Well then why are people able to borrow against it and then also deduct taxes on the interest on that borrowed amount?
Also I pay property taxes. Somehow the worth of the property goes up every year and gets gets taxed accordingly. Then why can’t wealth get the same treatment?
> Well then why are people able to borrow against it and then also deduct taxes on the interest on that borrowed amount?
I doubt they can borrow against the full amount of it, because that changes. They'll be borrowing against a much smaller value, so the lender has a safety margin. Same as if you have a mortgage you pay less interest the less you borrow vs the value of your house, except I imagine it will be far more conservative.
> Also I pay property taxes. Somehow the worth of the property goes up every year and gets gets taxed accordingly. Then why can’t wealth get the same treatment?
Well, three things.
Firstly, as an aside, it's incredible that you would want this. That is a bad system. You should get taxed according to the services you consume, along with a flat rate for common services, rather than punished with taxes for daring to spend money on improving your house.
Secondly, "wealth" is far less tangible than property prices. Property prices are very well understood. A share price can fluctuate wildly, and saying "well your net worth for today is the number of shares you have times the last share sale price" is just a terrible measure.
Thirdly, what will those shares be worth to sell when they are taxed? Investing is a gamble. Housing is different: we need housing to live, and we want a nice house. No one wants shares. They want a return, and for it they'll stump up a giant amount of money, that will fund many jobs for years, and generate lots of taxes, and who will want to do that when their share will be eroded year on year? There's no benefit to shares except the return. Decreasing the return will have a direct impact on innovation and jobs.
7-9 rounds just means 7-9 conversations. Just talking to a recruiter and the manager are 2 rounds. So 5-7 interviews that evaluate competency. You usually get the lower end unless you ended up giving mixed signals.
Sounds like asking a lot from candidates but unfortunately candidates lie a lot and the cost of hiring candidates that don’t match up to the requirements when paying $300k-$500k/year is just too high. Firing people is hard and takes a long time, especially in management roles. My personal guidance to managers is to have rounds match the level and experience required for the job. You can hire an intern with 2 rounds after the hiring manager conversation but a staff IC probably needs 5, directors need 7.
I'm talking about 7-9 rounds for non tech companies, and each round is at least an hour plus interview. These roles aren't even hitting the $200k marker.
You’re not even hearing back from the recruiter for 14 days if the job posting just went up. I mean it takes 1-2 weeks from the day you got told that you’re getting an offer to the day when you sign it.
We are at the moment hiring for a L3 (no fresh graduate but someone with 3-5 years of experience). The role has been open for two months now (it was a backfill). I personally am in charge of the technical screen which is the second interview after the hiring manager. I am already getting a filtered set of candidates after the recruiter and the hiring manager review candidates. Of the 5 that have come my way, I’ve said yes to 1 person and 1 as a yes, pending another technical screen. We are not even wanting an exact match, nor are we expecting cure for cancer. Yes there are a lot of people looking for jobs but you don’t realize how many candidates are just not what their resumes portray. It takes forever to get someone competent in the pipeline and even then, you know nothing about their work ethic. The reason the pipeline is slow is because the candidate pool is flooded with over the top resumes that are not backed by actual talent and once you hire a wrong candidate it is extremely difficult to fire them, even with at will employment contracts.
Any manager will tell you, they’d rather not go through the long hiring process.
> once you hire a wrong candidate it is extremely difficult to fire them, even with at will employment contracts
I live in a country where the probational period is 6 months (Germany), so the law says people can get fired without cause or justification, just give them 2 weeks notice or 2 weeks garden leave.
Even with that, it's a very arduous process to fire people. Even in cases where they repeatedly refused to show up for work, I've seen HR departments asking managers to "try harder". This only makes both the employee and the manager suffer.
The reason for that is simple: HR departments are extremely inefficient machines.
Yes please, add vets to the bill. The problem you’re describing gets exacerbated when PEs buy practices. They undercut the very few other surviving practices and remove any ability for new practices to open up. In the last 3 years, we went from 10 to just 3 emergency vets in a 20 mile radius. Now if I need to go to an emergency vet, I drive half an hour if there’s no traffic and pay $200 to just be seen.
This insanity is creating a crisis amount of pets being abandoned, and then euthanized by the animal services. People can’t afford to have pets anymore.
As costs for legal work drop we might expect demand for that work to increase. For example, it may be the case that legal help becomes accessible to entire segments of the population that had no access previously.
