So what does all this mean to you. Very likely we will have low rates for several more years. The US economy is not an island and cannot just continue to grow at a solid rate when the rest of the world is mired in slow growth and overwhelming debt. While it is not likely we will have a recession anytime soon, it is likely we will have some decline in the next three years. The debt markets will remain difficult in these conditions for several more years as the world credit markets remain unstable and volatile. That means lock down good long term low cost debt now if you can even get a good loan. The CMBS market is in turmoil, and is likely to remain so for all of this year and maybe next year. That is at the same time $200 billion of maturing loans need to be rolled over. There is now simply no capacity to roll that amount so there will be defaults, distressed debt opportunities again, and opportunities for hard money lenders. Asian investors are already waiting for the downturn to buy again. You thought distressed opportunities were long gone, but they are coming back.

The Fed did as expected and held steady. The result is the dollar declined around 1% or so depending on the currency. This sets up a problem for the rest of the world central banks which were trying to devalue their currencies relative to the dollar to attempt to boost their own economies. If the dollar weakens then the efforts of the other central banks is not having the desired impact and may leave these other central banks struggling to find new ways to stimulate.

One way is negative rates as the ECB is trying, which they hope will push money out to loans to companies by banks. It is unclear if this will really work since borrowers do not take loans if they believe business will remain slow. At the moment there is little reason to expect the world economy to improve much, if at all, in 2016. China is still going through a major credit crisis and massive shift in the focus from export to domestic demand. Japan seems unable to get any real lift. The Eurozone remains mired, and its banks still have not dealt with their real structural issues. Latin America is in major crisis as Brazil and Venezuela are in total political and economic collapse. The smaller countries which depend on oil, commodities and exports to these bigger nations, are in serious trouble. The US remains the only country which has a decent economy and strong banking system other than the UK.

All those investors who rushed to Europe to buy defaulted debt and foreclosed assets will have a continued long road ahead to achieve the risk adjusted returns they hoped for. The European economy is not going to suddenly heal and grow much for a long time. Many of the law changes related to labor and red take in places like Italy, France and other places have not happened, and until these actions occur and the banks take steps to clean their books of bad loans, and straighten out their operations, it is going to be a slow painful recovery.

The other longer term and more important issue is that the debt levels around the world for many governments and companies is now at unsustainable levels, and once rates do rise to more historic normalized levels, there is no way these debts can be handled, and that goes for the US as well. If the ten year gets back to its historic normal range of 5.5%-6%, the US will be consumed with paying interest and will not have money to pay for the more important functions of government, especially defense in a very dangerous world. Obama has put the country into a very dangerous positions fiscally and now Hilary wants to double down with even higher spending and higher taxes. It is simply not possible to sustain.

So what does all this mean to you. Very likely we will have low rates for several more years. The US economy is not an island and cannot just continue to grow at a solid rate when the rest of the world is mired in slow growth and overwhelming debt. While it is not likely we will have a recession anytime soon, it is likely we will have some decline in the next three years. The debt markets will remain difficult in these conditions for several more years as the world credit markets remain unstable and volatile. That means lock down good long term low cost debt now if you can even get a good loan. The CMBS market is in turmoil, and is likely to remain so for all of this year and maybe next year. That is at the same time $200 billion of maturing loans need to be rolled over. There is now simply no capacity to roll that amount so there will be defaults, distressed debt opportunities again, and opportunities for hard money lenders. Asian investors are already waiting for the downturn to buy again. You thought distressed opportunities were long gone, but they are coming back.