Mortgage rates have come down because all mortgage in the USA are now backed up by the (broke) US government. There is no risk of default anymore, mortgages are now similar to US treasury paper. Every mortgage that is signed now, if defaulted, is paid by the US taxpayer. Thank you, thank you.
Long term interest will shoot up. They have risen 10% on Friday, this must be the first time in my life time that interest rates rise 10% in 1 day.
Americans still can't get a grip to the idea of $3.5 a gallong gas at the pump. As amazed that they are today of gas prices above 3 dollars when only a few years ago they were 1 dollar a gallon. Wait until the dollar collapses, THEN things will become f'ing expensive. This inflation (general rise in prices) is caused by printing money out of thin air.
Because the government is now broke, bankrupt, they soon will lose their AAA status, which will cause the interest rates of the debt go up. The taxpayer pays.
The Bush administration averted a US Bush depression and created an economy with hyperinflation.
In a depression, everything becomes cheaper by the day (deflation), so everybody postpones their consumption. Result: no production and everybody loses his job and we all become poor.
With hyperinflation, we are poor as well but we can keep our jobs, our taxes and the cost of living will be so high, our purchasing power will melt like an ice cream on a summer day in Arizona. Bankers on Wallstreet can keep their jobs, luckily, goal achieved.
Maybe they can stop the collapse of the dollar by preventing people to preserve wealth and putting it into gold or silver, things that can't be printed out of thin air. Oops they already did that twice...
Bush = Putin = Chavez
Socialism is the intermediate system between capitalism and communism, when the government is in the process of changing the means of ownership from privatism, to collective ownership
McSame is of course too old, not very smart (graduated with one of the worst grades of his year in the army), he has the charisma of a traffic sign, he is not really certain of things, BUT his opposition against the bailout makes me love him for a short while.
So who is to blame for this mess?
Except the usual suspects like Al Queda, the Muslims, Iran, Iraq, Saddham Hussein, maybe this had something to do with it: Up until 2003, all investment banks were allowed only 12 to 1 leverage. Then in 2004, the SEC basically gave five banks (and only five banks) the ability to lever up 30 or even 40 to 1. Bet you can guess the five banks. Bear Stearns, Lehman brothers, Merrill Lynch, Morgan Stanley and Goldman Sachs. Three down.
Not only gold but also OIL appears to be a gauge for inflation. Oil prices dipped this week to $91 a barrel, but are now back to $104. Thank you banking bailout.
Saturday, September 20, 2008
So what effect does this "nationalization of the banking industry" have on us mortal people?
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4 comments:
The real truth on Treasury Rates. Fair and Balanced reporting.
Date 1 mo 3 mo 6 mo 1 yr 2 yr 3 yr 5 yr 7 yr 10 yr 20 yr 30 yr
09/02/08 1.64 1.72 1.93 2.12 2.26 2.51 3.00 3.37 3.74 4.39 4.36
09/03/08 1.57 1.70 1.90 2.08 2.26 2.48 2.95 3.29 3.71 4.36 4.32
09/04/08 1.56 1.69 1.89 2.04 2.20 2.41 2.87 3.21 3.64 4.31 4.27
09/05/08 1.53 1.68 1.90 2.07 2.23 2.44 2.91 3.24 3.66 4.31 4.27
09/08/08 1.59 1.71 1.92 2.12 2.30 2.49 2.96 3.26 3.66 4.30 4.26
09/09/08 1.59 1.66 1.89 2.06 2.23 2.43 2.90 3.21 3.62 4.24 4.20
09/10/08 1.58 1.65 1.87 2.06 2.22 2.42 2.91 3.23 3.65 4.27 4.23
09/11/08 1.53 1.61 1.85 2.01 2.18 2.38 2.87 3.21 3.64 4.25 4.20
09/12/08 1.37 1.49 1.84 2.02 2.23 2.45 2.97 3.32 3.74 4.36 4.32
09/15/08 0.36 1.02 1.55 1.66 1.78 2.01 2.59 2.99 3.47 4.14 4.12
09/16/08 0.23 0.84 1.52 1.72 1.89 2.12 2.64 3.02 3.48 4.12 4.08
09/17/08 0.07 0.03 1.03 1.50 1.64 1.91 2.52 2.93 3.41 4.12 4.08
09/18/08 0.26 0.23 0.79 1.53 1.78 2.05 2.67 3.08 3.54 4.19 4.14
09/19/08 0.75 0.99 1.54 2.05 2.16 2.42 3.01 3.37 3.78 4.42 4.36
GP
Well that is just my point, compare date 9/18 with 9/19:
3 month treasury from 0.23 to 0.99 ; 1 y treasury from 1.53 to 2.05 ; 5 y treasury from 2.67 to 3.01 ; 10 y trasury from 3.54 to 3.78 and 30y treasury from 4.14 to 4.36.
3 month treasury up 300% / 1 y treasury up 34% / 5 y treasury up 13% / 10 y treasury up 7% / 30 y treasury up 5%.
Maybe the 10% interest rate change was understated. I thought that was pretty balanced reporting from my side.
Selecting a one day change is self serving. Economics are based on macro, not micro trends. Compare 09/15 with 09/12 and it will totally disprove your point.
"Give me your desired answer and I will select the data points to prove, or conversely, disprove it."
Your Science Professor,
GP
I agree with your point, that my timeframe was very short and that interest rates are just what they were a week ago.
Before that 9/18-9/19 day we had a depression coming:Deflation (=lower prices on all goods). But that day (intervention) changed everything. We will see higher interest rates in the future. I wanted to make it clear that we had a important change in interest rates that brings us into a hyperinflationary (double digit inflation / rising prices)environment, which is of course worse than a depression.
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