In the previous blog entry, we discussed financial repression and the biggest investment challenge for insurers in the last thirty years – low nominal, and, in many cases, low real interest rates. For more on financial repression, we refer you to an article in the IMF’s Finance & Development magazine, Financial Repression Redux. As noted.
Like a finely tuned, yet incessantly blaring marching band, the Federal Reserve continues its financial repression march. If your insurer is like most, the preferred scenario for rates is typically ‘slow, up’, meaning rates moving higher, consistently but slowly over time. However, this is unlikely in the present regime. As Chrysler’s latest controversial ad says,.
In a recent article in McKinsey Quarterly called “Working Out of Debt,” the venerable consulting firm tracks past deleveraging processes and compares them to the current process in the US, UK and Spain. In a nutshell for the US, households appear to be about a year and a half away from reducing debt as a.
Finally, over four years after the start of the Great Recession, the Fed, in a letter to Congress has started pushing some aggressive solutions to the housing crisis that may not sit well with investors and banks. Read the letter here: http://www.federalreserve.gov/publications/other-reports/files/housing-white-paper-20120104.pdf Bill Dudley, NY Fed President, Chairman of the Federal Open Market Committee, successor.