Interest rates......Going up from now on?

[Mega]

Have turned the conner?
The 35 year cycle is over?
Up Up & away?

Mike

[jk]

Re: Interest rates......Going up from now on?

i got rid of my long tsy bonds when the 30yr backed up to 2.3 [now 3.18], but i'm not convinced i won't be buying back in. i'll really be convinced when gary shilling throws in the towel. he's has been correctly calling for disinflation/deflation and descending rates since 1981. and btw, he thinks rates will start going down again.

[Mega]

Re: Interest rates......Going up from now on?

Thanks JK
I think you might be right, i guess that if we have "Spike" inflation rather then rolling inflation "They" will keep rates low.
Mike

[GRG55]

Re: Interest rates......Going up from now on?

i got rid of my long tsy bonds when the 30yr backed up to 2.3 [now 3.18], but i'm not convinced i won't be buying back in. i'll really be convinced when gary shilling throws in the towel. he's has been correctly calling for disinflation/deflation and descending rates since 1981. and btw, he thinks rates will start going down again.

In the short run the Fed and other central banks are getting what they desperately need. The market has raised long rates (10 yr and out) allowing the Fed to finally raise short rates. The Fed will remain behind the curve, as usual, doing all it can to hold a steeper yield curve for the banks.

Shilling will be correct if the world moves from the so far orderly 'extend and pretend' + manageable credit losses to a situation where credit losses in the private sector become disorderly.

At the moment it appears all eyes are on the Italian bank credits. Does China step in and inject enough equity to keep the game going? Some other capital source such as Qatar or even Russia (a la Cyprus)? Or do the Italian banks become the post-GFC 'bridge too far'?

[Mega]

Re: Interest rates......Going up from now on?

I wonder what the HELL pension funds are going to do?
They need 6-7% a year & we had 0% ish for YEARS............at some point the breaking point will come.

Perhaps we see the debts going onto the IMF balance sheet & SDR's ...................but then what?

Going to Run up the Mega debts AGAIN?

Mike

[thriftyandboringinohio]

Re: Interest rates......Going up from now on?

...I wonder what the HELL pension funds are going to do?...

Mike, they will do the same thing everyone does. Reduce pensions.

[jk]

Re: Interest rates......Going up from now on?

Mike, they will do the same thing everyone does. Reduce pensions.

states and municipalities are having trouble getting courts to go along with this. something about contracts being honored if i'm not mistaken.

there will be big tax increases. calpers is revising down its unrealistic 7.5% return assumption to a still unrealistic 7% assumption. this implies billions in increased taxes from california state and municipalities.

[dcarrigg]

Re: Interest rates......Going up from now on?

states and municipalities are having trouble getting courts to go along with this. something about contracts being honored if i'm not mistaken.

there will be big tax increases. calpers is revising down its unrealistic 7.5% return assumption to a still unrealistic 7% assumption. this implies billions in increased taxes from california state and municipalities.

John Arnold funded the test case to break through that barrier in Rhode Island. He won and functionally abolished the pension system, funding and installing a new Democrat governor with close ties to big VC and Citibank along the way. He's now operating in Kentucky and beginning the thrust in California. See this thread from 2013. The billionaires will not pay taxes. They would rather pay the equivalent in political donations and dark money campaigns to rob the workers.

The rule has been the same since the Powell Memo came out in 1971. Workers' pay and benefits never get better. They only get worse.

[GRG55]

Re: Interest rates......Going up from now on?

states and municipalities are having trouble getting courts to go along with this. something about contracts being honored if i'm not mistaken.

there will be big tax increases. calpers is revising down its unrealistic 7.5% return assumption to a still unrealistic 7% assumption. this implies billions in increased taxes from california state and municipalities.

This is going to set up some real problems between public and private sector workers/retirees. Slashing pensions in the private sector is not new. Airline bankruptcies in the wake of Reagan's deregulation resulted in many union pension plans being cut dramatically. If the courts require taxpayers make good 100% on public plans it'll have some interesting consequences.

[jk]

Re: Interest rates......Going up from now on?

