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alstry (35.28)

Economy getting Squeezed?

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February 19, 2008 – Comments (3)

We know credit card rates are going up.

Mortgage rates went up the most last week in 10 years.

It is getting more expensive to borrow in Commercial RE.

Companies are having a harder and harder time borrowing money.

Now from Bloomberg today:

Feb. 19 (Bloomberg) -- New York state taxpayers' weekly borrowing costs increased $2.3 million after banks failed to attract bidders to auction-rate bonds and stopped buying unwanted securities.

Interest rates on Dormitory Authority bonds sold for the City University of New York rose to as high as 6.26 percent last week from 3.42 percent on Feb. 6, according to data compiled by Bloomberg. Buffalo's rate on water system revenue bonds soared to 11 percent from 3.30 percent. Bonds issued by the Museum of Modern Art climbed to 4.47 percent on Feb. 13 from 3 percent at the end of January.

Rates in the $330 billion auction-rate bond market are rising nationwide after banks from Citigroup Inc. to Goldman Sachs Group Inc. stopped bidding for the debt at periodic sales they oversee, according to Bloomberg data. New York, with $4 billion of auction debt, may convert the bonds to a fixed rate or a different type of variable-rate security, state budget director Laura Anglin said in an interview in Albany last week.

``It hurts,'' said Anthony Farina, executive assistant in the Buffalo comptroller's office. Interest costs on the $63 million of auction-rate bonds rose $93,000 for the week, he said. ``Nobody expected this kind of jump.''

 

Has the interest rate cuts gone too far?  People running from our debt?  Default risk outweighing interest rate return?  Inflation kicking in?

Rising interest rates and a slowing economy?  And some of think that light at the end of the tunnel is our retirement?

3 Comments – Post Your Own

#1) On February 19, 2008 at 9:33 AM, CycleFreak7 (22.68) wrote:

Why do municipalities have to issue debt to pay for stuff anyway?

When I want something, I save up what I need and then I buy it. Freakin' gov't takes in enough taxes to pave the streets with gold fer crissakes. The problem is that they spend it like idiots. 

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#2) On February 19, 2008 at 4:39 PM, abitare (59.84) wrote:

Jim Rogers can explain it:

 

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#3) On February 19, 2008 at 7:21 PM, thisthatother47 (89.96) wrote:

"Mortgage rates went up the most last week in 10 years"

 Mortagage rates went up the most in ONE day today.

 Like the blog!

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