New York 50A and 50B Case Resolution
New York 50A and 50B Case Resolution
Boy are we geniuses! A couple of months ago, we started saying that the 10-Year Treasury notes would trade in the range between 2.45 and 2.95%. The daily yields recently traded at and above the high end of the range, and it looked like we would be compelled to revise our range upward. Then the Fed came in and bailed us out by announcing the purchase of long term Treasuries, and the infusion of liquidity through this, further mortgage-backed security purchases and increased funding of Fannie Mae and Freddie Mac. This bail-out is a strong indicator that the Fed wants to keep borrowing costs low, and 10-Year Treasuries within our range for a considerable period of time.
On prior occasions, the Fed used target and discount rates to achieve liquidity objectives, but since the Fed fired all of those bullets, it must now purchase Treasury notes and securities. But, don't look too closely, and don't ask what government is using to pay for them. The Fed has now provided some of the institutions that they bailed out with short term gains on the funds infusions that they have already made, and which the bankers invested in Treasuries.
There are likely to be some short and long term gains in annuity portfolio values as rates decline, but only if the annuity provider liquidates higher yield positions. In the short to medium term, portfolio yields will decline and the cost of annuities will rise.
The money supply is going to experience a quantum increase, and that will produce a marked increase in real inflation. The Fed is going to inflate its way out of a recession. Just look at the sudden rise in gold and commodity prices! The basic problem is that their market tools do not adequately control the overall supply of money, and the fed has never been able to fine tune the market to control the level of inflation while reducing the cost of money.
We have believed that increased real inflation would enter upon the heals of rising interest rates. Now, it appears that it may enter independent of any change in interest rates. As to settlement issues, the Court of Appeals has taken the position that Award inflation is independent of, and in addition to any inflation incorporated in the statutes.
This could be the triple whammy for the defense,
We continue to believe that the plaintiff should take an aggressive approach to settlement by offering a comprehensive Award and Valuation using some average 10-year Treasury rate that exceeds the discount breakeven point of 3.625% to set the discount rates. The offer should be complete and up to date, incorporate all of the elements of loss including offsets and adjustments, and incorporate interest, as appropriate. The plaintiff should select elements with shorter time horizons and, therefore, marginal overall returns, and take them in cash. That together with a part of lump sums, past Pain and Suffering and interest can then be invested through a trust that protects the principal, adjusts to inflation and can match payments to anticipated needs.
The Burbank Group contact us: Tel. #: 908-955-4661
For the latest updates, please click this line
For a subject by subject discussion of the applicable statutes
Operation of New York 50A Operation of New York 50B
To see examples of our valuations, reconciliations, payments schedules and average rates and yields,