Low rates and a failing economy

Rates are low. Very low. Most people think this is good. As far as someone refinancing or purchasing a house right now, this is good. You're not going to find better rates.

The rates should stay low. Low confidence in the stock market and a lack of jobs is creating a perfect storm for people to shelter their money in treasuries. This pushes the yield down and should mean low rates for a while. Mainly because I don't see where the public or private sector will be creating any new jobs soon. Don't forget we still have a massive Real Estate problem and tons of inventory that the banks have not unleashed or pushed forward on foreclosing. We're far from the end.

The economy is not there. Anyone who tells you that this economy is turning around doesn't know what they're talking about. We're in for a long year. If we can truly put Fed money into "green" research or the creation of "ideas" that will be the best way for us to get out of this mess. Eventually the RE market will correct itself but we've got a long way and many ups and downs before that happens. It's going to take people putting research into new ideas and hopefully there will be a spark that will set off a product that will need specialized employees that can offer good paying jobs. What that spark will be or in what direction of manufacturing, I don't know. But I'm thinking in the way that the Dot.Com boom was in the 90's. Sure there where failures at the end but look what we where left with. iEverything, internet, the digitalization of information and a slew of other products and money earning opportunities.

Back to low rates, yes we have low rates. Now is the time to check into refinancing or if you've been waiting to purchase, start looking. The problem there is that the banks are so tight with the money and guidelines that it's making it near impossible to qualify. Don't be dismayed if you can't get a loan Today. The tightening of guidelines is reactionary to how loose the guidelines where. Eventually you'll see some changes to the positive. It might not seem like it now. It might seem like you hear no a lot more than you hear yes, but in time things will loosen up. Just like the job market, it just takes a spark. It will take a few risk minded investors to roll out a Stated program that makes sense, and if they're successful others will follow. But it takes time for these people to 1) have the balls to create a good program with guidelines that will allow it to succeed, 2) the program must succeed and turn a profit, and 3) both one and two will take time to develop and show success. Even in a perfect scenario, if all these dominoes fall the way they're supposed to, it could take months if not years. I'd guess, from the roll out of a new product to the sale of the loan to the time they can be analyzed and finally confirmed as a success and for other to start copying them; you're looking at a year?

Meanwhile who knows what will happen between now and then. It's scary but for some reason I think there is a light at the end of this pit we're falling in. It's not going to be a fun fall and I might not be able to see the light, but I feel that we know what direction we're going to need to go into. The problem is not everyone, especially the people who actually make the decisions like lawmakers and their advisers and lobbyists, can agree on the same path to take to get to the light. This is where we might find the most difficulty getting to the end. Without a good plan that everyone can latch onto, it could cause us to be lost longer than we need to be or can afford to be.