Ed Lette of Business Bank of Texas

On July 20, Ed Lette of the Business Bank of Texas spoke to us about the world economy and what's happening. According to Ed, the world is deleveraging. U.S. Government debt interest rates are at record lows for treasury bonds - roughly 2%. German bonds and Japanese debt are both at negative rates, and banks are starting not to buy debt at these negative rates. Everyone would rather buy U.S. Debt, but currently the currency exchange rate is keeping U.S. bond interest rates from dropping more. Ed told us that because interest rates are so low, banks are addicted to fees. In fact, 50% of big banks' gross incomes comes from fees. With regards to the European Union, economics and politics cross in the European Union. After Brexit, there are now only two countries carrying the union - Germany and France. Ed also told us that the World Bank and IMF have both told Federal Reserve not to raise rates, which is very unusual. However, the Federal Reserve would like to raise interest rates to create "wriggle room" for making adjustments. If rates are negative, there is no wriggle room. According to Ed, the U.S. is in great shape considering the rest of the world.