Mortgage rates are not decided by the fed rate as much as they are by the bond yields. There’s a reason why the mortgage rates were above 7% yesterday even when the fed rate has been stable for a while.
This rate hike is aimed to stabilize the bond yields which in turn will lower the mortgage rates.
If interest rates go up, bonds get sold (for better yield bearing products), pushing the yields of those bonds higher. And it finds some equilibrium. The fact it isn't immediate has to do with short term vs long term bonds. When they mature and the pace of arbitrage.
I don't see how a rate hike is meant to lower mortgage rate. And just looking at the figures shows it's the opposite effect.
Logically, if borrowing money becomes more expensive, how could borrowing specifically for the purpose of buying houses become cheaper.
You have to look at the current context. Bond yields have been spiking, mostly because of the inflation expectations from oil prices and tariffs (mostly oil prices). Mortgages mostly track 10 year yields, which is why when fed dropped the rates back to back, the mortgage rates didn’t come down. The current hike (and the next one) is supposed to create a deflationary pressure, but also provide confidence to the market that the fed will step in to cool inflation if necessary. This in turn lowers the yield on 10 year treasuries and therefore mortgage rates.
The fed rate provides a floor for mortgage rates, but the 10 year yield and mortgage demand decide the ceiling. Currently the demand is pretty low, and therefore the yield mostly controls the mortgage rates.
what I'm saying is that Fed hikes interest rates → bonds sell off → yields rise → mortgage rates rise.
This is logical and empirically observed.
But you are right on the longer term effect. Zooming out: Fed hikes → inflation cools → inflation expectations fall → yields fall → mortgage rates fall.
But the latter is not guaranteed, and it takes time.
I'm unsure to understand how the ceiling and floor mechanisms work. But will dig into that. Thanks.
It seems like this would depend on the bond market’s perception of whether or not this hike is the start of a trend. It could be seen as a signal that political attempts to lower rates have been unsuccessful.
This is the right move. Inflationary pressures due to high oil prices and tariffs are not going away anytime soon. All the economic numbers point to a need for a rate hike. Not doing so has a much larger effect on the financial system than a 25 bps rate hike. Stagflation is a bigger risk to the economy.
Counterintuitively the rate hike can help lower things like mortgage rates by stabilizing the bond yields.
I don't think that mortgage rates are going to go down; I think they will go up. Just my opinion.
I also think oil is about to go up even more, maybe for multiple years, which is going to be inflationary on everything we do. But, could be really good for solar growth, electrification, and electric cars.
That wouldn’t be a great way to measure it. I’m only talking about the fed rates, how it impacts the bond market and therefore the mortgage rates. If someone decides to nuke the oil infrastructure of the world tomorrow, this rate hike doesn’t matter and your hopes and dreams of a low mortgage rate get nuked along with the oil infrastructure.
We'll continue through the depression we've started since 2008. (GDP growth should be closer to 3.5%-5%, but we haven't really escaped sub-2% since 2008) - our GDP has been depressed by at least 1-2% growth since that crisis, and I think a large part of it has been the inflationary cycle we started and never stopped.
The wars already put us into too much debt, Obama continued it for 8 years (granted, the deficit slowly went down, but it wasn't fixed). Trump and Biden did a huge disservice to the debt (but neither really cared much about it), and now I fear the path Bush, Obama, Trump, and Biden have laid will not be easily fixed.
I agree with you. We are still paying for 2008, and compounded the problem with Covid stimuli. I sure wish we would just rip the band aid off at this point, but it might already be too late. The global economy is jacked, China needs everyone to be consumers, and that well is running dry, globally.
GDP growth is never going to be that high again. GDP growth is just per-capita GDP growth (1-1.5% per year) + population growth (used to be 1%, now is 0% or slightly negative). GDP growth of 1-1.5% will be normal going forward and could even go lower if population decline is at -.5% per year, for example.
I did list GDP growth per capita[0], so that already was accounting for population changes.
Having said that, you are depressingly very correct. A negative population growth will cause the post-2008 depression to continue even longer, and probably more agressively.
Pedantic, but more likely to be a moonroof. A sunroof is opaque, while a moonroof is the clear or mild-to-moderately tinted glass panel we've all grown used to.
Well then why are people able to borrow against it and then also deduct taxes on the interest on that borrowed amount?
Also I pay property taxes. Somehow the worth of the property goes up every year and gets gets taxed accordingly. Then why can’t wealth get the same treatment?
reply