Debt Conoslidation Articles

Inflations Effect On Interest Rates

Andy Kessler asks a very important question: How do you “Put the Toothpaste Back in the Tube?”

Since we are printing up all of the money that doesn’t exist, most economist agree that the threat of hyper inflation is coming down the road and either we head it off now or get eaten by it later.  Interest Rates vs. Hyper Inflation

Kessler begins thinking about how the Federal Reserve might go about heading off inflation as the economy begins to recover:

But how? Doing the opposite of what it is doing now.Of course, you raise the interest rates. There are some bad debt out there that should never have been there such as the debt left by AIG and Bear Stearns. By removing all the backstops it put in for the commercial paper and other markets to keep them functioning. Will this change the economy speed? Sure will. This is a tightrope act. Getting all that toothpaste back into the tube will require the skills of a surgeon and the moxie of a middle linebacker, and someone deaf, dumb, and blind to congressional meddling. Keep in mind that we are treading on uncharted ground now.  What is a Mortgage Planner?

How this is emplimented is going to to vital to the future of the mortgage business and mortgage rates. Something like this will most likely be very difficult to implement well. Therefore, using that as a baseline assumption who wins in a mortgage environment with double-digit interest rates?

As the Federal Reserve meets for FOMC this week the question of inflation is beginning to re-enter the discussion.

Federal v. State Banking Powers

Here is another issue that may have strategic impact on the future structure of the mortgage industry: “Can the US Treasury Shield National Banks from New York State Law?”

Four years ago, Eliot Spitzer, then the New York attorney general, asked several national banks to explain why they were disproportionately charging blacks and Hispanics high interest rates.

Instead of an answer, he got a lawsuit. The banking industry tries to get the fed courts to get rid of anitdiscrimination laws.  Mortgage Interest Rates

On Monday, the U.S. Supreme Court will hear New York’s appeal. If the state wins, it would mark a break with decades of precedent that mostly favors the powers of the federal government and open a new era for 50 state regulators to play a bigger role.

A shift like this, although unlikely based on past Federal judicial precedence would dramatically shift the structure of banking.