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July 23, 2008 at 10:42 AM #245409July 23, 2008 at 9:04 PM #245516
bob007
Participantfor a currency to be worth something interest rates must be greater than inflation (at least a point or so)
this is from my basic understanding of economics and from common sense. anyone with a better understanding of economics care to correct me !!!
July 23, 2008 at 9:04 PM #245666Participantfor a currency to be worth something interest rates must be greater than inflation (at least a point or so)
this is from my basic understanding of economics and from common sense. anyone with a better understanding of economics care to correct me !!!
July 23, 2008 at 9:04 PM #245673Participantfor a currency to be worth something interest rates must be greater than inflation (at least a point or so)
this is from my basic understanding of economics and from common sense. anyone with a better understanding of economics care to correct me !!!
July 23, 2008 at 9:04 PM #245729Participantfor a currency to be worth something interest rates must be greater than inflation (at least a point or so)
this is from my basic understanding of economics and from common sense. anyone with a better understanding of economics care to correct me !!!
July 23, 2008 at 9:04 PM #245737Participantfor a currency to be worth something interest rates must be greater than inflation (at least a point or so)
this is from my basic understanding of economics and from common sense. anyone with a better understanding of economics care to correct me !!!
July 23, 2008 at 11:31 PM #245689capeman
Participant[quote=DWCAP]TG, what can the gov do to keep down interest rates? They can bail out the GSE’s, but how do they force rates down in a high (relatively) inflation environment?
Also, we are nearing the end of July, the elections will start gearing up soon, officially, and Washington will empty so people can raise money or votes. How are they gonna run things between early October and January? [/quote]
Huh? What we’re seeing here is rising long bond rates perfectly correlated to when Hank (Skeletor) Paulson began demanding a blank check to backstop the GSEs. Bailing them out is going to help US Gov’t borrowing costs skyrocket. Get ready for more as he dips into the $800 billion line if this bill passes the Senate!
July 23, 2008 at 11:31 PM #245840Participant[quote=DWCAP]TG, what can the gov do to keep down interest rates? They can bail out the GSE’s, but how do they force rates down in a high (relatively) inflation environment?
Also, we are nearing the end of July, the elections will start gearing up soon, officially, and Washington will empty so people can raise money or votes. How are they gonna run things between early October and January? [/quote]
Huh? What we’re seeing here is rising long bond rates perfectly correlated to when Hank (Skeletor) Paulson began demanding a blank check to backstop the GSEs. Bailing them out is going to help US Gov’t borrowing costs skyrocket. Get ready for more as he dips into the $800 billion line if this bill passes the Senate!
July 23, 2008 at 11:31 PM #245847Participant[quote=DWCAP]TG, what can the gov do to keep down interest rates? They can bail out the GSE’s, but how do they force rates down in a high (relatively) inflation environment?
Also, we are nearing the end of July, the elections will start gearing up soon, officially, and Washington will empty so people can raise money or votes. How are they gonna run things between early October and January? [/quote]
Huh? What we’re seeing here is rising long bond rates perfectly correlated to when Hank (Skeletor) Paulson began demanding a blank check to backstop the GSEs. Bailing them out is going to help US Gov’t borrowing costs skyrocket. Get ready for more as he dips into the $800 billion line if this bill passes the Senate!
July 23, 2008 at 11:31 PM #245904Participant[quote=DWCAP]TG, what can the gov do to keep down interest rates? They can bail out the GSE’s, but how do they force rates down in a high (relatively) inflation environment?
Also, we are nearing the end of July, the elections will start gearing up soon, officially, and Washington will empty so people can raise money or votes. How are they gonna run things between early October and January? [/quote]
Huh? What we’re seeing here is rising long bond rates perfectly correlated to when Hank (Skeletor) Paulson began demanding a blank check to backstop the GSEs. Bailing them out is going to help US Gov’t borrowing costs skyrocket. Get ready for more as he dips into the $800 billion line if this bill passes the Senate!
July 23, 2008 at 11:31 PM #245911Participant[quote=DWCAP]TG, what can the gov do to keep down interest rates? They can bail out the GSE’s, but how do they force rates down in a high (relatively) inflation environment?
Also, we are nearing the end of July, the elections will start gearing up soon, officially, and Washington will empty so people can raise money or votes. How are they gonna run things between early October and January? [/quote]
Huh? What we’re seeing here is rising long bond rates perfectly correlated to when Hank (Skeletor) Paulson began demanding a blank check to backstop the GSEs. Bailing them out is going to help US Gov’t borrowing costs skyrocket. Get ready for more as he dips into the $800 billion line if this bill passes the Senate!
July 24, 2008 at 11:59 PM #246642Anonymous
GuestAt this point, there is only one thing the government can do to keep mortgage interest rates down. They have to shore up the dollar. The only way to do that is to shrink the money supply (or at least reduce the growth rate of the money supply.) The only way to do that is to stop running a deficit. Not likely.
As is well known, the Fed, not the government, controls the Fed rate. This has precious little to do with mortgage rates. Yes, historically they track with some correlation, but they dont have to.
