Thursday, March 4, 2010

Rates WANT TO GO UP But....

The investment world waits as tomorrow's unemployment report is the pivotal moment in this week's trading action. Each day, rates have spiked up in the morning only to drift lower. Today, we are testing the lows in a four-day testing action. Normally yesterday should have been the test but who knows what is going to happen next?

I must admit, I have been playing the rates to go up since 2005 and still rates have continued to decline. This can't be a good thing as it shows that the U.S. economy has been week for years now. Yes, if you are blessed and a banker or CEO making your millions, you are probably oblivious to such trivial things as interest rates. Lower rates continue to help your business (if you are lucky enough to be credit-worthy).

There is little doubt that for years, rates have been artificially supressed. But there is such a conflict. On one hand, the government wants us to feel confident that we are turning the corner and headed upward. Being an older person, had the government done absolutely nothing, then for sure, we would be on the upswing. Cycles are cycles and they do what cycles do. All the kings horses and all the kings men.... so the rhyme goes. The government merely doled out trillions to their buddies and their efforts have done little to affect the cycles that are going to occur no matter what.

The trip for higher rates has been a long and painful venture. Yet it is inevitable. How can an entity continue to print more money, borrow more money and spend without end and expect it's base rate to be zero? Is the king really wearing clothes? Or is this all a big facade???

No comments:

Post a Comment