This is going to set up some real problems between public and private sector workers/retirees. Slashing pensions in the private sector is not new. Airline bankruptcies in the wake of Reagan's deregulation resulted in many union pension plans being cut dramatically. If the courts require taxpayers make good 100% on public plans it'll have some interesting consequences.

this is already happening, with private sector workers angry that public sector ones get better treatment. i think this was behind scott walker's successful effort to abrogate the bargaining rights of public sector unions. i don't think that this undid pension agreements already made.

[Thailandnotes]

Re: Interest rates......Going up from now on?

The billionaires will not pay taxes. They would rather pay the equivalent in political donations and dark money campaigns to rob the workers. The rule has been the same since the Powell Memo came out in 1971. Workers' pay and benefits never get better. They only get worse.

This is it in a nutshell. The Powell Memo...

http://reclaimdemocracy.org/powell_memo_lewis/

[jk]

Re: Interest rates......Going up from now on?

This is it in a nutshell. The Powell Memo...

http://reclaimdemocracy.org/powell_memo_lewis/

the powell memo was a real turning point. richard nixon had introduced a national healthcare plan better than obamacare, but the democrats killed it thinking they'd be able to pass something even stronger once nixon was gone. by that time, however, the powell memo's recommendations had been implemented- there was an enormous growth of chambers of commerce, business roundtables, lobbying by local and national businesses, right wing think tanks.

see

Winner-Take-All Politics: How Washington Made the Rich Richer--and Turned Its Back on the Middle Class


for details

[thriftyandboringinohio]

Re: Interest rates......Going up from now on?

This is it in a nutshell. The Powell Memo...

http://reclaimdemocracy.org/powell_memo_lewis/

+1

[dcarrigg]

Re: Interest rates......Going up from now on?

this is already happening, with private sector workers angry that public sector ones get better treatment. i think this was behind scott walker's successful effort to abrogate the bargaining rights of public sector unions. i don't think that this undid pension agreements already made.

I suppose to clarify what I was intimating before, it won't be Republicans that successfully destroy public sector pensions. It will be Democrats. It took a Democrat to kill AFDC. And it will take Democrats to kill public workers' pensions. Republicans weaken the unions and strip their bargaining rights. Then Democrats reneg on union contracts once they are on the ropes. It's a 1-2 punch. States have drastically slashed the top income tax rates, corporate rates, and estate taxes over the last 20 years. They did it at the expense of paying into pension funds and funding higher education and basic infrastructure. Therefore, the pensions will not be paid, public university tuition will continue to skyrocket and infrastructure will continue to age and crumble without basic maintenance, never-mind the addition of anything new.

Basically, top income tax rates went from between 8 and 16 percent in states that had income tax to between 4 and 10 percent today.
NY went from 14% in 1980 to 6.85% today.
CA went from 11% in 1980 to 9.3% today.
MN went from 16% in 1980 to 9.85% today.
AZ went from 8% in 1980 to 4.45% today.
CT went from 9% in 1980 to 6.00% today.
WI went from 10% in 1980 to 7.65% today.

Top estate tax rates went even crazier. In 1999, all 50 states had an estate or inheritance tax on millionaires. Only 19 states still do today.
MT went from 32% in 1999 to 0% today.
SD went from 30% in 1999 to 0% today.
IN went from 20% in 1999 to 0% today.
NH went from 18% in 1999 to 0% today.
NC went from 17% in 1999 to 0% today.
KS went from 15% in 1999 to 0% today.

All of this just goes to show you how incredibly successful the wealthy have been at drastically lowering their tax burden at the state level, even as middle class income tax rates and excise and property taxes and sales taxes have increased and their exemptions have dissipated while their service levels have decreased, college gets more expensive, and infrastructure is overloaded.

Make no mistake. The pensions could have been paid as promised. Or public college tuition could be cut by 80%. Or the roads could not suck. It's just that all that money that could have gone in to sure up the fund in 1999 goes to the children of the two richest people who died in your state in the 2010s instead.

[vt]

Re: Interest rates......Going up from now on?

Don't forget property taxes:

http://www.thefiscaltimes.com/2015/0...Property-Taxes

Here is the list for all the states:

https://wallethub.com/edu/best-worst...taxpayer/2416/

Here is a measure of the best states to be poor or rich:

https://wallethub.com/edu/best-state...pective/11257/