Whatever happened to rising interest rates?

[FlyerInHi]

[quote=moneymaker]What is most interesting to me is that Europe and US are moving in opposite directions as far as rates are concerned. We are emphasizing saving more while Europe is trying to invest more. The question is where will our money go and where will Europe invest, assuming things continue on their current path. Both could be the right path for now.[/quote]

Europe is now doing what we did correctly after the 2008 financial crisis. We lowered interest rates, printed money, and implemented a stimulus (albeit a small one) to get economy going again.

Europe tightened and implemented austerity measures.

Fast forward to 2015. We are doing much better, our economy recovered, growth is acceptable, GDP is good…. Europe is falling behind. If we consistently grow 2% more then Europe, then after 30 years, our standard of living would be almost double.

We learned the lesson of Japan and administered the medicine early (The Fed did, Congress not so much). Europe will suffer economic malaise for some more years, then they will end up poorer, just like Japan is now poorer and less relevant.

[spdrun]

I don’t agree with Sanders carping about the rate hike, but I still respect the man.

[Reality]

[quote=FlyerInHi]

Fast forward to 2015. We are doing much better, our economy recovered, growth is acceptable, GDP is good….
[/quote]

LOL if you say so.

[Coronita]

[quote=spdrun]Prices are set by buyers not sellers. If there are no takers at an offered price, the value is lower. Regardless of whether the listing is pulled or not.[/quote]

It depends on the submarket you are talking about. When the housing markets crashed, We didn’t see a massive panic selling for example in Carmel V. You didn’t have a -20% across the board. Yes, you did have some folks that got in trouble ,folks that were able to buy that normally shouldn’t have ever been able to qualify for. And those people lost their homes.

But the majority of other people just sat it out. In fact, some of the better off simply took advantage of the downturn and bought another house that was on sale and held onto their existing home, waiting for things to turn around. And it looks like those are the same people now selling at ridiculous prices.

Now fast forward to the situation we are in right now. The folks that have all bought over the past few years are all the strongest buyers. They locked in when rates are ridiculously low, their fixed payments are ridiculously low, and rent costs are going through the roof. There is little motivation for the current owners who bought to sell, when rental costs > mortgage+tax+insurance. I don’t see a panic selling from the strongest buyers. If they are selling, they’ll put some ridiculous price on their home right now, and wait indefinitely to see if it sticks with anyone.

And we’re sort of seeing this right now in Carmel V. Inventory is going down, some people are sticking their homes on the market at ridiculous prices to see if there is someone out there that will buy it, and the home just sits there for many months waiting.

Just ask yuhtey or whatever his name was on how his house search is going.

http://www.sdlookup.com/Market-92130-Carmel_Valley
Inventory sits at 131, less than even June 2015…

Until the banks bring back the alt-a, stated income, sketchy financed people, then things won’t get that much more interesting. IN general, that hasn’t happened yet.

[FlyerInHi]

[quote=Reality][quote=FlyerInHi]

Fast forward to 2015. We are doing much better, our economy recovered, growth is acceptable, GDP is good….
[/quote]

LOL if you say so.[/quote]

The data speak for themselves.
Of course after a reshuffle, there are winners and losers.

[The-Shoveler]

[quote=FlyerInHi][quote=Reality][quote=FlyerInHi]

Fast forward to 2015. We are doing much better, our economy recovered, growth is acceptable, GDP is good….
[/quote]

LOL if you say so.[/quote]

The data speak for themselves.
Of course after a reshuffle, there are winners and losers.[/quote]

I remember back in the early 80’s when I was first starting my computer career, I could not get a date to save my life. All my old high school buddies who where were mostly in the construction trades had no issues.

[Reality]

[quote=FlyerInHi][quote=Reality][quote=FlyerInHi]

Fast forward to 2015. We are doing much better, our economy recovered, growth is acceptable, GDP is good….
[/quote]

LOL if you say so.[/quote]

The data speak for themselves.
Of course after a reshuffle, there are winners and losers.[/quote]

It seems OK right now but it’s extremely fragile. Government intervention props things up.

What is the national debt up to BTW?

[paramount]

One of the best macro indicators is oil, now below $35 – in part due to dollar strength, but also falling demand.

[barnaby33]

Deflation.

[The-Shoveler]

When most of the most productive industries in the USA no longer use Oil directly and F-150’s get close to 30 miles a gallon, Oil is no longer the Indicator it used to be.

Well for the USA anyway.

[FlyerInHi]

Mohammed el Erian on low rates.

We need wage inflation to spur spending, consumption and growth

[spdrun]

Consumption is a disease.
Growth is a cancer.

Stagnation is better. We have it well enough, no point to grow.

[EconProf]

Thanks, FlyerInHi for reviving my thread from over a year ago. And reviewing the comments, I see that your predictions from January, 2015 were pretty accurate. And my 4 predictions from the original post, which were contrary to the consensus of other economists, turned out to be largely on target.

[FlyerInHi]

[quote=spdrun]Consumption is a disease.
Growth is a cancer.

Stagnation is better. We have it well enough, no point to grow.[/quote]

Does that mean you don’t support Bernie sanders’ platform of higher wages for the working and middle classes? And if you do, where do you think the higher wages will be spent?

[Author]

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