No hiding place for investors in markets wobble

Almost every major asset class has fallen into negative territory for the year

Robin Wigglesworth, Steve Johnson and Katie Martin

Nerve-racking conditions in markets have left traders treading a thin line © Getty

Global markets have suffered plenty of post-crisis wobbles, but the latest one is unique: for the first time in a very long while, almost every major asset class has fallen into negative territory for the year.

The US stock market and US junk bonds were the last two corners to still hold on to narrow gains for 2018. But this month even high-flying technology stocks have been pummelled, and this week the last of the S&P 500’s advance evaporated and left investors facing a sea of red.

The markets’ bounce on Thursday proved shortlived, as investors who had started scouring the detritus for bargains were wrongfooted by the third-quarter results of Amazon and Alphabet, which reignited the sell-off. The S&P 500 only fell 3 per cent or more twice in 2012-17, but has now done so four times in 2018 — and twice just this month.

However, analysts and investors insist they are not panicking yet. While October has been a bad month, the sense of its severity has been amplified by the calm stretch that preceded it. The US stock market has historically averaged more than four falls of 5 per cent (or more) a year, and suffers a 10 per cent correction roughly once a year.

US equity funds took in $1.8bn for the week ending October 24, according to data from EPFR, indicating that some investors are looking to take advantage of the rout. “It’s never enjoyable when markets fall this far, but I don’t think any investors are jumping ship,” said Andrew Scott, head of US flow strategy at Société Générale.

Even the mood in emerging markets — hit harder than anywhere else since the summer — is also starting to improve. The JPMorgan EM currency index has bounced 3 per cent from its September nadir, enabling both hard and local currency EM debt to recover from its lows, even if equity markets have continued to sag lower.

Nonetheless, the abruptness of the sell-off — global equities are on track for their worst month since mid-2012 — and its breadth has sparked some speculation the US Federal Reserve could hold fire at its next meeting in December. A fourth interest rate increase for the year has long been considered a foregone conclusion, but some doubt is creeping in.

Fed Funds futures, derivatives that allow traders to bet on US interest rates, now imply a 33 per cent chance the central bank will blink and hold steady in December, up from just 19 per cent last Friday.

The yield of two-year Treasuries, the most rate-sensitive corner of the US government bond market, has slipped to a one-month low of just under 2.8 per cent. Financial conditions, a measure of how supportive or restrictive markets are for growth, have also tightened abruptly this month. Goldman Sachs’ index of how stressed conditions are has jumped to its highest since March 2017.

However, most investors remain very sceptical that the Fed will blink, given the increasingly hawkish tone from policymakers in recent months.

“They remain data-dependent, and they seem convinced that the US economy is fine,” said Jim Sarni, managing principal at Payden & Rygel. “It will take more than this to push them off course.”

The European Central Bank also seems unperturbed. In his latest press conference on Thursday, ECB president Mario Draghi said the market volatility was a “persistent” cause for concern. But he stopped far short of suggesting that they would derail the ECB’s plans to reel in its stimulus, stressing that interest rates would remain extremely low even after the bond-buying programmes start to unwind.

The biggest danger confronting investors is therefore that the “rolling bear market” — as Morgan Stanley has dubbed the expanding sequence of asset classes suffering losses this year — continues to rumble on, and plays havoc with many popular portfolio construction methods.

What is so nerve-racking about this rolling bear market is that it leaves even big, diversified investors few places to hide.

Typically, bond investments offer some relief when equities are tumbling. And fixed income tends to sag lower when stock markets are soaring. But in 2018, almost nothing has worked out, which undermines one of the foundational principles of how most investment portfolios are designed – the importance of diversification.

The lack of insulation from fixed income has exacerbated the sell-off, as investors who want to prune their market exposure have no choice but to simply sell, notes Salman Ahmed, chief investment strategist at Lombard Odier Asset Management.

US high-yield debt has stayed surprisingly resilient, but is only barely in positive territory for the year, and the global bond market as a whole has lost more than 3 per cent in 2018, setting in on course for its third-worst year since at least 1998. At the same time, the FTSE All-World has tumbled nearly 10 per cent just this month.

If historical correlations continue to go haywire then it could cause an “utter bloodbath” for investors that don’t seek to protect their portfolios in more imaginative ways, Société Générale’s Mr Scott predicts.

“The whole portfolio diversification argument doesn’t work when everything is selling off,” Mr Scott said. “That’s why this will be such a fascinating time for markets.”

