BGFalcons82;846145 wrote:Interest rates are poised to jump up. If not next week, then certainly by the end of 2011. Investors will need some breaks in order to...uhhh...umm...well...ahem...invest. Without lower cost for capital, innovation & expansion falter.
Can't completely wrap my head around this at the moment. When risk is higher, investors demand higher interest rates, as is the case here. The supply of capital is going to be there...keep in mind there's a difference between taxing the investor (capital gains) vs. the company making the investment. You're not going to crowd out investment with higher capital gains tax, I don't think (which is why I said show me the evidence supporting that when it was reduced from 20 to 15%). And rates are historically low, even if they should go up 100bps, so I think this would be dominated by the lack of confidence more than anything.
Interest rates are poised to jump up. If not next week, then certainly by the end of 2011. Investors will need some breaks in order to...uhhh...umm...well...ahem...invest. Without lower cost for capital, innovation & expansion falter.