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Jennifer_G
Guest
What if your 401K has bonds instead of stocks? But, wouldn’t heightened interest rates be good? My bank account (money market) is something like 1%. Would that go up, or is that something different?
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Trader
Guest
If you mean short term rates and the temporary situation under Volcker, you are correct. He was dealing with very high inflation at the time, which thankfully, we do not have yet.
Higher rates will encourage more saving and that is a good thing, but that can be overdone also. The Japanese were able to eat our lunch during the 1980’s partly because they had a nation of savers who provided cheap capital to their manufacturing base. Neither our current 0% rates or the 18% rates of the 1980’s are healthy in the long term. Both extremes are temporary measures to deal with emergencies and are contrary to free market principles.
Where we find ourselves now is that rates will be higher in the long term, not because of market risk, but because of credit risk, and that cannot be a good thing.
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ProVobis
Guest
High grade bond funds theoretically will sink. Individual bonds, if you hold them to maturity, won’t be affected. New bonds should be cheaper and yield higher rates if you’re looking to purchase. CD’s may even yield a little higher and that’s good, IMO.
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jomoco
Guest
American history quite vividly paints the teapartying neocons for exactly what they are, in no uncertain terms.
In 2003, when bush junior gave taxcuts during an active shooting war, it was un-precedented in American history until that point.
Where were you spending cutter’s then?
What precedent did junior have other than the kennedy taxcut’s prior to vietnam going shooting active status, which then led to a tax increase, as history clearly shows?
The very most distinguishing characteristic of the teaparty is their belief that cutting taxes during an active shooting war is either patriotic or acceptable American conduct.
Show me the precedent in our history as a free republic when such conduct was ever acceptable my friends?
Telling traits kinda like tattoo’d to your foreheads in my opinion.
jomoco
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ProVobis
Guest
So says the FED. But if you check shadow statistics, they’ll paint you a different picture. The FED’s numbers are designed as to show you no inflation.
But they are right in that there is no wage inflation, though bonuses to millionaire bankers aren’t counted.
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Darryl1958
Guest
In Canada at the time, the greatest enemy for the media was ‘the danger on the right’ known as the Reform Party. The liberals effectively adopted the fiscal positions of their Official Opposition, without opposition from the media, or anywhere else.
It was probably only in the last election cycle when the opposition of the left finally caught up. The collapse of the Liberals and Quebec separatists and the rise of the leftist NDP in their stead again recreates the same fiscal partisan divides of America, but only with the left on the outside looking in.
In America though, the left is so much a part of the Democratic party that it really is not internally possible for them to make the necessary cuts, like the Canadian Liberals once did.
And for Republicans to try to do this if they ever get the chance, not just the Democratic opposition, but the whole of the media and other institutions of the American elite will be in an uproar. They will fight them tooth and nail with great noise and fanfare.
The example to explain what I am saying is to consider how easily it was for Democrat Obama to enter into yet a third war in Libya, compared to the outrage against Bush for entering into Iraq. What is possible for a Democrat to do without raising ire, is near impossible for a Republican to do without raising a deafening din against such ‘fascism’.
But as for the Democrats, unlike Canada’s Liberals, they are a party not just of centrist liberals, but they have the leftists similar to Canada’s NDP at the very helm of their party as well. It is ideologically impossible for them to do what Canada’s Liberals managed to do 15 years ago.
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MugenOne
Guest
Bonds have an inverse relationship to interest rates. If you are not a bond trader, none of this will matter to you. You want to buy bonds, buy it when interest rates are rising. Now, it is a little too early.
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Trader
Guest
Show me one member of the Tea Party who was happy with Bush’s spending. Medicare part D went in exactly the wrong direction. The government should get out of medical insurance altogether rather than try to fix a system that does more harm than good. We should also make Social Security a system of mandatory personal retirement saving rather than a shush fund for more government spending.
Look at the Department of Education since it became a cabinet level agency in 1978. Have test scores gone up or down since then? Has the inflation adjusted price of college tuition gone up or down? Department of Education has earned a grade of “F”. Send them out to clean the erasers and don’t let them back in.