Growing Anti-Semitism in Germany

'We Are Facing a Monster'

In a DER SPIEGEL interview, Charlotte Knobloch, 85, speaks of the fears Jews in Germany have of growing right-wing populism in the country. The former president of the Central Council of Jews in Germany is also sharply critical of U.S. Ambassador Richard Grenell.

Interview Conducted by Veit Medick and Christoph Schult

Charlotte Knobloch, former president of the Central Council of Jews in Germany

DER SPIEGEL: Ms. Knobloch, 73 years after the end of the Holocaust, right-wing extremists in Germany are once again stretching out their right arms in the Hitler salute. Jews are being threatened in public while parliamentary opposition leader Alexander Gauland, of the right-wing Alternative for Germany (AfD) party, recently said that the Nazi period was nothing but a "speck of bird shit" on German history. What is your reaction to the last several months?

Knobloch: These events weigh on us heavily. By "us" I mean the members of all Jewish communities in Germany. I am actually an optimist, something I inherited from my devout father. After the Holocaust, he was convinced Germany would once again have a future. I have thought a lot about my father recently. And I hope the alarming spectacle of the last few months will somehow come to an end like many others have before.

DER SPIEGEL: You don't sound terribly optimistic.

Knobloch: I never thought it could get so bad again. Recently, I was at a high school with 300 students and told them: Take the responsibility we hand down to you. Be proud of your country. It has achieved a lot and is continuing to achieve. And as I was speaking, I was thinking: What are you even saying? Is it true at all?

DER SPIEGEL: You have your doubts?

Knobloch: There have been worrisome developments earlier. A few years ago, for example, there was a right-wing extremist demonstration in Munich where marchers shouted, "Jews in the gas, Jews out," and the police didn't intervene. But it has never been as bad as it is today. For the first time, a party has made it into national parliament whose program can be summarized with the words: Jews Out.

DER SPIEGEL: You are referring to the AfD.

Knobloch: I don't actually want to even say their name. "Alternative for Germany," what impudence. But yes, I am referring to the AfD.

DER SPIEGEL: Do you view the AfD as a Nazi party?

Knobloch: What else are you supposed to call a party that disseminates a platform that makes Jewish life impossible? This party is opposed to ritual circumcision and seeks to ban the shechita of animals, through which meat becomes kosher for practicing Jews.

DER SPIEGEL: There are more than a few Jews involved in the AfD. How can the party be anti-Semitic?

Knobloch: Just like a person with Jewish friends can still be an anti-Semite, Jewish party members are in no way a guarantee that a party doesn't have anti-Semitic tendencies. The simple presence of Jews, in any case, isn't enough and a group like the one calling itself "Jews in the AfD" is no proof of the lack of anti-Semitism. Particularly since the group isn't just made up of Jews.

DER SPIEGEL: Among the established parties in Germany, there is a significant degree of uncertainty about how they should confront the AfD. Should they go on the attack? Ignore them? Try to expose them with arguments? They are trying everything and nothing seems to be working.

Knobloch: I like how the single neo-Nazi in the Munich city council is being dealt with. He is simply completely ignored by the other parties. He files inquiries and they simply go unanswered.

DER SPIEGEL: But in Germany's federal parliament, the Bundestag, every deputy has rights. And with 92 members of parliament, the AfD is the largest opposition party. How can they be ignored?

Knobloch: There needs to be a consensus among all the other parties. The AfD has positioned itself outside of our liberal values. Period. It bothers me that there isn't even consensus on this point at the moment. What other viewpoint can there possibly be?

DER SPIEGEL: The debate surrounding how to deal with the AfD recently intensified after an extremely emotional plenary speech by former Social Democrat leader Martin Schulz, who linked the right-wing populists with fascism.

Knobloch: I thought Schulz's reaction was absolutely the correct one. Everybody needs to know who they are voting for when they cast their ballot for the AfD. Our task is to clearly draw the line. If we don't, we are merely helping normalize the right-wing populists. I wanted to write Martin Schulz a letter, but I never got around to it because of the Jewish holidays. His dedication is admirable.

DER SPIEGEL: Among other things, Schulz said that AfD co-leader Gauland belongs on the "manure heap of history." Should he be stooping to the level of the right-wing populists?

