Are you serious? If interest rates rise considerably it is not a going to be because of a recovery. It will be because our foreign creditors have lost confidence and refuse to fund any more of our debt. That is already starting to happen, it is being covered up by the Feds purchasing programs.
Even if the economy improved, rising interest rates would still be disastrous. There are so many people out there who still have good jobs but are living on the edge due to their interest only and neg-am loans. I know and work with several people in this category. Just cause the economy improves doesn’t mean their salaries are all of a sudden going to jump. The payment shocks caused by rising interest rates will push many folks over the edge.[/quote]
Yes, I am serious. I acknowledge that there is some likelihood that rates rise for a period with no recovery due to the forces you cite. But, interest rates do not rise in a vaccum. At some point if rates choke off folks and push them over the edge, there is usually a reaction to it. What would be that reaction ? There are many possible outcomes.
I do find it odd that the mention of rising rates in a recovery, a return to the mean in terms of long-term inflation, rates and growth, is met by “are you kidding?”
