Location: carl sagan's universe
Posted on: 09-12-08 16:16:00
Well looks like the BoC has dropped their rates by 0.75% to 1.5%.
But major banks are only dropping prime by 0.5% to 3.5%.
Wonder when they'll pass the full benefit of the drop to the public, if ever.
Let's see if a smaller bank or foreign bank drops it by 0.75%
http://www.globeinvestor.com/servlet/story/RTGAM.20081209.wrates1209/GIStory/
And if the US drops another 0.5% to 0.5%?
And Japan drops even further from 0.3%?
Pretty soon maybe the rates might go negative???
Can the stock markets go negative? Like can Nasdaq go to -100????
OK, OK yaar... that was the joke in 2002...
rates go down traditionally meaning stocks shud go higher but instead they are lower.
markets already had it built in and then some?
Quote:It appears that short term T-Bill rates are already at or below zero -
Originally posted by investpro
And if the US drops another 0.5% to 0.5%?
And Japan drops even further from 0.3%?
Pretty soon maybe the rates might go negative???
Can the stock markets go negative? Like can Nasdaq go to -100????
OK, OK yaar... that was the joke in 2002...
http://money.cnn.com/2008/12/10/markets/bondcenter/credit_market/index.htm?postversion=2008121009
Interesting times, these.
The question is whether this is only a short term phenomenon or the begining of a long-term trend of zero interest rates and negative bond returns.
If that's the case, then stock markets will not go up on lower rates - it'll be Japan all over again on a global scale.
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"Mah deah, there is much more money to be made in the destruction of civilization than in building it up."
-- Rhett Butler in "Gone with the Wind"
I am just glad I got that open-variable mortgage in September for prime-0.5. Score!
Other than that every damn investment is going downhill for me 
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If you have a gun, you can rob a bank.
If you have a bank, you can rob everyone.
- Bill Maher
In your opinion can prime go further low ?
Location: Canada-Glorious and Free
Posted on: 11-12-08 09:48:24
Japan on a global scale is about right. They had a prime of 0.5% for many years in the mid-90's. And I think it will be the same here too.
What I don't get is the -(ve) interest in the T-Bills. That basically means you lend the money to the government and then you pay them interest too.
V
Quote:Essentially, yes.
Originally posted by Big Vee
Japan on a global scale is about right. They had a prime of 0.5% for many years in the mid-90's. And I think it will be the same here too.
What I don't get is the -(ve) interest in the T-Bills. That basically means you lend the money to the government and then you pay them interest too.
V
The negative interest rate is the premium investors pay for the security of their money.
During growth times, you receive a positive premium for lending someone your money.
In depression times, you pay a premium to someone for keeping your money safe.
Also, keep in mind these are 30-day T-Bills.
So if during the next 30 days you expect other investments to return -2% and this bond is returning you -0.5%, hey it's not a bad deal.
Of course, zero or negative interest rates long-term will be a very bad thing for the global economy.
Accounting for inflation in Japan, their interest rate was zero or even negative during the 90s.
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"Mah deah, there is much more money to be made in the destruction of civilization than in building it up."
-- Rhett Butler in "Gone with the Wind"
Location: carl sagan's universe
Posted on: 11-12-08 11:42:16
Quote:
Originally posted by Aashu
In your opinion can prime go further low ?
The prime is set by the banks not the Bank of Canada.
Right now there is tremendous pressure on the banks to pass on the full benefit of 3/4% to the public as they have only passed on 1/2%, i.e prime is 3.5%. Even if they don't right now, when BoC meets in Jan the expectation is that they will reduce rates and then the banks will also reduce the prime even if not by the full amount the BoC does.
At least that's the expectation.
I hear Vancity in BC has reduced the full 0.75% that the BoC announced. Can anyone from BC confirm please?
