Economy & Rates: Two Recoveries, Stable Dollar, Deflation Disappears, Negative Interest Rates, ARMS Cost More

April 28th, 2009 · No Comments

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Two Recoveries: The Economic Forecast Has Two Distinct Phases - Bill Conerly - Two observations about the present situation:  There is excess capacity virtually all across our economy. Some of that excess capacity will not come back into service. … Business Strategy Implications:  Plan on a recovery that is not a strong as past recoveries.  We will rebound, we will get back up to normal growth rates, but we will not have the excellent growth needed to get back to where we would have been absent the recession. …Businomics Blog


Forget Inflation Targets, Go For Dollar-Price Stability -  John Tamny -  We need a stable currency, but does the Fed get it? - Forbes



Deflation risk disappears - Scott Grannis - Calafia Beach Pundit



The Nuttiness of Negative Interest Rates - by Robert P. Murphy - In his April 18 New York Times op-ed, Harvard professor (and Bush adviser) Greg Mankiw calls on the Federal Reserve to promise future inflation, in order to fix the economy. Mankiw’s article beautifully illustrates what is wrong with today’s economics profession: it consists of very sharp guys (and gals) who can develop interesting models that spit out policy recommendations that would destroy the economy. -  Mises Daily



Fed Ideal Interest Rate at -5% - DIANA GOLOBAY - Staff research at the Federal Reserve calculated the ideal interest rate for the US economy at negative 5%, according to analysis prepared ahead of the Fed’s latest policy meeting. The assessment, taking into account the Fed cannot cut rates below zero, sized up some “unconventional” operations that could result in the desired effect, including the expansion of the Fed’s asset purchases beyond the $1.15trn already committed, Financial Times reported … - housingwire
ARMs costlier than fixed-rate mortgages - Demand for ARMs has evaporated - Demand for adjustable-rate mortgages has almost disappeared as long-term fixed-rate mortgages continue to be cheaper than ARM loans for the first time in 25 years of recordkeeping by Freddie Mac. - INMAN NEWS

Tags: Mortgage Market

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