Wednesday, February 4, 2009

Why interest rates will go up and up

UK Heading for Worst Recession Since World War2

Carmen M. Reinhart and Kenneth S. Rogoff compare the current crisis with ones in the past...the real eye-opener is the massive surge typically seen in government debt. This isn't just down to bail-outs – in fact, it's mostly down to normal recession effects, such as unemployment payouts rising while tax revenues slump...Reinhart and Rogoff argue that "a near doubling of the US national debt suggests that the endgame to this crisis is going to eventually bring much higher interest rates [as investors demand higher yields in return for buying US government debt] and a collapse in today's bond-market bubble." The high level of debt will also mean "stunted US growth for at least five to seven more years".

Posted by mountain goat @ 04:22 PM (869 views)
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2 thoughts on “Why interest rates will go up and up

  • stillthinking says:

    I have read a lot of stuff off that site and its all humdrum apart from Nadeem_Walayat’s articles.

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  • mountain goat says:

    Stillthinking do you mean MoneyWeek or Market Oracle? I take it you mean the latter. IMO they are not boring at all but it certainly is a mixed bunch, many being unbalanced. John Mauldin’s articles are excellent and a weekly must-read for me(he is an award winning and highly regarded economics writer and fund manager), Mike (Mish) Shedlock is good too although he does seem to pick conflicts with other analysts which I find annoying. Prieur du Plessis who posted here on hpc today also posts there and is worth a read. Most of the others on general economics views are a bit/very unbalanced but often amusing. Certainly less humdrum than Telegraph, Guardian etc. Many articles are on trading views/self promotion, which may not interest you, Chris Vermeulen is one of the best in this regard.

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