30 year mortgage rates are based on the perceived future value of the dollar i.e. inflation. The willingness of foreigners to buy MBS with all those extra dollars the FED keeps printing for the US Budget deficit and which are then sent overseas to buy stuff through the trade deficit.
If there were no trade deficit, those dollars would just have to come from Americans to buy MBS and keep 30 year interest rates low. The fact that the Chinese, Japanese, and Arabs end up with the extra money supply $$ is just because of the trade deficit.
No investor wants to buy a US mortgage, a bond, in todays $$ then have that worth 50% less against their home currency in 3 years. Our reckless spending will continue to push up rates as investors demand a premium to trade in the US $$. The analogy to the Mexican Peso is pretty darn accurate.
In conclusion, the only way the government can keep 30 year mortgage interest rates down is to stop spending so much damn money…..and/or the FED to stop printing so much money (which in effect accomplishes the first item). That’s about it. Nothing else will work.
Rates will continue to rise until inflation (the money supply) is under control.
July 24, 2008 at 11:59 PM #246792GuestAt this point, there is only one thing the government can do to keep mortgage interest rates down. They have to shore up the dollar. The only way to do that is to shrink the money supply (or at least reduce the growth rate of the money supply.) The only way to do that is to stop running a deficit. Not likely.
As is well known, the Fed, not the government, controls the Fed rate. This has precious little to do with mortgage rates. Yes, historically they track with some correlation, but they dont have to.
30 year mortgage rates are based on the perceived future value of the dollar i.e. inflation. The willingness of foreigners to buy MBS with all those extra dollars the FED keeps printing for the US Budget deficit and which are then sent overseas to buy stuff through the trade deficit.
If there were no trade deficit, those dollars would just have to come from Americans to buy MBS and keep 30 year interest rates low. The fact that the Chinese, Japanese, and Arabs end up with the extra money supply $$ is just because of the trade deficit.
No investor wants to buy a US mortgage, a bond, in todays $$ then have that worth 50% less against their home currency in 3 years. Our reckless spending will continue to push up rates as investors demand a premium to trade in the US $$. The analogy to the Mexican Peso is pretty darn accurate.
In conclusion, the only way the government can keep 30 year mortgage interest rates down is to stop spending so much damn money…..and/or the FED to stop printing so much money (which in effect accomplishes the first item). That’s about it. Nothing else will work.
Rates will continue to rise until inflation (the money supply) is under control.
July 24, 2008 at 11:59 PM #246798GuestAt this point, there is only one thing the government can do to keep mortgage interest rates down. They have to shore up the dollar. The only way to do that is to shrink the money supply (or at least reduce the growth rate of the money supply.) The only way to do that is to stop running a deficit. Not likely.
As is well known, the Fed, not the government, controls the Fed rate. This has precious little to do with mortgage rates. Yes, historically they track with some correlation, but they dont have to.
30 year mortgage rates are based on the perceived future value of the dollar i.e. inflation. The willingness of foreigners to buy MBS with all those extra dollars the FED keeps printing for the US Budget deficit and which are then sent overseas to buy stuff through the trade deficit.
If there were no trade deficit, those dollars would just have to come from Americans to buy MBS and keep 30 year interest rates low. The fact that the Chinese, Japanese, and Arabs end up with the extra money supply $$ is just because of the trade deficit.
No investor wants to buy a US mortgage, a bond, in todays $$ then have that worth 50% less against their home currency in 3 years. Our reckless spending will continue to push up rates as investors demand a premium to trade in the US $$. The analogy to the Mexican Peso is pretty darn accurate.
In conclusion, the only way the government can keep 30 year mortgage interest rates down is to stop spending so much damn money…..and/or the FED to stop printing so much money (which in effect accomplishes the first item). That’s about it. Nothing else will work.
Rates will continue to rise until inflation (the money supply) is under control.
July 24, 2008 at 11:59 PM #246856GuestAt this point, there is only one thing the government can do to keep mortgage interest rates down. They have to shore up the dollar. The only way to do that is to shrink the money supply (or at least reduce the growth rate of the money supply.) The only way to do that is to stop running a deficit. Not likely.
As is well known, the Fed, not the government, controls the Fed rate. This has precious little to do with mortgage rates. Yes, historically they track with some correlation, but they dont have to.
30 year mortgage rates are based on the perceived future value of the dollar i.e. inflation. The willingness of foreigners to buy MBS with all those extra dollars the FED keeps printing for the US Budget deficit and which are then sent overseas to buy stuff through the trade deficit.
If there were no trade deficit, those dollars would just have to come from Americans to buy MBS and keep 30 year interest rates low. The fact that the Chinese, Japanese, and Arabs end up with the extra money supply $$ is just because of the trade deficit.
No investor wants to buy a US mortgage, a bond, in todays $$ then have that worth 50% less against their home currency in 3 years. Our reckless spending will continue to push up rates as investors demand a premium to trade in the US $$. The analogy to the Mexican Peso is pretty darn accurate.
In conclusion, the only way the government can keep 30 year mortgage interest rates down is to stop spending so much damn money…..and/or the FED to stop printing so much money (which in effect accomplishes the first item). That’s about it. Nothing else will work.
Rates will continue to rise until inflation (the money supply) is under control.
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