Thursday, March 24, 2005

Mortgage rate and gas squeeze

The Wall Street Journal reported today that interest rates on home mortgages have jumped from 5.66 percent to 6.19 percent in the last month. Greenspan and the Fed raised the short term fed funds rate a quarter point on Tuesday, making it the 7th rate increase over the last 8 months.

The dollar has rallied over the last 5 days on the rising interest rates, which is both good and bad. A stronger dollar brings in more foreign investment which is required to fund the federal deficits (we already have record debt and record debt held by foreigners), but it is likely to make the trade deficit wider because it increases the cost of American products overseas.

I also heard that gas hit an all-time high in the DC metro area this morning. Regular unleaded is averaging $2.18/gallon across the metro area - up 8 cents from last week. I paid $2.19/gallon to fill up my car.

The Republican congress and this president have racked up more debt and increased the size of the federal budget and trade deficits to record levels. They are putting the financial stability of the U.S. economy in peril, as well as the world economy. Although there are some simple relationships between interest rates and government deficits, most Americans just don't see the connections between the economic policies of this president and their prices/costs. The Republicans do a great job of distracting the American public with such things as the Terri Schiavo situation. I wish Americans would just wake up!


Justin's D! said...

Who cares about mortgage rates, gas prices, wars overseas, less economic stability, anti-US sentiment overseas, when major league baseball players are doing steroids?!!!

Rob said...

You are absolutely right! What am I thinking?!?!?! The most important things in my life right now are stopping gay marriage, Terri Schiavo, steroids, Michael Jackson, and the Pope's health.

I don't need to worry about health care for my kids, how I am going to pay for college, and the things you list.

The Wolf said...

I don't have time to worry about Bin Laden or North Korea's growing nuclear arsenal!

Can we focus on the real issues like whether Mark McGwire deserves to be in the Hall of Fame?!! THANK YOU!!!!