The Right Coast

Editor: Thomas A. Smith
University of San Diego
School of Law

A Member of the Law Professor Blogs Network

Friday, April 5, 2013

When Interest Rates Rise by Martin Feldstein - Project Syndicate

CAMBRIDGE – Long-term interest rates are now unsustainably low, implying bubbles in the prices of bonds and other securities. When interest rates rise, as they surely will, the bubbles will burst, the prices of those securities will fall, and anyone holding them will be hurt. To the extent that banks and other highly leveraged financial institutions hold them, the bursting bubbles could cause bankruptcies and financial-market breakdown.


This is going to be difficult to time. --ts

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You have a choice - hold assets and you'll lose a lot in the collapse - equities, bonds, property, commodities....

But if you stay in cash you're at risk from confiscation as banks go bust, a la Cyprus.

And if you hold gold, you'll be plundered.

Posted by: dearieme | Apr 6, 2013 4:09:12 PM