Romania

Because “there’s no difference in the taste”

The chart below, from the Economist, takes a look at how long it would take an individual from any given country to become a millionaire based on "how much the main breadwinner in an average household makes each year (before tax)." No major surprises here: the fastest spawning place for a budding millionaire, a term that has long ago lost its one-time cachet thanks to the world's central banks who have pumped some $14 trillion into the market, is the US, while those hoping to hit the vaunted seven figures in Bulgaria, Mexico and Romania would need to wait about 2-3 average lifetimes before they hit their monetary goal.

Thanks to a law banning horses from Romanian roads, the ever-enterprising and integrated European Union workers have apparently found a use for the millions of horses and donkeys that were slaughtered. In a bizarre report from The Independent, it appears 'donkey meat' has turned up on the shelves of British, French, and Swedish supermarket shelves (and no it doesn't taste like chicken or ass). The unintended consequence of the Romanian horse (and donkey) ban appears to follow a truly remarkable path from abattoirs in Romania (who must be busy) to a dealer in Cyprus (subcontracting for a Dutch dealer) to a meat plant in France which sold its frozen 'meat' onto a distributor in Luxembourg. French and British governments have forced the removal of the 'fake' beef from supermarket shelves as "a case of fraud and conspiracy against the public." Given last week's incredible footage from Greece, we suspect more than a few are willing to choke it down, as for now the British are pushing to ban meat imports.

The 2008 crash resulted from the bursting of the biggest bubble in financial history, a ‘credit super-cycle’ that spanned more than three decades. How did this happen? Some might draw comfort from the observation that bubbles are a long established aberration, arguing that the boom-and-bust cycle of recent years is nothing abnormal. Any such comfort would be misplaced, for two main reasons. First, the excesses of recent years have reached a scale which exceeds anything that has been experienced before. Second, and more disturbing still, the developments which led to the financial crisis of 2008 amounted to a process of sequential bubbles, a process in which the bursting of each bubble was followed by the immediate creation of another. Though the sequential nature of the pre-2008 process marks this as something that really is different, in order to put the 'credit cuper-cycle' in context, we must understand the vast folly of globalization, the undermining of official economic and fiscal data, and the fundamental misunderstanding of the dynamic which really drives the economy.

Big news ahead of this Friday's NFP report:

• CITI TO CUT OVER 11,000 JOBS, TAKE PRETAX CHARGE $1B IN 4Q

"Sandy's fault?" Or maybe the economy is collapsing despite all the propaganda one is spoonfed. Considering the recent termination of over 50,000 by UBS we think we know the answer. And while C stock may jump on the news, the end result is that New York and the US have both just lost 11,000 less key taxpayers most of whom are almost certainly in the $250,000+ bucket. That said we can't wait for the BLS to take this data as somehow beneficial for the unemployment rate.

Forget Citius, Altius, Fortius ("Faster, Higher, Stronger"), the real Olympic challenge among Europe's nations is Pinguissimam, Ignavissumi, Bibe Maxime (Fattest, Laziest, Drunkest). As WaPo notes, there's nothing like tales of butter-eating, wine-guzzling, yet somehow-still thin Europeans to add to American angst over holiday calories and upcoming resolutions, but while overall Europeans are fairly healthy, a recently-released report by the Organization for Economic Cooperation and Development (below) found that the prevalence of diseases such as diabetes and asthma has also increased — in part because of better diagnosis, but also thanks to underlying causes such as drinking, smoking and eating fattening foods. Here’s a look at which Europeans are most obese, most inactive and drink most (no, it's not the Brits):

U.S. Scores Towards the Bottom of All North American and Western European Nations

China Quietly Becoming Gold Superpower

Europe, and its apparent Union, is rapidly fragmenting as tensions mount on large and small scales across all of its regions and nations. From Scotland's independence referendum to Flanders' autonomy and now Catalonian separatism on the rise once more, this is no longer a north-south divide, but a rich/poor, debt/no-debt divide. As the NY Times notes, this seems to emerge from the ebbing of the concept of shared sovereignty (richer - or less debt-saturated - nations increasing anger at having to bail out their poorer neighbors), or as Stratfor describes it - the paradox of integration - as 'more Europe' means vastly different things depending on which side of the fence you sit on. Now, as Russia Today reports, Venice is pushing for independence from Rome and there is increasing independence movements in Sicily and Sardinia. As old battles and historical grievance come back to the fore, "when it comes to the crunch, while money may be the catalyst (who commits what to central budgets); it is, as the NY Times puts it, "the meta-narrative and emotions of 'do we feel oppressed?... as the ghosts of history return." From Bannockburn to WWII, "Europe seems shakier; some of the taboo questions are coming out again!"

