over how to divvy up $61 billion in assets.

If Greece Acts Quickly, Crisis Could Be Averted (CNBC)
”The longer Greece waits before, the more the plan will cost…and the greater the odds of a haircut for bondholders,” Carl Weinberg explained.

Madoff Said Picower May Have Suspected Fraud, Henriques Writes (Bloomberg)
Madoff, serving a 150-year term for the largest Ponzi scheme in history, said in a prison interview that Picower could have figured out the fraud at Bernard L. Madoff Investment Securities LLC, according to the book. Picower invested $620 million and withdrew $7.8 billion before Madoff confessed to his brother and two sons in December 2008. Henriques asked Madoff who knew of the fraud. “Picower was the only one that might have,” Madoff said. “I mean how could he not?”

Human Cannonball Dies After Safety Net Fails (Sky News)
The accident happened during a show put on by Scott May’s Daredevil Stunt Show at the Kent County Showground in Detling at about 3.30pm on Monday.
The 23-year-old man was flown by air ambulance to Maidstone Hospital, but later died from his injuries.

Article courtesy of Dealbreaker

Ex-Goldman Board Member Took The Fifth (Bloomberg)
Shortly before the start of proceedings yesterday in the insider-trading trial of Galleon Group LLC co-founder Raj Rajaratnam, Assistant U.S. Attorney Reed Brodsky asked whether the defense intended to introduce into evidence a submission that Rajat Gupta made to the SEC. Defense attorney John Dowd said he didn’t plan on telling jurors about the so-called Wells submission. “In that Wells submission, Mr. Gupta took the Fifth Amendment when he spoke to the SEC,” Brodsky told U.S. District Judge Richard Holwell. Gupta “wasn’t deposed when the SEC asked for his deposition,” Brodsky said.

Exchange CEOs Square Off (WSJ)
In 2008, NYSE Euronext Chief Executive Duncan Niederauer arrived at an investor conference early to hear comments by Robert Greifeld, the head of rival exchange operator Nasdaq OMX Group Inc. Mr. Niederauer cringed at Mr. Greifeld’s description of market-share gains in stock trading by Nasdaq over the Big Board, denouncing the numbers as “dishonest.” “He’s running for president. I am the president,” the NYSE chief told the crowd…If Mr. Greifeld can torpedo the Deutsche Börse deal and walk away with the Big Board, he also would likely become Mr. Niederaurer’s boss. Analysts say the Big Board chief, a former trader at Goldman Sachs Group Inc., probably would quit, a move that would entitle him to exit-related payments of $34.3 million.

Brady Dougan’s Pay Sliced 34% (Bloomberg)
Dougan’s pay of 12.8 million Swiss francs ($14 million) included a fixed salary of 2.5 million francs, which doubled from 2009, and 10.26 million francs in bonus and other compensation. He was paid 19.2 million francs in 2009.

Spanish Banks Hit By Moody’s (WSJ)
Iberian bank shares are expected to drop after the market opens Thursday, following a downgrade of the Spanish sector by Moody’s Investors Service Inc. and the collapse of Portugal’s minority government overnight.

Portugal Yields Hit New High; Report Of Bailout ‘Soon’ (CNBC)
Late on Wednesday, Portugal’s parliament rejected an austerity program proposed by Prime Minister Jose Socrates’ government and he resigned. “Portugal’s bailout will be among the top issues at the summit talks today and tomorrow. I believe they will seek the loan soon,” Dow Jones quoted a senior euro zone official as saying.

Irish Economy Shrinks Most in a Year on Investment, Exports (Bloomberg)
Gross domestic product fell 1.6 percent from the previous three months, when it increased 0.6 percent, the Central Statistics Office said in Dublin today. Consumer spending declined 0.4 percent on the quarter, exports fell 1.4 percent and investment dropped 2.3 percent. In 2010, the economy shrank 1 percent, a third straight annual contraction.