Knobloch: We can't always obey the rules of politesse when dealing with a Nazi party. When politicians from the AfD refer to the Nazi period as "a speck of bird shit" in German history and refer to the Holocaust memorial as a monument to shame, then we need to strike back rhetorically. We are facing a monster. We have to fight it before it becomes stronger.

DER SPIEGEL: Following the recent riotsin Chemnitz, German President Frank-Walter Steinmeier harkened to the collapse of the Weimar Republic

Knobloch: That wasn't an exaggeration. Weimar collapsed because the democrats, who were actually supposed to be the pillars of the system, ducked responsibility. I find it extremely troubling that people today aren't taking to the streets in large numbers to demonstrate. There are distressing parallels between then and now. You just have to listen to the things politicians from this party say without facing repercussions. It is reminiscent of the rise of the NSDAP (Nazi party). Personally, I feel like it is 1928 again.

DER SPIEGEL: Do you think the AfD should be monitored by the Federal Office for the Protection of the Constitution (BfV), Germany's domestic intelligence agency?

Knobloch: I find it completely incomprehensible as to why that wasn't started long ago. I am stunned. If the AfD was being monitored, their representative would perhaps tone themselves down in public instead of inciting the population. Instead, there are rumors that Mr. Maassen ...

DER SPIEGEL: ... the former head of the BfV Hans-Georg Maassen, who wasrelieved of his duties recently for allegedly pandering to the far right ...

Knobloch: ... may have given tips to AfD members on how to avoid monitoring from the BfV. If that is true, that would be a catastrophe from my point of view.

DER SPIEGEL: Maassen expressed doubt about the authenticity of a video from Chemnitz that showed migrants being chased down.

Knobloch: Someone in his position should not just say something like that without presenting proof. That is a break with our political culture.

DER SPIEGEL: The rise of the AfD is inseparably connected with the refugee policies of Chancellor Angela Merkel. Do you think it was the correct decision to not seal off the German border in September 2015?

Knobloch: I view the issue through the lens of my own biography. If the U.S. immigration authorities in the late 1930s had approved the visas that my uncle applied for on behalf of his brother, his mother and me, my grandmother would not have had to suffer such a horrific death. She was too old to be accepted into the U.S. There were similar fates people faced that I heard about at the time. That is why I was very much in favor of Germany taking in the people who were living in horrific conditions in the Budapest train station in September 2015. After all, we became a humane country after 1945.

DER SPIEGEL: The Christian Social Union, the Bavarian sister party to Merkel's Christian Democrats, believes the chancellor's refugee policies are misguided.

Knobloch: We can't take on more than we can handle, I agree with that. First and foremost, we have to help those who have had to leave their homes to escape war. When I see the terrible images from Syria, then we can't hesitate for a moment. But we need a migration law to decide who fits, who can be integrated, who we need on the job market.

DER SPIEGEL: Do you see a connection between Merkel's refugee policies and increasing anti-Semitism?

Knobloch: I'm wary on that issue. We don't have an anti-Semitism problem because people from other cultures are coming to us. That would be an extremely simplistic view.

DER SPIEGEL: You don't see a qualitative difference between European anti-Semitism from the Christian West and Muslim anti-Semitism?

Knobloch: I didn't say that. Muslim anti-Semitism works primarily by way of the delegitimization of Israel. And there is a specific form of anti-Semitism that has its roots in the Koran. That also has an influence over how anti-Semitism develops in this country.

DER SPIEGEL: What do you mean?

Knobloch: Anti-Semitism used to be the rejection of a certain group of people. Today, it is simply hatred of the Jews.

DER SPIEGEL: Anti-Semitism has radicalized?

Knobloch: Absolutely.

DER SPIEGEL: Is there a recipe for fighting it?

Knobloch: Not enough is being done, that is the frightening thing. We have been calling attention to the problem for years. And there are actually institutions that should be taking action. Political leaders, for example. Security authorities. Educational institutions. All of them should focus on fighting anti-Semitism, especially given our history. But not nearly enough is being done. Those who are blaming the refugees exclusively for anti-Semitism are making it too easy on themselves. These people, if you will, can't help it. That's how they were raised.

DER SPIEGEL: Where do you think the largest shortcomings are to be found?

Knobloch: In education. We are way behind there. You can't fight anti-Semitism by simply talking about anti-Semitism. You fight it by learning to love your own country and by defending its values.

DER SPIEGEL: In a recent op-ed for the Israeli daily Haaretz, you sharply criticized Richard Grenell, the U.S. ambassador to Germany, saying that he has positioned himself as an ally to right-wing populists in Europe. Why did you get involved?

