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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: KyrosL who wrote (1352)3/5/2004 5:58:53 PM
From: mishedlo  Read Replies (1) of 116555
 
So it's not clear to me how jacking up short rates from to 1% to 3% will hurt the real economy.

Do you have any idea how many companies are dependent on short term rates not converted to LT debt?

Do you have any idea how many variable rate mortgages there are?

Do you have any idea how many people are on the edge of falling off a cliff that this would push them over?

Do you have any idea of how many TRILLIONS of $ of derrivatives that would be wiped out in a sudden move like this?

I do not know either but... Quite simply we are way way way passed the point of no return, and i seriously doubt you would like the result unless you were shorts stocks and treasuries cause the world would collapse. In fact, if you were long puts, I am not sure you would even get paid. Those that owed you might be worthless.

It is 100% without a doubt preposterous to suggest an immediate hiking of rate by 2%.

Mish
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