Blackstone Hedge Fund Seeder Business Gets Traction (Reuters)
In about four months, hundreds of individual investors sank some $355 million into a so-called hedge fund seeder set up by the New York-based investment firm, a recent regulatory filing shows…Overall, Blackstone’s Strategic Alliance fund has raised $2.4 billion, say people familiar with the fund. The new fund, which already has “seeded” two newcomers and is in advanced discussions to seed another two, is Blackstone’s second foray into the hedge fund incubating business.

Worst Texas Drought In 44 Years Hits US Wheat, Beef Supply (Bloomberg)
Texas, the biggest U.S. cattle producer and second-largest winter-wheat grower, got just 4.7 inches (12 centimeters) of rain on average in the five months through February, the least for the period since 1967.

Ten Economists Call A Severe Threat To US (CNBC)
In an open letter published in Politico to Congress and the president, 10 ex-chairman and chairwoman of the President’s Council of Economic Advisers called for intense negotiations between both parties to take place in the wake of a report by the bipartisan National Commission of Fiscal Responsibility and Reform entitled “The Moment of Truth,” issued in December. The report, by co-chairmen Erskine Bowles and Alan Simpson, argues that the long-run federal budget deficit will pose a serious threat to the long-term recovery of the economy. It was supported by 11 out of a panel of 18 Democrats and Republicans.

Bank Of China Posts 29% Profit Growth (WSJ)
The state-run bank reported a net profit of 104.42 billion yuan (US$15.9 billion) for the 12 months ended Dec. 31, from 80.82 billion yuan in 2009. Net-interest income, which accounts for roughly 70% of Bank of China’s operating income, rose 22% to 193.96 billion yuan in 2010 from 158.88 billion yuan, the lender said.

Military Monetary Policy: Rebels Set Up Central Bank (Reuters)
Libyan rebels plan to set up a national oil company and central bank based in Benghazi as an alternative to the institutions of President Muammar Gaddafi, the Gulf newspaper The Nation reported Thursday.

Article courtesy of Dealbreaker

US Jury to Hear Gripping Opening of Rajaratnam Trial (Reuters)
A jury of New Yorkers on Wednesday will hear U.S. prosecutors outlining how they believe Sri Lankan-born Rajaratnam broke the law by designing a complex web of stock tippers who helped him reap $45 million in illicit profit between 2003 and March 2009. For the first time, the jury and observers of the high-profile case will be given an insight into the defense trial strategy, which faces seemingly overwhelming evidence of leaked corporate secrets, tapped telephones and friends-turned-government witnesses.

Arrests Made Over Icelandic Bank Collapse (WSJ)
The U.K.’s Serious Fraud Office, or SFO, said Wednesday that it has arrested seven individuals as part of its ongoing investigation into the collapse of the Icelandic Kaupthing Banking Group. The arrests were made after searches at two business properties and eight residential addresses in London. They follow extensive searches in London and Reykjavik, which the SFO has carried out in tandem with the City of London and Essex Police and with the assistance of Icelandic investigators.

RBS’s Hester Earns Half A Diamond (Guardian)
A pay package of £7.7m, including a £4.5m bonus, for Stephen Hester at Royal Bank of Scotland can hardly be described as modest. But one way to view this sum is as a half-Diamond: it’s a little more than half the package awarded last year to Barclays’ chief executive, Bob Diamond.

Buffett Takes $2.25 Billion in Burlington Dividends Since Biggest Takeover (Bloomberg)
Berkshire Hathaway took $2.25 billion in dividends from Burlington Northern Santa Fe in less than 13 months of ownership, almost triple the railroad’s payout rate prior to the February 2010 acquisition.

Man Group Hopes German Mandate Will Stem Outflows (Reuters)
The firm has won a mandate to run 1.2 billion euros (1.0 billion pounds) for German pension fund BVK, as the world’s biggest listed hedge fund firm tries to woo clients after bleeding assets during the crisis.

The Most Expensive Town In America (WSJ)
The average home price in Aspen has increased over the past four years, to $6 million in 2010 from $5.4 million in 2006, according to multiple-listings data. The median price for single-family homes is now the highest in the country at $4.6 million, says San Francisco-based Altos Research, surpassing the Hamptons, Beverly Hills and Palm Beach.

