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More Pressure on Interest Rates

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June 11, 2008 – Comments (3)

Junk bonds are increasingly in default and that is simply going to put more pressure on interest rates.

How many ways is the pressure for rising interest rates coming?

There has to be less interest in lending to the US with no government indications that there are any mores to more fiscal responsibility.

There's the bad mortgages that have to be paid for somehow and increasing rate spreads have to happen.

There's the bad construction loans that are falling apart.

There's the CDOs.

There's the credit card debt that is increasing in defaults.

There's the student load debt that's getting into trouble as expected opportunities do not materialize.

There's the car loans that have been rolled over to exceed the cost of the vehicles that's getting into trouble.

Hmmm, there is a pattern here, called debt. 

None of the economic stimulus of recent years has been paid for and many people's investments are tied to other people or business paying what they owe back.  

 

3 Comments – Post Your Own

#1) On June 11, 2008 at 10:20 AM, alstry (36.32) wrote:

You think there is pressure now, wait until Friday when the CPI numbers come out.

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#2) On June 11, 2008 at 7:53 PM, TheParadox (93.62) wrote:

"...none of the econmic stiumulus of recent years has been paid for..."

 I never thought about it like that... I guess its always felt like debt is never growing or decreasing.

 

good post

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#3) On June 11, 2008 at 8:06 PM, dwot (45.74) wrote:

TheParadox,

Debt hurt Canadians very badly from our Trudeau era.  The high taxes we eventually had to pay killed our birth rate as younger adults had less ability to save and to get a start.  I know so many that did what you are "supposed" to do, ie., get a good education, and their professional wages simply were not enough get a home and it is those that had a home that tended to be further buffered from increasing costs. 

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