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estesbob
Guest
Obama administration official: S&P move 'a facts-be-damned decision’
CNN) – A senior Obama administration official is calling Standard & Poor’s move to downgrade U.S. credit “a facts-be-damned decision,” saying the rating agency admitted to an error that inflated U.S. deficits by $2 trillion.
cnn.com/2011/BUSINESS/08/06/credit.rating.reaction.cnn/index.html?eref=rss_politics&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+rss%2Fcnn_allpolitics+%28RSS%3A+Politics%29&utm_content=My+Yahoo
CNN) – A senior Obama administration official is calling Standard & Poor’s move to downgrade U.S. credit “a facts-be-damned decision,” saying the rating agency admitted to an error that inflated U.S. deficits by $2 trillion.
cnn.com/2011/BUSINESS/08/06/credit.rating.reaction.cnn/index.html?eref=rss_politics&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+rss%2Fcnn_allpolitics+%28RSS%3A+Politics%29&utm_content=My+Yahoo
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ProVobis
Guest
I agree with much of what you say but which insurance company can deal with catastrophic events which happen as a result of flooding, for example? Both parties have no problems in government spending there. And as far as medical insurance, private companies don’t make money on very sick patients so why should they insure them under individual coverage? Just saying.
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ProVobis
Guest
Depends on the situation. When you have borrowers who are willing to borrow at 12% (yes, there are those who would be happy to borrow at any rate) but the FED doesn’t allow lenders to lend at more than 4%, who will lend to high-risk people with declining or no collateral? Thus, no loan but taxpayers are still on the hook for that money.
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Trader
Guest
Before Medicare there were private insurance companies that insured people at risk adjusted rates. People with higher risks did pay more, but they also had the option of changing to lower risk behaviors to save money. Under Medicare and Medicaid the sexually promiscuous, drug abusing, mobidly obese smoker pays no more for risky choices. Some states, like Michigan prohibited employers from charging higher rate to employees who smoked. Michigan had one of the highest rates of smoking and two major Michigan companies went bankrupt at least partly because of employee and retiree health insurance costs, General Motors and Chrysler. It is one of the reasons that medical costs are so much higher in the US than in countries where people behave better. The Obama solution of forcing added benefits into private plans and then publicly complaining when rates were raised is intended to drive private insurers from the market altogether, just like Medicare did for seniors. Those who are already sick could go into assigned risk pools just like we have for auto insurance. The auto insurance industry is more inovative and has kept costs under better control because it is private.
Certainly no single private insurance company could handle a Japanese tsunami, Hurricane Katrina, or asteroid stike all by itself. That is why they limit the risk they will take on in a given market, and it is enforced by state regulators. AIG failed because they were not regulated on credit default swaps and they did not understand the risk they were taking. They may still have failed with regulation because the regulators and rating agencies did not understand the risk either. If more people understood the true cost of building on landfill atop a known earthquake fault, or in a coastal area subject to the storm surge of a huricane, maybe they would take less risk. It is the government that encourages people to take excessive risk by standing as the uneconomic insurer of last resort.
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ProVobis
Guest
No dispute there. But certain insurance products, like term life and annuities, don’t have to worry about catastrophic coverage either. Even group medical insurance can spread the risk enough to make it profitable. Problem is that it seems to be available only through an employer-based system. The only alternative is, as you say, the high-cost, high-risk pools that many, but not all states offer, typically administered by a private co-op or for-profit.
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mary_bobo
Guest
Please tell me what is dishonest about wanting to cut spending? Also, please don’t insult the intelligene of those who happen to agree with the Tea Party. Anyone can see that we have been spending beyond our means for a long time and both parties are guilty.
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jomoco
Guest
The tea party has to acknowledge that spending cuts are only half the answer. That their conservative forefathers paid whatever taxrates necessary to achieve fiscal responsibility as a principle of life worth sacrificing for, that their children might enjoy the same freedom they themselves have.
Why does the tea party’s sense of patriotism stop so abruptly at their wallets, unlike their forefathers?
The tea party is unworthy of our history’s true conservatives who paid the price of freedom in both blood and money.
That’s why your new tea party is now toxic, and deservedly so in my opinion.
jomoco
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jam070406
Guest
The Federal gov has spent us broke and people like you still divert the responsibility back to the people, while attempting to toss in a good old guilt trip on top of it. Wow, no wonder this country is so messed up.
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Charlie
Guest
It appears that we have received what is coming to us. Our country has been spending more than it recives in revenues for decades now. Finally the party is over. I can not remember any country in history to borrow it’s way to prosperity.
yours in Christ,
yours in Christ,
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Insight
Guest
To ensure that whatever business has not been chased out of the USA is compelled to leave.
God Bless
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ProVobis
Guest
Perhaps they can take a personal lesson from Donald Trump et al. He’ll show them how to do it.
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OrdinaryMelkite
Guest
So basically Obama shares no blame at all for this debacle?
Just an “innocent bystander?”
Sheesh.
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