Demand Grows for ‘Synthetic’ Junk Bonds (FT)
Hedge funds are buying the riskiest parts of instruments linked to bonds. This demand reflects more bullish views on the US economy, which investors believe will translate into lower corporate defaults. “We see much interest in synthetic high yield, more than we would have predicted just a few months ago,” said Sivan Mahadevan, managing director at Morgan Stanley.

Jon Cryer “A Turncoat, A Traitor, A Troll,” Sheen Says (CBS)
Charlie Sheen has already lashed out at his “Two and a Half Men” bosses, and now he has some harsh words for costar Jon Cryer. “Jon has not called me,” Sheen said Tuesday. “He’s a turncoat, a traitor, a troll… Is it gonna take me calling him a ‘traitor, juvenile and scared’ for him to get it?” “Like I said: You’re with me, or you’re with the trolls,” he added of Cryer. “Obviously he’s with the trolls.”

UBS Says Asia Profit Margins May Shrink as Banker Pay Rises (Bloomberg)
Staff expenses are increasing faster in Asia than in any other region, Alex Wilmot-Sitwell, co-head of UBS’s Asia-Pacific operations, said in an interview in Sydney yesterday. China, India and Indonesia are among “hot markets” where employee costs are climbing, he said. “Unless your revenues are running at significantly higher levels than that, this may lead to a risk of margin compression,” said Wilmot-Sitwell, 49. “If history is any guide, it will likely persist for a year or two.”

Americans Oppose Government Shutdown, Fault Cuts in Poll (Bloomberg)
Almost 8 in 10 people say Republicans and Democrats should reach a compromise on a plan to reduce the federal budget deficit to keep the government running, a Bloomberg National Poll shows. At the same time, lopsided margins oppose cuts to Medicare, education, environmental protection, medical research and community-renewal programs.

Europe Blinks On Bank Test (WSJ)
The new European Banking Authority, which is running the tests on 88 of Europe’s biggest banks, has told regulators and bankers that the exams are likely to rely on each country’s definition of an important capital ratio known as Tier 1, according to people familiar with the matter. If the plan goes through, some skeptical bankers and regulators worry, it could undermine the effort to end the European financial crisis. They fear a rerun of one of the key weaknesses in last year’s stress tests by the European Union. Those results were widely panned for giving passing grades to almost all banks, including some that subsequently required taxpayer bailouts.

Article courtesy of Dealbreaker

Inflation Risk Is Low, Fed Says (WSJ)
In a rare television interview, on CBS’s “60 Minutes” news program, Mr. Bernanke warned that the economic recovery “may not be” self-sustaining. He said the chance of unemployment staying high for a protracted period was “the primary source of risk that we might have another slowdown in the economy.” He also said “it’s certainly possible” the Fed could expand a program to buy $600 billion in Treasury securities beyond the initial target it announced about a month ago. “It depends on the efficacy of the program. It depends on inflation. And finally it depends on how the economy looks,” he said of the program aimed at lowering interest rates and stimulating growth.

Bank of America Says It Met Condition of TARP Exit (FT)
Bank of America has told US regulators that it has sold enough assets this year to meet the final condition that was set on its landmark plan to repay $45 billion in government bail-out funding…If BofA fails to satisfy the Federal Reserve Board, the lender will have to issue additional common shares, diluting its per-share earnings.

Bush Tax-Cut Deal With Jobless Aid Said to Be Near (NYT)
A day after the Senate rejected President Obama’s preferred tax plan, officials said the broad contours of a compromise were in focus. Rather than extending the tax rates only on income described by Democrats as middle class — up to $250,000 a year for couples and $200,000 for individuals — the deal would also keep the rates for higher earners, probably for two years. In return, Republicans said they would probably agree to extend jobless aid for the long-term unemployed.

