8 October 2018 FT — Articles to Read

8 October 2018


Question: According to MSN:Money, what 6 things should one stop doing if they hope to be rich?


China eases rules on banks’ reserves to unlock cash and lifting slowing economy – Pg. 1

–          China’s central bank has moved to inject more cash into the financial system by cutting reserve requirement ratios for most commercial banks…

–          The easing measure…follows weak investment and manufacturing data, and comes as a deepening trade war with the US raises pressure on the world’s second-largest economy

–          Christine Lagarde, managing director of the IMF, warned last week that the global economic outlook was turning for the worse…

–          China’s foreign exchange reserves fell $22.7bn in September from the previous month to $3.09tn…

–          Growth in China’s manufacturing sector stalled in September after more than a year of expansion, …

–          China’s economy expanded by an annualized 6.7% in the second quarter, its slowest pace since 2016…


US to open more funding for the IMF as expiry dates loom – Pg. 2

–          …some of the IMF’s funding would expire between 2020 and 2022 – ….

–          The IMF….is hoping to convince its members to increase the fund’s permanent reserves – in tandem with an upgrade in governance – next year, with initial conversations to gather pace among officials this week on the margins of the meetings

–          The IMF has about $11tn in available reserves for lending, but more than half of that is due to expire in 2022

–          The experience has down US officials that the IMF can be helpful in stabilizing countries in the western hemisphere that have friendly relations with Washington, ….

–          For now, the US is suggesting it would not support any new IMF interventions in advanced economies, particularly in Europe, where Eurozone countries have set up a separate bailout fund to deal with crises in the single currency


Strong global growth fragility in emerging markets – Pg. 3

–          Momentum in the global economy remains strong, if weaker than hoped at the start of the year, but severe strains have already been seen in Argentina and Turkey and these are starting to ripple out to other emerging economies

–          The Tiger index, which tracks a wide range of official economic data, financial market prices and confidence indicators and compares them with historical values for the largest economies, suggests global growth has come a little off the boil

–          With the US economy notably strong, pushing unemployment to its lowest level in almost 50 years, and other advanced economies still growing faster than long-term sustainable rates, the short-term concern in the global economy is centred on emerging economies

–          In advanced economies, the long upswing has been welcome in lowering unemployment to pre-crisis levels in most economies, but that has not repaired all the damage of the crisis, leaving them vulnerable to a new shock


Dark clouds gather over US housing – Pg. 9

–          Nationwide, sales and building permits are down.  Several once soaring markets, including New York City, the San Francisco area, and Denver, have been softening.  Construction activity has been slowing too, which is a concern given the disproportionate role that home building plans in the US economic growth

–          The problem is, ironically, the growth of the housing market itself, which has been bifurcated and has outpaced the ability of most consumers to pay for shelter

–          A wider fall in house prices is not expected to cause a 2008-style systemic collapse, because most mortgages are now lent at fixed rates and borrowers are required to show more evidence they can repay their lenders

–          That has reduced the risk of mass foreclosures, but it has also meant that much of the investment gains from housing in the past decade have flowed to the oldest, richest buyers.  Younger people have an average of $30,000 in student loans and have come of age in a weak employment market

–          Asset growth, rather than income, has driven so much of the US economy in recent years

–          Four decades ago, a 20% decline in house prices would have created negative home equity equivalent to about 1% of the aggregate income.  Today, the same drop would amount to 5%, or roughly $600bn in negative equity


Answer: (1) Blowing through a budget (Prof Note: When you make the budget, one must be true to one’s self (note…there are times, e.g. medical issues, where budget be damned!); (2) Waking up too late (Prof Note: One of the blessings I give myself is non-use of alarms.  I still am at my desk by 8:00am.  Of course my commute is about 10’ J); (3) Ignoring that book on your side table (Prof Note: Reading is such a joy.  As I age I realize it is an ultimate luxury as one must have the time); (4) Hating a job (Prof Note: If you are looking at the holiday calendar to learn when your boss is on holiday as you do not want to coincide holidays AS when you boss is out it is a HOLIDAY….you need to change jobs! J); (5) Shying away from investment opportunities (Prof Note: Get in the game.  You cannot win if you are not playing!); (6) Neglecting body and mind (Prof Note: Exercise and travel…better body and mind)