Are We Any Safer 10 Years After Lehman?

Today’s Agenda

Are We Any Safer 10 Years After Lehman?

Four Worries For Your Fourth

(Bloomberg Opinion) -- Last week this newsletter confidently declared that problems in the banking sector are not the threats they were 10 years ago. That doesn’t mean there’s no reason to stay vigilant, though.

In fact, 10 years after the summer in which Lehman Brothers was reenacting the Three Mile Island nuclear disaster, the global economy is, in four very specific ways, more vulnerable to another meltdown, warns Sony Kapoor.

Global debt is at record levels:

Are We Any Safer 10 Years After Lehman?

And the quality of that debt is overall worse than it was in 2018 (you may be shocked to learn from Sony’s piece how few AAA credits are left in the world; let’s just say you can count them on two hands and less than one full foot).

Meanwhile, central bankers don’t have as much dry powder as in the days before Lehman, and government balance sheets are even more stretched. Oh, also, politics around the world are far more fractious. And the global order is fraying.

You could also add that we seem to be in the middle of an oil-price shock and that the yield curve (the spread between long- and short-term interest rates) has nearly inverted, which is often a recession harbinger.

Or you could just ignore all that and have a happy Fourth of July.

Big Change in Mexico, for Better or Worse

The Mexican people can be proud of being “able to throw the bums out” in their latest election, Bloomberg’s editors write. President-elect Andrés Manuel López Obrador has an appetite, and a mandate, for big change – but also few checks on his power. “That could be a dangerous combination,” the editors warn. It’s not clear he’ll crack down on corruption or shepherd the economy as he should.

Bonus editorial I overlooked yesterday: Europe’s aggressive new approach to fighting plastic pollution should be adopted worldwide. Exhibit A:

Are We Any Safer 10 Years After Lehman?

Time Vs. Trump

President Donald Trump’s views on his pet issues – immigration, trade and crime – seem to be frozen in the distant past, writes Noah Smith. These things may have been huge problems in past decades, but they’ve been shrinking for many years. Here’s one example:

Are We Any Safer 10 Years After Lehman?

Trump's approach may inspire a base that shares his fears. But it also means ignoring the country’s real and growing problems, Noah writes. Click here to read it.

Bonus historical reading: Francis Wilkinson looks back on the many years it took for Congress to finally turn against Joe McCarthy and sees lessons for Trump’s opposition.

SCOTUS Fight: You Worry Too Much

Trump has promised to present a replacement for retiring Supreme Court Justice Anthony Kennedy on Monday. This will surely trigger an apocalyptic political fight, with both sides warning of existential consequences. We may be overdoing our focus on the high court just a bit, suggests Tyler Cowen. In the meantime, we're letting Congress rot from the inattention.

“For one thing, a change of focus might encourage Congress to check the powers of the president when it comes to trade, foreign policy and immigration. More generally, as Congress is not dominated by a single person, a greater interest in Congress could bring about a greater interest in the substance of policy.”

Trillion-Dollar FAAMGs

The hot new parlor game around here is watching to see who will hit $1 trillion in valuation first: Inc. or Apple Inc. It may be all fun and games to us, but Jim Bianco argues convincingly that the rise in market capitalization of these and the other tech giants in the dreaded FAAMGs – including also Facebook Inc., Google parent Alphabet Inc. and Microsoft Corp. – is sucking capital away from traditional companies.

“In more than 50 years of data, we have not seen this kind of zero-sum trading pattern in markets,” Jim writes. Click here to read the rest.

Chart Attack

The Retailpocalypse  keeps being postponed, writes Sarah Halzack.

Are We Any Safer 10 Years After Lehman?

To believe a T-Mobile/Sprint merger will be good for consumers, you have to trust T-Mobile CEO John Legere. – Tara Lachapelle 

Are We Any Safer 10 Years After Lehman?

Speed Reading

China’s been lending a lot to third-world borrowers. We need to make sure it’s lending responsibly. – Heidi Crebo-Rediker

Angela Merkel has silenced right-wing rivals with an immigration deal that only makes migrants’ lives harder. – Leonid Bershidsky

There are suddenly lots of reasons to be more optimistic about the euro. – Marcus Ashworth

The Brazil-Mexico World Cup match apparently hurt Monday’s Treasury auction. – Brian Chappatta


Tesla tumbled, and stocks retreated. It’s so hot on the East Coast that it’s slowing down high-speed stock trades. Walmart took flak over an impeachment onesie.

Steroidal Kickers Section

Subclinical narcissists may have a competitive advantage.

What the kids are into these days: local Twitter.

An up-and-coming group of Panamanian monkeys has just started its own Stone Age.

Vulture’s top movies of 2018 so far. 

Popular Mechanics’ best sci-fi books of 2018 so far.

The Very Large Telescope found a very new planet.

Mr. Rogers was an art critic too.

For a brief while, the Fourth of July was a black holiday.

Programming Note: There will be no newsletter tomorrow. We’ll be back on July 5. Have a happy Fourth.

Note: Please send impeachment onesies, suggestions and kicker ideas to Mark Gongloff at


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