Ireland Relies On ‘Sugar Daddy’ For Budget Support (Bloomberg)
The government will lay out details tomorrow of 6 billion euros ($7.9 billion) of spending cuts and tax increases. Cowen’s Fianna Fail party has a minority of seats in parliament and may need the backing of independents such as Healy-Rae and Michael Lowry. They have yet to declare support for the budget. “It is a real possibility that Ireland will not pass the proposed budget,” Mark Grant, managing director at Southwest Securities Inc. in Fort Lauderdale, Florida, said in a Nov. 30 e-mail. “Then another tailspin down for the euro and for European bank and sovereign debt is in the gun sights.”

Groupon Prankster Mason Not Joking in Spurning Google’s $6 Billion Offer (Bloomberg)
Mason, Groupon’s chief executive officer, fretted that the sale would sap employee morale and alienate business clients, said two people with knowledge of the matter.

Assange: UFOs discussed in WikiLeaks files (FP)
Julian Assange: “Many weirdos email us about UFOs or how they discovered that they were the anti-christ whilst talking with their ex-wife at a garden party over a pot-plant. However, as yet they have not satisfied two of our publishing rules. 1) that the documents not be self-authored; 2) that they be original. However, it is worth noting that in yet-to-be-published parts of the cablegate archive there are indeed references to UFOs.”

Ackman Will Back Borders Bid For Barnes And Noble (CNBC)
Ackman raised his stake in Borders Group to 37.3 percent and is prepared to finance an offer by Borders to buy Barnes & Noble, according to a filing with the Securities and Exchange Commission Monday. Ackman’s Pershing Square Capital Management’s stake in the book retailer, as of Dec. 3, is up from the previously disclosed stake of 31.5 percent as of May 20.

Carlyle Closing In On 2010 IPO For Buy-Out Fund Capital (Bloomberg)
After participating in $16 billion of buyouts this year, more than any other private-equity firm, Carlyle plans to file IPO papers late in 2011, said people with knowledge of the matter. The stock sale may not occur until the following year

Madoff Trustee Goes After HSBC (WSJ)
In a statement, Mr. Picard said HSBC and a network of feeder funds in Europe, the Caribbean and Central America directed more than $8.9 billion in the fraudulent investment advisory business to Mr. Madoff’s firm.

Article courtesy of Dealbreaker

Deutsche Bank Plans Capital Raise (WSJ)
DB is planning to raise as much as €9 billion ($11.4 billion) to boost its stake in another German bank and possibly shore up its own capital, according to people familiar with the matter. The German banking giant plans to launch the huge share sale as early as Monday, the people said. The primary goal for the fund raising will be to give Deutsche Bank cash to make a tender offer for additional shares in Deutsche Postbank AG, Germany’s largest retail bank by customers, the people said. Deutsche Bank hasn’t finalized its plans and may decide not to go forward with the sale.

Goolsbee To Lead Economic Counsel (WSJ)
Mr. Goolsbee, an economist at the University of Chicago’s business school, is currently a member of the council and executive director of the President’s Economic Recovery Advisory Board. In elevating him to the council’s chairmanship, Mr. Obama has decided to stay with a friend and longtime member of his inner policy circle rather than choosing an older, more prominent academic economist.

As Wall Street Sheriff, Coffey Would Be Discreet (NYT)
“There’s nothing more dangerous than a prosecutor who’s politically ambitious and has a cavalier attitude toward the facts,” Coffey told Reuters in an interview, saying Democratic rival Kathleen Rice fit that category. “I understand that the Attorney General can cut a stock price in half with a bad press release,” Coffey said at another point, adding that his experience as a federal prosecutor taught him the value knowing when not to press a case. Coffey said he would draw on pieces of both Cuomo and Spitzer but also stressed that, as a lawyer who has been a plaintiff and defender of firms accused of malfeasance, that prosecutorial discretion was paramount in an attorney general.

