30 YEAR CYCLE IN HIGH INTEREST RATES STARTS IN 2014
Not kidding, and like a said, M-REITs can't handle rising or decline interest rates. A 30 year rising interest cycle is starting in October 2014. FED will be tapering because interest rates will be rising. Look at Japan, inflation hit .8% in last quarter and will average 3% next year. USA is not far behind. Employment will rise dramtically and unemployment will fall dramatically at the baby boomer retirement is picking up. THE NEXT 30 YEAR INFLATION CYCLE IS STARTING, BETTER WAKE UP TO THE FACTS BEFORE IT IS TOO LATE. I do expect the M-REITS, will be joining their baby boomer parents Fannie and Freddie in the single low digits in next year.
Any company with a pension that allows a 5 year certain pay out had a major fraction of their work force retire this year because the interest rate for the present value calculation rose from .75% to 1.75%. Our company lost 10% of our work force last month. If they had not retired they would have lost a sum equal to 3 years worth of their salary.
inflation is low so rates will stay low. guaranteed returns will stay super low because inflation is low. inflation wont be picking up anytime soon unless growth is excessive which can not happen as the consumer is already maxed out again like.2006-07. There will be another consumer deleveraging cycle.
Unless we start re-opening the manufacturing plants, the paper mills, the garment factories, and the steel mills so 14 million people can go back to work and an additional 20 million can quit McDonald's and go work for a decent wage and everyone pay taxes, rates will stay very low for a very very long time. Not everyone is an MBA.
You could be right, Craig (without the Fed's actions, we'd probably be in a disinflation environment now)...There are so many variables, it may be difficult to be 100% correct at predicting rate moves ("the doctor")...and you also have recession cycles where rates pull back down. I tend to look at what happened to Japan, their demographics, debt-to-GDP ratios, etc...We could wind up going down that disinflation road, were it not for our WEIMAR FED CHIEFS here, determined to "print or die". So, opposing forces at work, coupled with all sorts of other variables, like demographics, student loan debt, macro econ cycles...plus the fact that the US is not the center of the world, it once was. I guess I take a middle road view...Sure, rates can rise a bit...but if a recession hits and stocks pull back, then money flows back to bonds, lowering rates...But if the money within the banks and held as reserves in the CB ever get out into the economy, then I could see price inflation taking off...and interest rates going up. I'm sure the FED is working on keeping inflation up...and working against what happened in Japan, earlier.
Wrong. Every 10 seconds one of us turns 65 (this amounts to between 3 and 4 million Boomers a year). This means that we are the force behind the rapid expansion in the number of over-55 communities, senior apartments and skilled nursing facilities.
Not only are we currently reaching the age of 65 at the rate of about 10,000 a day, but we will continue reaching retirement age at this rate for the next 20 years! This will result in more than double the number of senior citizens in our country by 2050.
Nearly half of all American workers (which includes our adult children) have less than $10,000 in retirement savings. However, even when you only consider older workers, one-fourth of workers in the 46 to 64 year old age group have NO retirement savings or personal savings.
Baby Boomers tend to carry more credit card debt than younger adults in our population. Approximately 56 percent of current retirees still had outstanding debts when they retired.
Seventy percent of American workers plan to work after retirement, and forty percent of Baby Boomers say they expect to work "until they drop." (Check the medical statistics below, however; many of us will not be able to keep working for the rest of our lives, even if we want to.)
In 1945, there were 42 workers for every person on Social Security. Today there are only about 2.5 workers per Social Security beneficiary, and this number is expected to drop even more in coming years.
This country will need workers. Big Ben even acknowledge that unemployment is dropping because boomers are retiring and young people are being hired has picked up dramatically. This is the inflationary cycle starting, Japan is also in same cycle, inflation hit 3% from 0% last quarter. IT IS HERE....FOLKS....GET READY.....