Knobloch: When Mr. Grenell welcomes the rise of anti-establishment populists in a country where the extreme right has won seats in parliament, we Jews feel threatened. The fact that he apparently doesn't see this connection is appalling. Mr. Grenell uses the same language as the AfD. This cycle of mutual encouragement is a danger to our liberal democracy. In such a situation, I don't care if he is the U.S. ambassador or whatever else.

DER SPIEGEL: Has Mr. Grenell contacted you at all?

Knobloch: No.

DER SPIEGEL: Would you like to meet with him?

Knobloch: It would depend on the subject matter. I am happy to talk at any time with young people who have adopted different ideas and to try and convince them.

DER SPIEGEL: Mr. Grenell claims to be a great friend of Israel's.

Knobloch: Friendship is a rather broad term. Many people use it to put themselves in the center of attention because they think it looks good.

DER SPIEGEL: What do you think of the Israel policies of U.S. President Donald Trump?

Knobloch: I have family in Israel: a daughter, several grandchildren and two great-grandchildren. I have a special relationship to the country and advocate for its security wherever I can. The Israeli people want nothing more than peace, I am 100 percent convinced of that. That is why I welcome the fundamental tenets of Trump's Middle East policy. I wouldn't, however, have moved the U.S. Embassy to Jerusalem. That is such a sensitive issue that doing so merely makes in more difficult to find the solutions to problems.

DER SPIEGEL: You belong to the last generation of Holocaust survivors. How should the memory be kept alive once all those who witnessed it firsthand are gone.

Knobloch: My hopes are very much pinned on young people who are more interested in the history of their own country than was the case 10 or 15 years ago.

DER SPIEGEL: The Berlin municipal official Sawsan Chebli has proposed making it a requirement for young people to visit a concentration camp memorial. What do you think of the idea?

Knobloch: The only camp where it is still possible to really get a sense for the tragedy is Auschwitz. Such visits, though, can only take place if there has been sufficient preparation. Young people have to know what they are visiting. And if one of them doesn't want to, you can't force them.

DER SPIEGEL: What do you have against the so-called "Stolpersteine," the gold-colored paving stones placed in front of buildings in German cities to commemorate Jews who lived there until they were deported by the Nazis?

Knobloch: I find this type of commemoration to be a catastrophe. People trample on the names of those who were murdered and dogs pee on them. The Munich city council has resolved that commemoration must take place at eye level. I hope that our example is followed elsewhere.

DER SPIEGEL: Jews who live in Israel often can't understand how Jews can continue to live in the diaspora.

Knobloch: In the diaspora or in Germany?

DER SPIEGEL: Does it make a difference?

Knobloch: Of course it does. Given recent developments, I am being asked such questions more often.


Knobloch: The part of my family that lives in Israel has already come to terms with it. My granddaughter is now grown up, but when she was in the ninth grade, she visited Auschwitz with her class. In Israel, it is a visit everybody makes. Afterwards, she wrote me a six-page letter and asked me how I can live in Germany.

DER SPIEGEL: The attacks on Jews in France triggered something of an exodus of Jews fleeing the country to Israel. Do you think there is a danger of something similar occurring in Germany?

Knobloch: Yes, there is a danger. Members of the Jewish community come to me and tell me that they are afraid. It is equal parts irrational and understandable. I try to give them courage, despite everything. That is part of the optimism that I mentioned earlier.

DER SPIEGEL: Ignatz Bubis, one of your predecessors as president of the Central Council of Jews in Germany, said toward the end of his life that he accomplished "almost nothing." What are your feelings when you look back on your own life?

Knobloch: He was already quite sick when he said that. I called him and said: How can you say such a thing? I know how much you have accomplished.

DER SPIEGEL: You have a more positive view than Bubis did at the end of his life?

Knobloch: It is a question I ask myself every day, when I see the terrible developments in Chemnitz and elsewhere. But then I always think: I did achieve something. It's just a gut feeling I have.

DER SPIEGEL: Bubis never wanted to live in Israel, but he wanted to be laid to rest there.

Knobloch: He didn't want his grave to be vandalized. And given the increasing anti-Semitism, that is a very real danger.

DER SPIEGEL: And where do you want to be buried?

Knobloch: I have our family plot here in Munich.