Secrets Of Gordon Gekko’s Clothes (Esquire)
“The character of Gordon Gekko needed to breath, so to speak. I didn’t want to put him in contrast collar, I didn’t want to put him back to exactly what he was. He was a groundbreaker at that time — he was outshining everyone around him — so why would he go back to that? Naturally, as a person of strong personality, such forceful instinct would progress. Sharks need to move forward. If they’re not moving forward they’re dying.”

Phil Davison Of Freakout Viral Video Has Never Used YouTube (TPM)
“I went home and had a ham sandwich and went to bed and thought that was the end of it,” Davison said when reached at home this afternoon. “A friend called, and well, I’m not very good with electronics, is there a YouTube? It was on some kind of electronic server.”

Trump: Developer More Interested Than Money Than Mosque (CNBC)
Speaking days after he offered the developer, Hisham Elzanaty, 25 percent above the price paid for his stake in the Park Place property just a year ago in exchange for moving the mosque elsewhere, Trump said “these are not the finest apples in the barrel.”

Paul Krugman: Things Could Be Worse (NYT)
“It’s hard to overstate how destructive the economic ideas offered earlier this week by John Boehner, the House minority leader, would be if put into practice. Basically, he proposes two things: large tax cuts for the wealthy that would increase the budget deficit while doing little to support the economy, and sharp spending cuts that would depress the economy while doing little to improve budget prospects. Fewer jobs and bigger deficits — the perfect combination. More broadly, if Republicans regain power, they will surely do what they did during the Bush years: they won’t seriously try to address the economy’s troubles; they’ll just use those troubles as an excuse to push the usual agenda, including Social Security privatization. They’ll also surely try to repeal health reform, which would be another twofer, reducing economic security even as it increases long-term deficits.”

“So I find myself almost envying the Japanese. Yes, their performance has been disappointing. But things could have been worse. And the case Democrats now need to make — the case the president finally began to make in Cleveland this week — is that if Republicans regain power, things will indeed be worse. Americans, understandably, are disappointed over, frustrated with and angry about the state of the economy; but disappointment is better than disaster.”

Did Plainfield Commit Fraud? The FBI Wants To Know (Fortune)
Asked for comment, Plainfield provided a written statement: “This story is merely the latest iteration of a strategy of filing a baseless complaint with regulatory authorities against Plainfield, and then using the press to publicize the ‘news’ that the authorities are investigating the complaint. Our lawyers have advised us not to discuss this further at this time, but we want to be clear that the allegations against Plainfield are entirely without merit. We believe this reporter has shown a consistent bias against Plainfield in her reporting.”

Article courtesy of Dealbreaker

Barclays Taps Diamond As CEO (WSJ)
In an unexpected shake-up, the giant London-based bank announced Tuesday morning that Mr. Diamond, Barclays’s president and investment-banking chief, will replace current CEO John Varley. After serving as CEO since September 2004, Mr. Varley will step down on March 31. Mr. Diamond will assume the title of deputy group CEO on Oct. 1. The announcement comes as a surprise, since Mr. Varley hasn’t previously indicated he has plans to retire. The 59-year-old Mr. Diamond, an avid golfer and die-hard Boston Red Sox fan, is four years older than Mr. Varley, who is 55. He lost out to Mr. Varley for the CEO job in 2003.

Obama Plans Business Tax Relief, Spending to Spur Growth (Bloomberg)
Obama will announce an expanded tax incentive to encourage business investment, an administration official said on condition of anonymity. Obama also will urge Congress to extend permanently and expand a research-and-development tax credit for businesses, costing about $100 billion over a decade. He began the rollout of initiatives yesterday in Milwaukee, calling for $50 billion in the first of a six-year program to fix roads, railways and runways and modernize the air-traffic control system. “All of this will not only create jobs now, but will make our economy run better over the long haul,” Obama said, announcing his public-works program. “It’s a plan that history tells us can and should attract bipartisan support.”

