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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: SouthFloridaGuy who wrote (77745)4/15/2008 11:37:02 PM
From: koan  Read Replies (2) of 116555
 
Longislandguy: "
"If debtors can't pay debts at a 3.5% risk-free, why and how could the market send it to 12%?

The only way the machine restarts itself again is with lower rates and/or lower risk premiums.

The implication is that rates are too high right now relative to debts."

koan: not sure what you are getting at?

My simple equation: Interest rates have to be above inflation so the lender can get a return and not lose money.

If inflation is 10%, interest rates need to be 12% or 13% to make up for the lost value of the debased currency. In a pure capitalist world-lol.

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