European equities opened higher, risk appetite boosted following overnight comments from Chinese Premier Wen that easing inflation in China left more room for monetary stimulus. However, summer thin volumes saw these gains pared, with particular underperformance in the FTSE 100, which currently trades in negative territory, despite stronger than expected UK retail sales for July. European CPI data for July was in line with market expectations, with no reaction seen across the asset classes following the release. Elsewhere, reports that Spain is to accelerate the bank bailout and is about to receive an emergency disbursement from the EUR 100bln bailout failed to support domestic bond market; the Spanish 2-year spread with respect to the German equivalent trading 6bps wider, though the Spanish 10-year spread is tighter on the day by 3.2bps and the 10-year yield is lower on the day,  currently at 6.852%. The Spanish IBEX is outperforming on the back of this news, led by Bankia and Banco Santander.

Factual data point after factual data point is indicating more than a little stress in the Chinese economy (and the Asian engine of growth in general). Whether it is bank loan losses escalating, shadow-banking stress, real-estate corruption, dismal retail spending, the shrinking textile industry, the artificial production in the crushingly slow metals industry, the construction industry's contraction, or the massive '50%-above-demand' channel-stuffing now occurring in the Chinese auto market, Diapason Commodity's Sean Corrigan succinctly notes: "China bulls will not heed any of this, of course, for they are prisoners of the nested illusion that all increases in outlay represent genuine growth (cf, Occidental property bubbles) and that higher growth must imply greater profitability. They will also argue, on any uptick in the macro numbers, that the worst is not only behind us, but that it has been more than fully priced in." Given a picture paints a thousand words; Asian trade volumes have ended their rebound and are now exhausted, just as Chinese authorities are still giving off signals that they will not repeat the indiscriminate orgy of spending of 2009-10.

• U.S drought wilts crops as officials pray for rain (Reuters)
• Obama backs aid for drought farmers (FT)
• Greek leaders identify two-thirds of spending cuts (FT)
• Central bankers eyeing whether Libor needs scrapping (Reuters)
• Markets Face a Life Sentence of Hard Libor (WSJ)
• World Bank chief warns no region immune to Europe crisis (Reuters)
• China big four banks' new loans double in early July (Reuters)
• Nokia Loss Widens as Smartphone Sales Slump (WSJ)
• Bundesbank Expected To Buy Australian Dollars In 3Q (WSJ)

Update 2: Russ Wasendorf Sr., the founder and CEO of PFGBest, reportedly attempted to commit suicide this morning outside the corporate headquarters in rural Cedar Falls, company officials confirmed Monday afternoon.

Update: PFGBest had $400MM in customer segregated funds at the end of April. Is JPMorgan about to "discover" another $400 million in Q2 "profits"?

Just out from futures broker PFG Best to clients, where the owner's suicide attempt apparently has led to a whole new MF Global spin off.

Due to a recent emergency involving Russell R. Wasendorf, Sr., a suicide attempt, some accounting irregularities are being investigated regarding company accounts.  PFGBEST is wholly owned by Mr. Wasendorf.  Therefore, the NFA and other officials have put all funds on hold, and PFGBEST is in liquidation-only status with our clearing FCM.  What this means is no customers are able to trade except to liquidate positions. Until further notice, PFGBEST is not authorized to release any funds.  We will update you as any new procedures are stipulated and with any further information as it becomes available.

... And just as the public trust was storming back into the capital markets.

Big Banks Are Rotten to the Core

• Most Germans Reject Ceding Sovereignty to EU, Stern Poll Shows (Bloomberg)
• How Stockton went broke: A 15-year spending binge (Reuters)
• Manchester United Shoots for $100 Million IPO (WSJ)... with 4x leverage and Jefferies as underwriter
• Iran says can destroy U.S. bases "minutes after attack" (Reuters)
• Poison claims spark call for Arafat exhumation  (FT)
• Diamond Would Be Catch for Investment, Private Equity (Bloomberg)
• Investors may shun big Libor lawsuit and go it alone (Reuters)
• New Particle Found, Consistent With Higgs Boson (WSJ)
• Chinese riot police clash with protesters  (FT)
• Euro-Area June Manufacturing, Services Output Contracts (Bloomberg)
• Utilities Struggle to Restore Power in East (WSJ)
• Dark economic clouds gather anew over Obama campaign (Reuters)