On Friday, I read a post on the New York City housing market that got me to thinking about how we view interest rates and their effect on credit markets. Traditionally, we view higher interest rates as a net tightening and slowing of the economy, while interest rate cuts are a loosening that should aid the economy. But is this really true? I say no. Tightening into frothy markets produces more froth. Some thoughts below
Here’s the article that sparked my interest in this: Manhattan Home Sales Rise to Year-End Record in Deal Rush. This is the part that I want to concentrate on:
Manhattan apartment sales surged in the fourth quarter, setting a record for year-end transactions, as the prospect of rising interest rates and prices pushed buyers to make deals before purc...
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Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He has also been a regular economic and financial commentator in print and on television for the past decade. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.