Fed Policy Creates Two Tales of Low Interest Rates

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Sept. 18 (Bloomberg) -- In today's "This Matters Now," Steve Miller, non-executive chairman at AIG, talks with Tom Keene about the good and bad of low interest rates. He speaks on Bloomberg Television's "Bloomberg Surveillance."

Corporations are adapting to the new normal of a more restrictive fed.

Verizon and apple issued joy norms debt.

It's a new race to outflank the central bank of the united states.

Of course, steve miller is executive chairman, helping them turn around another big affair.

Does the fed change the game of use of cash?

Well, no, i would say the fed is trying to deal with the enormous deficits our country is running, and in the short term, their moves are very important, very important to the traders and debt.

It's created a time of low interest rates, a lot of corporations have financed up.

I looked at a chart yesterday on what's called the maturity wall, when are the big -- and all the corporations have basically moved out the maturity of their debt so they don't have to worry about it for the next few years, and have done it at very low rates.

So it's going to be a while before the problem of higher rates comes to roost.

You are so well known for being plain spoken.

Explain to america why financial repression benefits verizon or apple, they issue debt and do what they do, and yet retirees are flat on their back.

What do you say so those retirees that are enjoying razor-thin low rates?

Well, for retirees, it is an issue.

It's an issue for many businesses that rely on increased rates to put their -- like insurance companies.

What they do, in order to pay your life insurance, put the money that they've demrect premium toss work so as to be able to make good on the promise.

And it's tougher these days with low interest rates and very low paying investments, and that's true for retirees and for a big sector of america.

But it's not going to last for long.

In 30 seconds, you are known as detroit lee iaccocca, major career.

Detroit flat on its back.

What is your optimism about detroit working out their bankruptcy?

Well, it is a bankruptcy.

It's not hard.

There's not enough tax revenue to go around, and detroit is -- they've got the problem that the city limits of detroit, the tax base of the city of detroit is limited to the poorest part of the whole detroit metropolitan area.

And it cannot be -- there's no magic going to happen here.

Somebody's going to have to pay, and it may come from bond holders, retirees, and from the city i was.

Steve miller, thank you so much.

We're going to come back.

It's fed day, and a fed decision at 2:00 p.m. this is "bloomberg surveillance." ??

This text has been automatically generated. It may not be 100% accurate.


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