No Defense Against Double-Dip-Recession, Roubini Says (Telegraph)
“The US has run out of bullets,” said Nouriel Roubini at the annual Ambrosetti conference on Lake Como. “More quantitative easing (bond purchases) by the Federal Reserve is not going to make any difference. Treasury yields are already down to 2.5pc yet credit spreads are widening again. Monetary policy can boost liquidity but it can’t deal with solvency problems,” he told Europe’s policy elite. “There is a 40pc chance of double-dip recession in the US, and worse in Japan. Even if it is not technically a recession it will feel like it,” he added.

Burry of `The Big Short’ Bets on Farmland, Gold After Profits on Subprime (Bloomberg)
Michael Burry, the former hedge-fund manager who predicted the housing market’s plunge, said he is investing in farmable land, small technology companies and gold as he hunts original ideas and braces for a weaker dollar. “I believe that agriculture land — productive agricultural land with water on site — will be very valuable in the future,” Burry, 39, said in a Bloomberg Television interview scheduled for broadcast this morning in New York. “I’ve put a good amount of money into that.” Burry, who now manages his own money after shuttering the fund in 2008, said finding original investments is difficult because many trades are crowded and asset classes often move together. “I’m interested in finding investments that aren’t just simply going to float up and down with the market,” he said. “The incredible correlation that we’re experiencing — we’ve been experiencing for a number of years — is problematic.”

Cameron lines up HSBC’s Green as trade minister (FT)
Stephen Green is expected to announce on Tuesday he is standing down as chairman of HSBC to become trade minister, ending David Cameron’s long search to find a high-profile business figure to fill the role.

Bounties Spur Surge In Fraud Tips (WSJ)
The Dodd-Frank financial law passed in July provides for the larger bounties, with the hope of fingering wrongdoers such as Bernard Madoff before they swindle thousands of people. People who supply “original information” about large frauds could net as much as 30% of the penalties and recovered funds collected by the SEC, which could add up to a multimillion-dollar payout. Lawyers who represent whistle-blowers have been spreading the word about the new incentives. “We’ve gotten some very high-quality tips,” said SEC official Stephen Cohen.

Why You Can’t Beat Wall Street (NYM)
The current economic malaise would cause trouble for whichever party is in power. But having helped open the valves of anti-Establishment fervor, the Democrats may have not only failed to harness the energy they unleashed, but lost what capitalist allies they had as well. If there is still such a thing as an Establishment, the Obama administration increasingly faces the prospect of alienating it while still getting pilloried for being it. That’s a political perfecta no one was looking to pull off.

Flight Attendant, Jet Blue Part Ways After Dramatic Exit (CNN)
JetBlue spokeswoman Jenny Dervin told CNN on Saturday that Steven Slater no longer works for the airline. She said that the separation occurred last week, but declined to elaborate how Slater and the company parted ways.

Buffett, Gates to Take Philanthropy Trip to China (CNBC)
Warren Buffett and Bill Gates will reportedly travel to China later this month to “learn how to do philanthropy” in that nation. China’s Economic Observer newspaper says Gates and Buffett have invited a “select group” of 50 to 60 members of the nation’s “business elite” to a “private party” in Beijing. Some of those invited, however, have declined to attend, apparently over concerns they’d be asked, or even pressured, to make a donation pledge at the event.

Europe’s Bank Stress-Tests Minimize Debt Risk (WSJ)
An examination of the banks’ disclosures indicates that some banks didn’t provide as comprehensive a picture of their government-debt holdings as regulators claimed. Some banks excluded certain bonds, and many reduced the sums to account for “short” positions they held—facts that neither regulators nor most banks disclosed when the test results were published in late July.

Bankers Gather To Assure Industry Is On The Right Track (NYT)
Top executives from some of the world’s leading banks are due to gather for a conference in Frankfurt later this week as lenders seek to avoid what they see as overly harsh regulation following the global financial crisis. Two years after Lehman Brothers’ collapse heralded the global financial system’s breakdown, chief executives at Morgan Stanley, Unicredit and Commerzbank are expected to try and convince the audience at the “Banken im Umbruch” conference that they have done their work to stabilize their banks and should not be thrown back by new banking rules.

Article courtesy of Dealbreaker