• Let the games begin. Now that the U.S. Congressional super committee has admitted defeat, hawks in Congress are rallying to fight the $500B in automatic cuts to defense scheduled to take place in the 2013 fiscal year. Further attempts to craft comprehensive deficit reduction plans in an election year look unrealistic. President Obama has promised to veto any attempts to duck the automatic spending cuts. From Bloomberg News.
• Fears are growing around the globe that the European debt crisis will further restrict lending by euro zone banks. European banks have provided an important lending source at the margin for projects in Asia and Africa. From the Wall Street Journal.
• MF Global’s trustee in the bankruptcy proceedings announced yesterday that missing funds at the firm may total $1.2B, rather than the $600M previously assumed. That revelation not only highlights the scale of the fiasco, but raises questions about the regulatory investigation itself. From Reuters News.
• French government bond spreads remain extremely wide, despite its triple A rating. This morning, the spread to 10 yr German bonds was 158 basis points. Last week the spread was as wide as 200 basis points, a record going back to 1990. From Bloomberg News.