The local Incline Village Real Estate market remains stable and Healthy.  Incline Village Home listing continue to defy gravity, as many luxury homes have gone into escrow this month.  Call Tim Lampe today for up-to-the-minute market updates.

Posted by Tim Lampe, written by Steve Peterson.

Weekly Global Economic Commentary-March 22, 2011

 World investors, obviously unable to foresee how the chaos and destruction surrounding Libya and Japan will play out and shape the economy in the longer term, seem to have decided simply to wait. Markets are acting as if nothing terribly unusual were happening. Economic meltdown? What economic meltdown?

 

This is a balancing act of remarkable virtuosity, and it leaves us nothing to base our assumptions about tomorrow’s interest rates or the price of gold or even the value of the Japanese yen on. As a result, those prices have been flapping like tattered flags in a stormy ocean wind for over a week.

 

Example: One assumption, quite logically, was that the exchange value of the yen would plummet in the wake of the earthquake, tsunami and damage to the nuclear reactors. Japan, after all, was looking at a massive economic rebuilding process—from infrastructure to manufacturing plants to housing, from the most basic to the most refined and complex aspects of its modern life.

 

But the first thing that the yen did was to rapidly gain value against most other currencies. It even threatened to set a new record against the dollar. Why? Investors apparently decided that Japan would try to repatriate its own currency in a massive effort to rebuild its economy from within. G-7 economies combined their strength to intervene in the currency markets and bring the yen back down a bit.

 

Meanwhile, U.S. Treasury securities predictably gained in value as world investors sought the safe haven of Treasury securities. But gold, the other major safe haven, lost value, correcting for a few days before regaining strength. Why? Perhaps because it had been ready for a correction and investors decided now was surely as good a time as any.

 

And while we might have expected American interest rates, led by Treasury securities, to fall and continue falling, they have had their downs and ups, just as if nothing particularly threatening loomed on the economic horizon.

 

What we have, therefore, is an incredibly difficult time to try to predict the future—near-term or mid-term or long-term—but a great Contrarian moment to arrange financing with today’s remarkably low interest rates. These low rates will most likely look better and better as the future brings on higher rates. That, after all, seems to be the one thing that our best economists agree on: Rates will rise and probably soon. It seems a great time to avoid the rush, grab the best possible rates, and get our financing in order…while the rest of the world continues to await some sign of what exactly the future may bring.