July 13,2019

【Riding high】

America’s expansion is now the longest on record: at the end of July America’s economy will have been growing for 121 months. And there is low inflation (averaged 1.6%) and unemployment rate during this period. Housing bubbles, price surges and industrial busts that used to trigger recessions are absent now.

However, just as the economy has changed, so have the risks. The author thinks 3 new kinds of problems loom: corporate unfamiliar vulnerabilities, high total private debt, politics in Washington.

【Europe’s nightmare on Wall Street】

Deutsche Bank will cut off its 18000 jobs, mostly in London and New York. The retreat ends European hopes of conquering Wall Street. The author puts forward the most likely source of competition is from China in the long run.

At the end of the passage, the author says an interesting conclusion: the share prices of most big American banks have lagged the stock market since 2008. That is, the big winners of the past quarter-century have been the industry’s employees, not its shareholders, even as thousands of Deutsche bankers are shown the door at present.

【Changing of Lagarde】

A selection between an European and Asian candidate likely exists in terms of IMF’s next boss, but issues about the fund’s future draws more attention.

What is people’s ideal for the how the IMF should work? That is, a father keeps four canes in his cupboard, one for each of his children. But he never had to use them. however, the fund rarely operates this way in practice. It is reluctant to cut its members off especially if they have powerful friends.

Further, IMF has been trying to shore up alternative sources of financing as America is opposed to increasing members’ “quotas”. And given fixed quotas, the fund will have to struggle to redistribute voting power from over-represented countries in Europe to faster-growing members elsewhere.

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