Rate hike odds plunge, yep more excuses not to raise rates in 2016

[Nine_Ender]

You must be fairly old.
You are confusing monetary and fiscal policy.
You can't conflate a stupid tax policy and a stupid interest rate policy other than to say they are both stupid and the result of them will be generally negative.
When the banksters slash rates to zero, for the wrong reason, it doesn't take a soothsayer to know it will lead to distress. It's happening right now. The results of our stagnant global economy now with rates racing towards zero most everywhere is an effect of a ZIRP policy. And the fact that this policy is a theoretical dead end means monetary policy has failed.

There is no demand and more credit was not the answer. They blew it.

To say that the current policy will not have to be paid for (or is currently being suffered through) is a stunning lack of vision for someone so old and for someone who has lived through so much.

Savings have collapsed anywhere where IR's are near zero. Investment by corporation has also has slowed. Bubbles get blown. Middle class suffers most. Home prices become unsustainably high.

Eventually when rates rise, whenever that might be, I believe it will result in a colossal implosion.

I read a lot of this kind of arrogant nonsense on this site in 2010 and 2011. I was wildly criticized by posters who insisted a depression or deep recession was imminent, that 2008/2009 market lows would be revisited. I stated that we were in a new bull market, and that historically they last minimum 4-5 years. I stated that there would be no depression, and that the crash we had experienced was a once/twice in a lifetime opportunity to get in cheap and that crashes just don't occur that often ( some posters expected another crash within 2-3 years of the original ).

7 years later, pretty most aspects of my vision at that time have occurred. While you can claim my vision is poor and make wildly aggressive assertions of the future, my experience suggests you are somewhat misguided. You seem to have totally missed my main points here, that long term contains many unknowns, and that low interest rates in my opinion is not a high risk factor in creating future crisis. I cited a very real example of how high interest rates in Canada did not have a long term negative impact on the Canadian economy. In fact, those high interest rates were a bigger risk factor then today's low interest rates. I don't expect you'll relate to this. I brought up taxes because I suspect many Americans will be uncomfortable with their rising taxes now ( if not already ). These realities we already went through in Canada; they may be fairly new to the US. Why do I mention this ? Because higher personal taxes are part of the solution to manage federal debt regardless of what interest rates are ( within a reasonable range ).

You are of course welcome to expect the worst in the US, and it doesn't really impact me much here in Toronto either way. I just don't think low interest rates are something to worry about, and definitely not something to stress about or post about every week like some on here do. You can disagree, and if the long term is truly as dire as you insist, well, adapt and be ready. I can deal with whatever occurs here no problem.

Perhaps you are more in the know about the US. Certainly the US has greater social issues, a much larger debt to GDP ratio then Canada, and your taxes are rising at a time when ours are dropping. Your stock markets are more prone to huge trends and bigger gains or losses then Canadian markets. Trump could be a disaster for your markets. My guess is things are much better in the US then posters on here suggest. If I'm wrong, well, we'll find out within 5 years. I trust you have a plan to get rich off your insight on the coming "implosion". Good luck. Maybe we can revisit this in 5 years.

 

[der_kommissar]

You must be fairly old.
You are confusing monetary and fiscal policy.
You can't conflate a stupid tax policy and a stupid interest rate policy other than to say they are both stupid and the result of them will be generally negative.
When the banksters slash rates to zero, for the wrong reason, it doesn't take a soothsayer to know it will lead to distress. It's happening right now. The results of our stagnant global economy now with rates racing towards zero most everywhere is an effect of a ZIRP policy. And the fact that this policy is a theoretical dead end means monetary policy has failed.

There is no demand and more credit was not the answer. They blew it.

To say that the current policy will not have to be paid for (or is currently being suffered through) is a stunning lack of vision for someone so old and for someone who has lived through so much.

Savings have collapsed anywhere where IR's are near zero. Investment by corporation has also has slowed. Bubbles get blown. Middle class suffers most. Home prices become unsustainably high.

Eventually when rates rise, whenever that might be, I believe it will result in a colossal implosion.

We have a winner!

 

[LacesOut]

I read a lot of this kind of arrogant nonsense on this site in 2010 and 2011. I was wildly criticized by posters who insisted a depression or deep recession was imminent, that 2008/2009 market lows would be revisited. I stated that we were in a new bull market, and that historically they last minimum 4-5 years. I stated that there would be no depression, and that the crash we had experienced was a once/twice in a lifetime opportunity to get in cheap and that crashes just don't occur that often ( some posters expected another crash within 2-3 years of the original ).

7 years later, pretty most aspects of my vision at that time have occurred. While you can claim my vision is poor and make wildly aggressive assertions of the future, my experience suggests you are somewhat misguided. You seem to have totally missed my main points here, that long term contains many unknowns, and that low interest rates in my opinion is not a high risk factor in creating future crisis. I cited a very real example of how high interest rates in Canada did not have a long term negative impact on the Canadian economy. In fact, those high interest rates were a bigger risk factor then today's low interest rates. I don't expect you'll relate to this. I brought up taxes because I suspect many Americans will be uncomfortable with their rising taxes now ( if not already ). These realities we already went through in Canada; they may be fairly new to the US. Why do I mention this ? Because higher personal taxes are part of the solution to manage federal debt regardless of what interest rates are ( within a reasonable range ).

