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	Name:	water_watcher -
	Subject:	New Tax
	Date:	10/7/2009 6:12:11 PM

I just got out of a meeting with a major bank and the picture they are painting for interest rates is not pretty. It is backed up by the huge federal debt and using a historical model that they showed has never been very far off.

I have a chart that shows the federal debt, and while it grew in the Bush years due to the Iraq war, the level for 2009 is more than double and the following five year projects they have is it continues to get worse.

I used to put together 20-30 interest rate swaps for one of my clients to fix variable rate debt. They said that due to the uncertainty they will only do 5 year swaps now (which is hardly worth it).

They did feel rates are going to stay relatively low through 2010, but all heck could break lose in the 2011 and 2012 time frame.

They had one model that showed rates going over 20% if the feds keep spending at the same level. They said increasing taxes (as it has done in the past) will have a negative impact on interest rate, since it will reduce growth and therefore revenue to the fed.

Lastly, they pointed out that Australia just increased their discount rate and felt our federal reserve will probably start incremental increases in 2010 just to prevent the dollar from going lower.

Oh yeah ... oil prices ... due to the low value of the US dollar, with even a moderate recovery, they have oil prices over $200 a barrel in 2011.

Other messages in this thread:

View Entire Thread

New Tax - GoneFishin - 10/6/2009 10:42:51 PM

New Tax - MartiniMan - 10/7/2009 8:24:58 AM

New Tax - water_watcher - 10/7/2009 6:12:11 PM

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