Joeh wrote..
6 Month Treasuries are yielding over 5.5%. 2-year yield over 5%. 30-year yield 4.35%. I don't see an economic uptick on the horizon. Any insight as to how we can commit to 4.35% for 30 years without being able to inflate the currency? War? (unlikely) Reduced SS and Medicare outlays? (lower life expectancy?) Something else?
WTF do you think interest rates are supposed to be with a 2% inflation target? My education told me the risk free rate was supposed to be inflation plus 3%. We aren't there yet. What the Fed and how the government operated was fiction. We haven't seen anything yet. Bad money drives out the good. The good is capital, which is leaving the country. Credit is to buy something that already exist. They can't create goods and services. There is a liquidation coming. The USA produces nothing but debts and exchange traded equities today, production fleeing bad money. Europe is worse and Canada has gone full 4th Reich. One who can't pay their debts is bankrupt.
Someone mentioned the Fed losing money on their securities. Look at Japan, with their money in full decline. They have produced an inflationary boom in their stock market, which is still trading below the january 1990 high. The JCB holds a massive amount of QE at negative rates. Their currency is in full decline and the bank will have to defend at some point. It will go bankrupt. The Fed can protect itself by ceasing to sell, but QE isn't in the cards again. China also has a currency and banking problem. I think the Yen decline and China are linked. Edward Dowd says the dollar is going to collapse upward. I'm not sure he isn't correct. There was a Petrodollar for a reason and the need for more dollars when the currency exchanges will produce fewer for the same products don't solve the problem. The delusion that game is done because India bought oil with their money is running amok. They always bought oil in their money. just like the Europeans did in theirs. Pricing in dollars is just another way of saying they want the equivalent. You won't see a published price in Rupees, unless there are financial assets in Rupees worth possessing. India is likely the next growth game that means anything, should the entire house of cards remain intact.
Joeh asks a damn good question. They haven't paid even the 2% they were paying. What happens when it goes to 7%?
While I'm commenting, Karl raised a good issue I have some experience.
KD wrote..
When people plant or build trees they damn well ought to pay attention to where the fall line might be 10, 20, 50 years hence. If that's a problem then you top the tree at the ~10 year point.
Its ALSO the root system spread and potential impact on the foundation and, depending on where your underground lines are, power, water, gas and sewer. ESPECIALLY sewer.
I don't think oaks are that big a deal, but when they built here around 50 years ago they planted fruitless mulberries and cottonwoods. Rather than go down into the ground, these trees roots go sideways for a long way. One house I have had a cottonwood that was maybe 50 foot tall. I was finding surface roots 4 inches in diameter 30 feet away. The tree had literally tilted the house.
The last time I did major work on the house, I heard a water noise. I finally located it in the hall bathroom. I think it cost me $4500. The plumber had to cut roots bigger around than my leg. I finally cut the tree down when the tenant complained about it dropping limbs. $1600. It was a bargain.
If there is a saving grace on this particular house it is the plumbing is a shotgun through the house. The house is getting close to 50 years old and I assume it is cast iron. The good part is there hasn't been the stopping up issues you usually have when plumbing is shot. That will be around $20K, unless I can find some cheap diggers. My sister worries about stuff like that. I just recognize its one reason a new one costs another $100K.
Then there are the foundation issues. There's an engineer we used to employ. In fact he does the engineering reports for the foundation company. He says you don't touch a 40 year old foundation unless you have to. I fixed a couple in the mid 2000's. What a mess that turned into. His reasoning was the house is still standing. You move one part of the foundation, plan on moving all of it. Then think about what jacking it is going to do to the plumbing. Adjusting a few doors and fixing a few cracks that show up from time to time generally works. If the brick is about to tilt off the walls, you don't have much choice, but go ahead and do the whole thing and hope the plumbing doesn't break. Fixing foundations aren't that complicated. It is the associated stuff that can turn into a nightmare.
The only function of economic forecasting is to make astrology look respectable.---John Kenneth Galbraith
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