DER SPIEGEL: Ms. Knobloch, thank you very much for this interview.

What’s Behind Trump’s Trade War?

Kemal Derviş , Caroline Conroy

trump tariff hikes rally

WASHINGTON, DC – Since World War II’s end, trade has grown 50% faster than global GDP, owing largely to successive rounds of liberalization under the auspices of the World Trade Organization (previously the General Agreement on Tariffs and Trade, or GATT). But now, US President Donald Trump’s latest dose of import tariffs could push the world into a full-blown trade war, undoing much of that progress.

Proponents of free trade have always celebrated the growth of international commerce because they regard it as a sign that countries are capitalizing on their comparative advantages through specialization, which implies increased efficiency overall. By contrast, critics of free trade worry that it might lock poor countries into producing goods that offer little room for productivity growth, and point out that even if there are aggregate gains from globalization, there are also clear losers.

In fact, few would disagree that a static comparative advantage theory is a poor guide for development policy. A more dynamic framework is needed to determine whether trade also brings knowledge and learning to new markets. If it does, then it can be an engine of future economic growth and social progress.

Overall, there is overwhelming evidence that trade has indeed enriched developing countries where supportive policies have been in place. Over time, developing countries have learned to complement trade policies with higher investment in infrastructure and education. But with the world trading system now under assault by the United States, the question for developing countries is how to respond.

To justify his tariffs, Trump points to America’s bilateral (or multilateral) trade deficits with its trading partners. But while tariffs can change the composition of trade flows, they will have little bearing on the current-account balance, which is determined by national savings and investment. If savings fall short of investment – as they do in the US – the current account will necessarily be in deficit.

To be sure, tariffs can have an incidental effect on the current-account balance. As a tax on domestic consumers and a subsidy for certain domestic producers, tariffs reduce consumers’ disposable income and augment capital income. To the extent that more capital income is saved relative to labor income, tariffs will increase the economy’s overall savings rate. Nevertheless, this effect on the savings-investment balance is both weak and indirect.

At the micro level, Trump might argue that tariffs are necessary to protect particular sectors. But many of the goods imported into the US actually contain intermediate inputs that were originally produced domestically (this is even more the case for China). So, to determine whether tariffs are actually protecting the value added – wages and profits – in a particular US sector, one must also account for the US value added within imports that are now facing levies. Assuming that Trump’s advisers have explained these complications to him, one wonders what his real rationale is.

While Trump’s desire to prop up politically important industries and reduce the US current-account deficit has certainly played a role in his trade policy, it is clear that his main target is the WTO and the multilateralism that it represents. Trump seems to think that multilateralism dilutes American power, given that the US can always use its economic and geopolitical clout to win a bilateral dispute. What he doesn’t realize is that even the world’s most powerful country still needs impartial global rules and disinterested institutions to oversee them.

Over the past 70-odd years, the GATT/WTO system has developed into a multilateral arrangement whereby the same rules apply to all countries alike. That is not to say that bigger and richer countries lack advantages over smaller and poorer countries. Countries like the US can allocate more staff and specialists to support their own producers in complicated trade negotiations, while also pursuing parallel (back-channel) diplomacy. Legally, however, the WTO is a grouping of equals. The “most favored nation” provision means that an advantage extended to one country’s producers must be extended to all.

Perhaps most important, the WTO has a dispute-settlement mechanism (DSM) that provides for the timely resolution of disagreements between member states. Though the US has won most of the cases that it has brought before the WTO’s arbitration panel, it has also lost some. With the ability to hand down binding judgments, the DSM is a unique feature of the WTO system. No other multilateral body has such a mechanism.

There are many ways that the multilateral system could be improved, of course. The WTO, the World Bank, and the International Monetary Fund should be devising new approaches to address the growing influence of Big Tech; and competition policy needs to be brought into the twenty-first century. It might also be appropriate for the WTO to adopt a form of weighted voting, similar to the procedure used by the IMF and World Bank.

As for the criticism that globalization produces both winners and losers, this is not an argument against trade; it is an argument for policies to compensate those who have been left behind. On that basis, those who have rightly criticized the WTO in the past should join forces with its supporters. Both sides have an interest in defending this key institution of global governance from the xenophobic unilateralism embodied by Trump’s policies.

Kemal Derviş, former Minister of Economic Affairs of Turkey and former Administrator for the United Nations Development Program (UNDP), is Senior Fellow at the Brookings Institution.

