A Quote by Franklin Raines
Right now the long-term investors are telling us that they're not as concerned about inflation and so we're seeing these rates now move into the marketplace and out to the street - rates that individuals can get.
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The FOMC has considerable control over short-term interest rates. We have much less influence over long-term rates, which are set in the marketplace.
Well, we're just now seeing the reductions in mortgage rates. The mortgage rates are based on the ten-year rate and the Fed controls the overnight or the shorter rates.
To investors, job creation is a second-order effect. Market participants care first about interest rates, exchange rates, bond prices and the one great factor that affects all three: the long-term solvency of a bond company called the U.S. government.
Of course, looking tough on inflation is part of any central banker's job description: if investors believe that inflation is going to get out of control, you end up with higher interest rates and capital flight, and a vicious circle quickly ensues.
The key is if the economic data stays soft, maybe we don't have to worry much about interest rates anymore. Then we need to worry about earnings. What gave us a really strong move in stock prices from late May until about two weeks ago was this heightened optimism that maybe interest rates are at that high. That gave you a relief rally. Now reality is setting in - if we've seen the worst on interest rates then we've seen the best on earnings.
We know that inflation distorts economic behavior. In the 1970s, a combination of high tax rates and inflation prompted investors to flee production in favor of protection.
One component of the leading economic indicators is the yield curve. Bond investors keep a close eye on this, as it illustrates the spread or difference between long-term interest rates and short-term ones.
The single biggest issue that I'm very sensitive to is inflation. I'm very concerned that this extended period where the interest rates were quite low and stimulated a lot of activity could breed inflation and create a problem for us.
Tax rates for the wealthy should revert to Clinton-era levels, both because it is necessary for long-term deficit reduction and because fairness dictates it. Moreover, there is no proof that higher marginal rates dissuade investment, all the rhetoric from the Right notwithstanding.
Well, rates would go up whether you deregulate or not, and of course, the rates that are going up right now on the electricity side are still within the regulated framework.
We're seeing the yield curve steepen, that means long rates are going up but short rates are not because the Fed is holding them down and this is usually good for financial stocks.
It is a paradoxical truth that tax rates are too high and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now Cutting taxes now is not to incur a budget deficit, but to achieve the more prosperous, expanding economy which can bring a budget surplus.
Investors that do the best, and have done the best, are those that stay and compound at above-average rates over the long term.
What's true for New York is true for most of the country: We are a long way removed from the double-digit interest rates and unemployment rates, and the soaring crime rates, of the early 1980s.
And so Fannie Mae produces very strong results for investors in - when interest rates are high and when interest rates are low, in recession and during booms.
If inflation is brought down, interest rates will fall. Once rates fall, we have the opportunity to maybe achieve the goal of 'housing for all' faster; take roads, infrastructure to India's interiors.
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