Home › Forums › Financial Markets/Economics › Negative Interest rates !
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phaster.
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November 30, 2015 at 7:47 AM #21789November 30, 2015 at 8:09 AM #791658
spdrun
ParticipantI’m buying up mattress maker stocks in preparation.
November 30, 2015 at 8:29 AM #791660evolusd
ParticipantI’m in the commercial finance industry and for years people have squawked about rates going up. I look around the world and wonder why the US would be the anomaly in today’s low and negative global environment.
I think the Fed will raise the Fed Funds rate in December by 25 bps as required to save face, but it will sit there for a long time and the mid to long end of the curve will stay within 50 bps of where it is today, IMO.
November 30, 2015 at 8:34 AM #791662The-Shoveler
ParticipantYea, I am not seeing the messaging coming from the fed that we are anywhere near negative rates.
November 30, 2015 at 11:47 AM #791663FlyerInHi
GuestI’ve been pretty happy with my adjustable rate mortgage since I took it on 26 years ago. Never refinanced.
Does that mean houses will keep on going up?
I guess the doom and gloomers have it covered. Negative rates iot skyrocketing rates and dollar debasement. Either way it’s not good.
It’s negative rates are in the cards, I wonder how policy makers could take advantage to improve the people’s lives and lower unemployment. Hummm… The answer is really hard to come by…
November 30, 2015 at 12:08 PM #791664Anonymous
GuestNot sure the title warrants three exclamation points.
November 30, 2015 at 12:20 PM #791665HLS
ParticipantIt’s a very serious situation.
The 25+ year period from early 80’s through the 2008 was not a ‘normal’ economy although almost everybody seems to think that period was
normal and we are now in a depressed period.The stark reality is that the 25 year bubble period was the true problem. The aberration was the REAL problem, although the world seems to think that the bursting of the bubble, which created the ‘Great Recession’ was a complete surprise and could have been avoided.
This is utter nonsense, spin and media hype.With negative interest rates, it is possible that
house prices would continue to rise as most people who get a mortgage don’t really care what they pay for it, they only care about their monthly payment.Those who pay cash will think twice but still may buy because that is the price if you want to own it.
The world is treading on very thin ice.
In many ways the exposure to debt & derivatives is much greater than what was faced in 2008.Relying on past history is what most people do to plan their future,,, who knows; it might be different this time.
Black swans do exist.
Foreclosures were not the problem; they were the solution, yet the govt stepped in to keep the punch spiked.The real time to step in was at least 5 years earlier and the ‘problem’ would have never been created, but the idiots that thought they were going to fix the problem didn’t really understand what the problem even was, and most people drank the punch and thought the punchbowl would never go dry.
Sad but true.November 30, 2015 at 12:27 PM #791666Participant[quote=harvey]Not sure the title warrants three exclamation points.[/quote]
Thanks for your comment.
just for you,
Edited to reflect only one but I reserve the right to increase that at some unknown future point.
It actually could be worthy of 5 or more.Negative interest rates were not really a concept 10 or 20 years ago.
You can ignore it if you wish, but it has serious consequences.Few people called the housing bubble long before
most people thought it was even a possibility that prices could drop 40%-50%A storm is brewing again.
November 30, 2015 at 12:51 PM #791668GuestWe are now in a period of high productivity with lots of spare capacity. We could use this productive capacity to offer more to improve people’s lives around the world.
The problem is old thinking in the face of a commoditized world. Politicians are not acting and central bankers can only turn the monetary levers.
I was at a Chinese owned granite store in Vegas. They sell slabs for $120 and up ($79 holiday special) That’s cheaper than Formica. There aren’t too many choices and everything is pre manufactured. So many colors are bullnose only and you can’t get it any other way. But prices are cheap so there’s no reason not to have granite countertops.
http://www.builderelements.comSpare capacity is all around. Policy makers should come up with ways to put money in people’s pockets to absorb that capacity and create some inflation, in the face of negative rates. Would that not fix it?
November 30, 2015 at 1:14 PM #791669ParticipantThey need to be careful what they wish for…
there are always unintended consequences.
They might do the opposite of what they are supposed to.http://www.businessinsider.com/the-effect-of-negative-interest-rates-2015-11
Are you familiar with carry trade ?
I don’t see how rates can rise much in the US
(maybe .125%) when there are forces going the opposite way.It may turn out that a 2% long term bond is an amazing return.
The average person will probably never have the opportunity to borrow large amounts at very low rates however there are some simple strategies that
people with good credit can take advantage of today.People who can least afford it are paying 20%-30% interest on credit card debt and it’s become a way of life for many.
Negative interest rates do pose an interesting concept and paying interest on anything will only be for the poor.
Aside from that, aren’t there American (or other nationalities) owned granite stores who can buy granite from the same sources that the Chinese owned store is buying from ?
What’s going on here. The Chinese owner is working on a smaller mark-up OR the non Chinese don’t know where to buy product….. ??November 30, 2015 at 1:20 PM #791670Guest[quote=HLS][quote=harvey]Not sure the title warrants three exclamation points.[/quote]
Thanks for your comment.
just for you,
Edited to reflect only one but I reserve the right to increase that at some unknown future point.
It actually could be worthy of 5 or more.Negative interest rates were not really a concept 10 or 20 years ago.
You can ignore it if you wish, but it has serious consequences.Few people called the housing bubble long before
most people thought it was even a possibility that prices could drop 40%-50%A storm is brewing again.[/quote]
Rates and returns are all relative. These numbers all have to be taken in the context of inflation, currency valuations, other market factors, etc.
There’s really nothing special about the number zero.
Sure, negative rates are interesting and a historical curiosity (although it has happened before…)
And of course a storm is brewing. A storm is always brewing somewhere, but most of them never materialize.
There’s no such thing as a “normal” economy, it only looks that way, sometimes, in hindsight.
November 30, 2015 at 2:03 PM #791672Participant[quote=harvey]
There’s no such thing as a “normal” economy, it only looks that way, sometimes, in hindsight.[/quote]
You should have been around in the 70’s LOL!!!
And yes that DOES deserve three.
November 30, 2015 at 2:40 PM #791673GuestJust thinking out loud here… After all the warnings of skyrocketing rates and dollar debasement, facing negative rates is so very out of left field.
Don’t we know how to create inflation if we need to? What about all the things that would have improved lives but we couldn’t do because of fear of inflation? So we endured untold human suffering for nothing.
Deflation is just too much capacity and not enough demand. Aren’t we smart enough to create demand?
November 30, 2015 at 3:06 PM #791675Hatfield
ParticipantIsn’t this just a byproduct of deflation & deleveraging?
November 30, 2015 at 10:24 PM #791686GuestIn hindsight, it only seems self-evident that deleveraging would lead to lower demand. Some economists were actually quite right at predicting very little, if any inflation following the 2008 financial crisis.
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