Goldman Sachs CEO, Lloyd Blankfein, this morning said that “One of the big risks that’s looming is complacency. People are once again complacent about the low level of interest rates.” He then went on to say that Goldman Sachs, arguably the most respected Banking firm on Wall Street, is advising its clients to borrower “as much as they’re going to need for as long as they think they could need it”.
Putting it another way, Blankfein is saying that Goldman sees a possibility for increased growth in the economy next year and if this were to happen, interest rates, and mortgage rates could rise sharply and quickly.
Yes, this is a possibility, and certainly worth considering, as I think the economy is poised for a strong 2013. However, this is IF Congress and the Whitehouse can come to reasonable terms on the fiscal cliff, before Dec 31.
And that is a big IF.
IF the Federal Gov. goes over the fiscal cliff the damage to the economy will be severe and the markets and economy will spiral, like the tazmanian devil, each day until a deal is reached.