You are of course welcome to expect the worst in the US, and it doesn't really impact me much here in Toronto either way. I just don't think low interest rates are something to worry about, and definitely not something to stress about or post about every week like some on here do. You can disagree, and if the long term is truly as dire as you insist, well, adapt and be ready. I can deal with whatever occurs here no problem.

Perhaps you are more in the know about the US. Certainly the US has greater social issues, a much larger debt to GDP ratio then Canada, and your taxes are rising at a time when ours are dropping. Your stock markets are more prone to huge trends and bigger gains or losses then Canadian markets. Trump could be a disaster for your markets. My guess is things are much better in the US then posters on here suggest. If I'm wrong, well, we'll find out within 5 years. I trust you have a plan to get rich off your insight on the coming "implosion". Good luck. Maybe we can revisit this in 5 years.

For the sake of this discussion I too live in Canada....(Ontario has a worse debt to GDP ratio than any US state, all things considered)....but I spent the majority of my life in the US and still have a lot of ties there.

I trust you profited handsomely from your bang on call. Congrats. I have always been long stocks, for as long as I can remember. I rode down some big downturns and kept adding and it's been a good strategy for me. Buying quality companies that are around for the long haul.

I just lightened up my positions 2 weeks ago which you can follow in my journal. I do this on occasion as well when I feel the markets are going to correct.

I'm sorry but this isn't arrogance.
It's pretty arrogant to think that what happens in America won't affect us here in Canada. Not much else matters.

The bottom line is that I'm already correct. A ZIRP has more negative consequences than positive ones. The longer interest rates are left artificially at this level, the longer it will take to raise and the more pain that will be exacted when they are finally raised. Currently, an interest rate rise to 5% would destroy the Markets, the consumer, businesses and the Government. Forget about it. Our economies could not handle this without a violent and deep correction (which we need anyways).

 

[der_kommissar]

The bottom line is that I'm already correct. A ZIRP has more negative consequences than positive ones. The longer interest rates are left artificially at this level, the longer it will take to raise and the more pain that will be exacted when they are finally raised. Currently, an interest rate rise to 5% would destroy the Markets, the consumer, businesses and the Government. Forget about it. Our economies could not handle this without a violent and deep correction (which we need anyways).

In all honesty, even that would be an optimistic outcome...Unless by destroy, you mean make 2008 look like a dress rehearsal...The system has continued leveraging at an epic pace (expand the debt) and leverage in the system is perhaps even greater than 2008...The problem with the optimist's version of events is that the "hint" of a rate rise in August 2015 led to a one day crash...the actual implementation of a rate increase and the potential for 3-4 more caused a 15% sell-off and a "too strong" dollar (which in turn pummeled commodities)...The flipside is that not raising leads to all sorts of momentum chasing, bubble-icious type outcomes that are certain to be more damaging than 2000/2008 (as you've alluded to)...

But again, the collaboration between all of the major CB's is also something to consider...The Fed can no longer operate in isolation, so if the ECB and BOJ go negative, even a modest rate increase brings too much dollar strength and we repeat Jan/Feb...the reality is that the other CB's have to bring some sanity back to their monetary policies or everyone is trapped in this same lunacy with assets spiking and crashing every other month.

 

[LacesOut]

In all honesty, even that would be an optimistic outcome...Unless by destroy, you mean make 2008 look like a dress rehearsal...The system has continued leveraging at an epic pace (expand the debt) and leverage in the system is perhaps even greater than 2008...The problem with the optimist's version of events is that the "hint" of a rate rise in August 2015 led to a one day crash...the actual implementation of a rate increase and the potential for 3-4 more caused a 15% sell-off and a "too strong" dollar (which in turn pummeled commodities)...The flipside is that not raising leads to all sorts of momentum chasing, bubble-icious type outcomes that are certain to be more damaging than 2000/2008 (as you've alluded to)...

But again, the collaboration between all of the major CB's is also something to consider...The Fed can no longer operate in isolation, so if the ECB and BOJ go negative, even a modest rate increase brings too much dollar strength and we repeat Jan/Feb...the reality is that the other CB's have to bring some sanity back to their monetary policies or everyone is trapped in this same lunacy with assets spiking and crashing every other month.

The only hitch in your eloquent point is where you say the CBs have to bring sanity back....
What if they don't?
Under which circumstance does this happen??
They are already fucking insane!!!!!

 

[der_kommissar]

The only hitch in your eloquent point is where you say the CBs have to bring sanity back....
What if they don't?
Under which circumstance does this happen??
They are already fucking insane!!!!!

Completely agree with you...They are criminally insane and I'm not holding my breath for the Kuroda's and Draghi's to do anything differently...We've entered the "hot potato" phase of CB "crisis management"...

 

[viktor_k67]

Does rate increase may cause market crash? does it the main reason everybody are afraid to say in loud about a rate increase delay?

http://www.reuters.com/article/us-economy-poll-usa-idUSKCN0Y31H9