Caroline Conroy is a senior research analyst at the Brookings Institution.

The Secret to Aging Well? Contentment

Despite having many friends in their 70s, 80s and 90s, I’ve been far too slow to realize that how we respond to aging is a choice made in the mind, not in the gym.

By Robert W. Goldfarb

CreditCreditRobert Nicol

At 88, I remain a competitive runner, always sprinting the last hundred yards of a race to cross the finish line with nothing left to give. The finish line of my life is drawing close, and I hope to reach it having given the best of myself along the way. I’ve been training my body to meet the demands of this final stretch. But, I wonder, should I have asked more of my mind?

I have no trouble taking my body to a gym or starting line. I’ve done a good job convincing myself that if I didn’t exercise, I would unleash the many predators that seek their elderly prey on couches, but not on treadmills. The more I sweated, the more likely it was my internist would continue to exclaim, “Keep doing what you’re doing, and I’ll see you next year.” It was my way of keeping at bay the dreaded: “Mr. Goldfarb, I’m afraid I have some bad news.”

My mind, on the other hand, seems less willing to yield to discipline, behaving as though it has a mind of its own. I have dabbled in internet “brain games,” solving algebraic problems flashing past and rerouting virtual trains to avoid crashes. I’ve audited classes at a university, and participated in a neurofeedback assessment of my brain’s electrical impulses. But these are only occasional diversions, never approaching my determination to remain physically fit as I move deeper into old age.

Despite having many friends in their 70s, 80s and 90s, I’ve been far too slow to realize that how we respond to aging is a choice made in the mind, not in the gym.  
Some of my healthiest friends carry themselves as victims abused by time. They see life as a parade of disappointments: aches and ailments, confusing technology, children who don’t visit, hurried doctors.

Other friends, many whose aching knees and hips are the least of their physical problems, find comfort in their ability to accept old age as just another stage of life to deal with. I would use the word “heroic” to describe the way they cope with aging as it drains strength from their minds and bodies, though they would quickly dismiss such a term as overstatement.

One such friend recently called from a hospital to tell me a sudden brain seizure had rendered him legally blind. He interrupted me as I began telling him how terribly sorry I was: “Bob, it could have been worse. I could have become deaf instead of blind.”

Despite all the time I spend lifting weights and exercising, I realized I lack the strength to have said those words. It suddenly struck me I’ve paid a price for being a “gym rat.”

If there is one characteristic common to friends who are aging with a graceful acceptance of life’s assaults, it is contentment. Some with life-altering disabilities — my blind friend, another with two prosthetic legs — are more serene and complain less than those with minor ailments. They accept the uncertainties of old age without surrendering to them. A few have told me that the wisdom they’ve acquired over the years has made aging easier to navigate than the chaos of adolescence.
It was clear I lacked, and had to find, the contentment those friends had attained. The hours I spent exercising had given me confidence, but not contentment.

The 30-pound weight I no longer attempt to lift reminds me that not far off is the day when lifting anything, or running anywhere, will be asking too much of my body. My brain would have to become the muscle I counted on to carry me through these final years with the peace and purpose others had found. Aging had to be more than what I saw in a mirror.

But rather than overhauling my life completely in the hopes of undertaking a fundamental change in the way I confronted aging, I felt the place to begin would be to start small, adopting a new approach to situations I encountered every day. A recent lunch provided a perfect example.

I’ve always found it extremely difficult to concentrate when I’m in a noisy setting. At this lunch with a friend in an outdoor restaurant, a landscaper began blowing leaves from underneath the bushes surrounding our table.

Typically, after such a noisy interruption, I would have snapped, “Let’s wait until he’s finished!” then fallen silent. When the roar eventually subsided, my irritation would have drained the conversation of any warmth. The lunch would be remembered for my angry reaction to the clamor, and not for any pleasure it gave the two of us.

It troubled me that even a passing distraction could so easily take me from enjoying lunch with a good friend to a place that gave me no pleasure at all. I wanted this meal to be different and decided to follow the example of friends my age who know they are running out of joyous moments and will let nothing interfere with them. They simply speak louder, accepting the noise for what it is, a temporary irritant.

My years in gyms had taught me to shake off twinges and other distractions, never permitting them to stop my workout or run. I decided to treat the noise as though it were a cramp experienced while doing crunches. I would shake it off instead of allowing it to end our conversation.  
I continued talking with my friend, challenging myself to hear the noise, but to hold it at a distance. The discipline so familiar to me in the gym — this time applied to my mind — proved equally effective in the restaurant. It was as though I had taken my brain to a mental fitness center.

