Whatever happened to rising interest rates?

[FlyerInHi]

[quote=harvey]Now that you mention it, it seems that all significant economic events happen within two years before or after a presidential election…[/quote]

I think you meant to be facetious because that makes perfect sense since we have elections every 4 years.

On spd’s point, constantly looking for reasons why we should fail seems like rooting against the success of America.

The economy is gathering steam. I see continued expansion for at least another 2 years, into 2017. Especially when we contrast America to Europe, we can see that the right economic policies are paying off.

[spdrun]

In this instance, I’m rooting for whatever creates the best investment conditions for me, not for any one country. Freely admitted. I consider myself a citizen of the world, though not always a good one.

[FlyerInHi]

Wanting something is not the same as reality. Sometimes people are blinded by what they want so they miss opportunities.

Plus people confuse what they want with the best policies for the economy.

sdp, it’s not just patriotism for America. When our economy grows, we help the whole world grow. When we implement the right policies, we lead the way to better economic management worldwide. Unlike physics, there are no universal laws of economics. We just need to manage the economy and come up with new tools for economic management. Our academics/economists are the best at that.

You may not want economic growth because you want to buy assets for cheap. But, in the aggregate, growth and development are good for everybody in the world.

You sound like a spoiled brat American who wants to build his rental portfolio, then use the rental stream, and the strong dollar, to retire in Prague where’s there’s chaos and cheap living.

A good world citizen would want everyone to be equally rich as Americans. However, that would make the average American ordinary and having to compete for resources with all the other world consumers with purchasing power. That means work, work, work, and not leisure and living off of savings.

[FlyerInHi]

[quote=flyer]
It’s so true that many people find themselves out of jobs in their 50’s, which is exactly why I’ve always believed retirement goals should be reached by then–“just in case”–whether one ends up retiring or not.[/quote]

For sure, being able to retire at 50 and not worry about money is a worthy goal.

It’s however not realistic given that most people can’t even keep their new year resolutions.

[spdrun]

FlyerInHI: Correct. And I’m not ashamed of what I want. Better than thinking there’s some moral virtue in coming to work at 8 am, staying until 7 pm and checking the electronic leash every hour at home. That’s what American white-collar workers have been driven to, and I reject that ideal.

I’m rooting and looking out for myself first. Right now, I’m rooting for a slowdown this year or next. If you want to expand your rental business, you should be shamelessly rooting for one as well.

Most people fear a slowdown. The smart ones cheer for one and see it as merely part of a cycle — an opportunity to get theirs and buy assets cheaper.

[FlyerInHi]

Rooting for something is like praying. It won’t make it happen so I won’t waste my time.

I welcome opportunities as they present themselves. But I want the economy to be managed well for everyone. I don’t want poverty and joblessness for other people.

There is virtue in working for what you consume. In the aggregate, we consume what we produce.

[spdrun]

Well, you used the term originally, not I. Seems like we’re just on different sides. You cheer when there are positive data. I’m cheering mediocrity because it gives me more time to accomplish what I want.

Only time will tell which forces will prevail in a year or two. I’m willing to work, just in my own way vs in a more structured way. Same as you — you’ve admitted as much in the past. Disruption provides better opportunities for this kind of work.

More assets to buy at a reasonable price and charge for use of. More opportunities for contract work (less commitment, more flexible schedule) since companies are averse to long-term hiring.

There’s no virtue in work for work’s sake unless you happen to be a masochist. There’s only virtue in work done for the good of the world. But that kind of work can be done pro bono if one doesn’t have to worry about income stream.

[FlyerInHi]

Put aside what you want for minute,
What is your prognostic on interest rates and the economy for the next year or 2.

[spdrun]

Interest rates: no idea, but betting on same or higher since they can’t get much lower.
Economy: slow growth in sum, but not necessarily even by time or area.
Property: Lots of foreclosed properties to still be worked through in the East Coast judicial states, which is what matters right now, less in states where processing is faster. Not a huge change in values since lending standards are still tighter than a few years ago, despite recent changes.

[EconProf]

[quote=spdrun]Interest rates: no idea, but betting on same or higher since they can’t get much lower.
Economy: slow growth in sum, but not necessarily even by time or area.
Property: Lots of foreclosed properties to still be worked through in the East Coast judicial states, which is what matters right now, less in states where processing is faster. Not a huge change in values since lending standards are still tighter than a few years ago, despite recent changes.[/quote]
I see the opposite.
Interest rates “can’t get much lower”. That is exactly what forecasters have been saying for years now, and they continue their downward trend. I think they will trend lower for most of the year. Reasons…far lower interest rates in most of the developed world. In Europe they are close to zero. European investors put their money here for a better interest rate and a currency play as the dollar continues to rise with our relatively stronger economy.
The lower interest rates will continue to lower our cap rates and prop up values of real estate in all categories.

[EconProf]

[quote=spdrun]Interest rates: no idea, but betting on same or higher since they can’t get much lower.
Economy: slow growth in sum, but not necessarily even by time or area.
Property: Lots of foreclosed properties to still be worked through in the East Coast judicial states, which is what matters right now, less in states where processing is faster. Not a huge change in values since lending standards are still tighter than a few years ago, despite recent changes.[/quote]
I see the opposite.
Interest rates “can’t get much lower”. That is exactly what forecasters have been saying for years now, and interest rates continue their downward trend. I think they will trend lower for most of the year. Reasons…far lower interest rates in most of the developed world. In Europe they are close to zero. European investors put their money here for a better interest rate and a currency play as the dollar continues to rise with our relatively stronger economy.
The lower interest rates will continue to lower our cap rates and prop up values of real estate in all categories.

[spdrun]

Don’t be so smug. Most continental Europeans wouldn’t know where to start looking outside of major cities, just as most Americans wouldn’t think to buy in Karlsruhe, Tarragona, or Lodz. And being more conservative than Americans financially, they’re not interested in managing from 3000 miles away.

Foreign buyers are about 7% of the total US market. Continental Europe is maybe 25% of this market. We’re talking about less than 2% of the national market, concentrated in specific, more desirable areas, not uniformly spread.

There are REITs as well, but the kind of property I’m interested in now (houses in working-class parts of NJ and PA burbs) is unlikely to be snapped up by REITards. Or isn’t currently being, anyway.

Looking at local Homepath, sheriff, and auction listings, REOs have doubled or trebled in many areas over the past 12 months.

Thanks, Governor Christie: http://www.northjersey.com/news/business/foreclosure-activity-up-71-in-nj-realtytrac-says-1.1196153

This being said, I’m getting a NYS sales license and have a broker I can hang it with. So if the flood of hungry Euro-peons does materialize in NYC, I can take some advantage of it as well. Nice thing is that, salespeople are essentially freelance, so this needn’t be a 50-60 hr per week game.

[moneymaker]

Interest rates on credit cards is still high for a lot of people, probably why banks are so profitable now because most of them are backing/or part of the credit industry. Anytime I get a zero rate offer that says it will go to 19% or more I immediately tear up on principal.

[spdrun]

I’ve heard of people transferring balances between 0% cards for years so they never end up paying 19%. 🙂

There’s also the subprime auto loan industry that loans for used cars at inflated prices at exorbitant rates.

[moneymaker]

Yes spdrun I know about those people because I’m one of them. But google top 10 credit card rates and you will see that the lowest rate is 11.9% and goes up to 22.9%, mind you these are the best rates. So the best rate is 10% higher than the best CD rate.

[Author]

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