That's because raising rates means sooner or later consumers will pay
higher debt servicing costs.
Mr. Ceci also announced that the government would legislate a debt ceiling of 15 percent debt - to - GDP in order to hold off a risk of credit downgrades and
higher debt service costs.
Not exact matches
This will set off a vicious cycle of
higher deficits that lead to
higher debt, which in turn will mean
higher interest
costs and less funding available for healthcare, education and other provincial
services.
This would not only mean
high, long - term
debt -
servicing -
costs, it could also challenge the U.S.'s credit worthiness.
Debt service costs have risen to 15 percent of GDP — just short of record
highs — according to CLSA.
The
cost of borrowing in China has been cut aggressively since the autumn of 2014 in response to the slowdown in the economy and the distress caused to property owners, local government and corporations by
high debt -
servicing costs.
What passed for Soviet Marxism lacked an understanding of how economic rents and the ensuing
high labor
costs affected international prices, or how
debt service and capital flight affected the currency's exchange rate.
As the gap widens, it creates rising uncertainty about how excess
debt servicing costs will ultimately be allocated, and at the point at which this uncertainty is
high enough to alter materially the behavior of economic agents, and so lower the net asset value of the economic entity, the borrowing country has «excessive»
debt.
I have explained elsewhere some of the reasons that determine whether a country's
debt is «excessively
high», and I hope formally to list these reasons more fully in my next book, but the key is the gap that is created between projected
debt -
servicing costs and the projected revenues earmarked to
service the
debt when an economic entity suffers an unexpected surge in
debt or an unexpected decline in growth.
Higher borrowing
costs would discourage business investment and raise the
cost of
servicing government
debt to unhealthy levels.
Their self - destructive real estate bubble has loaded down their labor force with
high debt service and housing
costs, whilst their giveaway of public infrastructure to insiders (with no price regulation) has led to
high basic living
costs.
As a striking example, and noting the total B.C. Budget is approximately $ 50 billion per year,
servicing B.C.'s
debt using Ontario's credit rating (and resulting
higher interest rates) would
cost B.C.'s taxpayers an extra $ 2.3 billion every year.
«Most discussions of how company balance sheets will react to
higher yields assume an instantaneous jump in
debt -
servicing costs — but borrowing is fixed - rate for several years,» Barclays says.
Further,
servicing costs of those households with
debt are considerably
higher than indicated by the average experience across the household sector, and have risen a good deal over the past ten years.
City - funded spending is projected to increase at an average annual rate of 4.6 percent between Fiscal Years 2013 and 2018, driven by
higher labor
costs and
debt service.
«Achieving these lapse — or savings — targets will be a significant budgetary challenge, especially in light of the
high levels of fixed
costs for FY 2018, such as
debt service payments, pension contributions and other
costs.»
This is a grant program designed to assist
high - performing charter schools with rent, lease,
debt service, and Proposition 39 pro-rata payments or
costs related to purchase, acquisition, design, new construction, and renovation.
Borrowing
costs may be
higher because of PA's 5 credit downgrades AND lawmakers who support this borrowing have not shared how they plan to pay for these substantial new
debt service payments in future budgets.
The burden is even more problematic if you consider the country's
high interest rates — the policy rate was just raised to 12.75 %, one of the
highest among major economies — which dramatically increase the
costs of
servicing debt.
Even if the path for tightening is described as ultra-slow and measured, investors will need to weigh just how much the
higher costs of borrowing might adversely impact the
cost of
debt servicing for corporations; that is, we may see further erosion of profitability from an earnings picture that is already flat.
As far as the government is concerned, there is also the problem of demand for the (existing)
debt at such low yields and that more new
debt can't be issued at
higher yields without increasing the
cost of
servicing that
debt.
Unless one believes US
debt levels have peaked, despite
debt interest
servicing costs at historic lows, gold prices appear set to move
higher over time.
However, if rates run too
high due to inflation, firms borrowing with floating - rate loans risk default as
debt servicing costs rise precipitously.
I ran into difficulty with my other
debt due to the
high payments to
service that
debt and the
high cost of living in the Bay Area.
Total Consumer
Debt as % of Discretionary Income (Send me email for the chart) The problem with the «consumer debt as percentage of discretionary income» measure (the above chart) is that it ignores the true cost of debt since higher debt levels in a low - interest - rate environment may not result in a high debt service burden (interest and principal payments) on the consu
Debt as % of Discretionary Income (Send me email for the chart) The problem with the «consumer
debt as percentage of discretionary income» measure (the above chart) is that it ignores the true cost of debt since higher debt levels in a low - interest - rate environment may not result in a high debt service burden (interest and principal payments) on the consu
debt as percentage of discretionary income» measure (the above chart) is that it ignores the true
cost of
debt since higher debt levels in a low - interest - rate environment may not result in a high debt service burden (interest and principal payments) on the consu
debt since
higher debt levels in a low - interest - rate environment may not result in a high debt service burden (interest and principal payments) on the consu
debt levels in a low - interest - rate environment may not result in a
high debt service burden (interest and principal payments) on the consu
debt service burden (interest and principal payments) on the consumer.
As discussed in Chapter 3, sustainable home ownership requires a stable and adequate individual income to
service debt; access to financial institutions; and a strategy to address the
high cost of housing against the low value of land in remote communities.
As corporations seek more and more profits, all levels of governments are increasing taxes and closing tax loopholes, new technology
costs are increasing (cell phones, internet),
higher and
higher levels of consumer
debt (
debt servicing) increase... these all erode cash flow for the average family.
«The average Alberta household would see
debt -
servicing costs shoot up by more than $ 1,200 a year — the
highest jump in the country — if interest rates rise by one percentage point, according to a new report by RBC Economics.