Learning to ignore a leaf blower’s roar hardly equips me to find contentment during my passage into ever-deeper old age. But I left the lunch feeling I had at least taken a small first step in changing behavior that stood in the way of that contentment.

Could I employ that same discipline to accept with dignity the inevitable decline awaiting me: frailty, memory lapses, dimming sound and sight, the passing of friends and the looming finish line? Churning legs and a pounding heart had taken me part of the way. But now the challenge was to find that contentment within me. Hoping that contentment will guide me as I make my way along the path yet to be traveled.

Robert W. Goldfarb is a management consultant and the author of “What’s Stopping Me From Getting Ahead?”

IMF Warns Of Potential Economic Meltdown

By Zero Hedge


The world economy is at risk of another financial meltdown, following the failure of governments and regulators to push through all the reforms needed to protect the system from reckless behaviour, the International Monetary Fund has warned.

With global debt levels well above those at the time of the last crash in 2008, the risk remains that unregulated parts of the financial system could trigger a global panic, the Washington-based lender of last resort said.

Much has been done to shore up the reserves of banks in the last 10 years and to put in place more rigorous oversight of the financial sector, but “risks tend to rise during good times, such as the current period of low interest rates and subdued volatility, and those risks can always migrate to new areas”, the IMF said, adding, “supervisors must remain vigilant to these unfolding events”.

A dramatic rise in lending by the so-called shadow banks in China and the failure to impose tough restrictions on insurance companies and asset managers, which handle trillions of dollars of funds, are highlighted by the IMF as causes for concern.

The growth of global banks such as JP Morgan and the Industrial and Commercial Bank of China to a scale beyond that seen in 2008, leading to fears that they remain “too big fail”, also registers on the IMF’s radar.

The warning from the IMF Global Financial Stability report echoes similar concerns that complacency among regulators and a backlash against international agreements, especially from Donald Trump’s US administration, has undermined efforts to prepare for another downturn.

The former UK prime minister Gordon Brown said last month that the world economy was “sleepwalking into a future crisis,” and risks were not being tackled now “we are in a leaderless world”.

Speaking this week before the fund’s forthcoming annual meeting – taking place next week on the Indonesian island of Bali – the IMF’s head, Christine Lagarde, said she was concerned that the total value of global debt, in both the public and private sectors, has rocketed by 60 percent in the decade since the financial crisis to reach an all-time high of $182tn (£139tn).

She said the build-up made developing world governments and companies more vulnerable to higher US interest rates, which could trigger a flight of funds and destabilise their economies.

“This should serve as a wake-up call,” she said.

The stability report said the development of digital trading platforms and digital currencies such as bitcoin, along with other financial technology companies, had been rapid. It said:

“Despite its potential benefits, our knowledge of its potential risks and how they might play out is still developing. Increased cybersecurity risks pose challenges for financial institutions, financial infrastructure, and supervisors. These developments should act as a reminder that the financial system is permanently evolving, and regulators and supervisors must remain vigilant to this evolution and ready to act if needed.”

In a separate analysis, as part of the IMF’s annual economic outlook, it warned that “large challenges loom for the global economy to prevent a second Great Depression”.

It said the huge rise in borrowing by corporates and government at cheap interest rates had not shown up in higher levels of research and development or more general investment in infrastructure.

This trend since the collapse of Lehman Brothers, which triggered the global financial crisis, had limited the growth potential of all countries and not just those which suffered the most in the aftermath of the crash. It had also left the global economy in a weaker position, especially as it enters a period when a downturn is posible.

The IMF said:

“The sequence of aftershocks and policy responses that followed the Lehman bankruptcy has led to a world economy in which the median general government debt-GDP ratio stands at 52 percent, up from 36 percent before the crisis; central bank balance sheets, particularly in advanced economies, are several multiples of the size they were before the crisis; and emerging market and developing economies now account for 60 percent of global GDP in purchasing-power-parity terms – which compares with 44 percent in the decade before the crisis – reflecting, in part, a weak recovery in advanced economies.”

Like many institutions the IMF has warned that rising levels of inequality have a negative impact on investment and productivity as wealthier groups hoard funds rather than re-invest them in productive parts of the economy. Without a rise in investment, economies remain vulnerable to financial stress.