Coming home to roost...

At least the chickens from the Bush administration's economic policies are. With Asian markets already saturated by US debt, South Korea announced that it was seeking to diversify its holdings in non-dollar equities. This in the face of record US trade and budget deficits and an already weak dollar. The net result was a drop in US bond prices with a rise in the yields. Down the road, this will result in higher consumer interest rates at a time when already over-stretched US borrowers can ill afford it. Also of note here is that more European central banks are starting to shift their holdings from dollar to euros

Of course, this will likely result in a whole slew of new bankruptcies. And, if the new bankruptcty bill makes it out of the House and Senate, otherwise responsible folks will be facing years of indentured servitude to their creditors when they default on their debt due to medical emergencies, job loss or divorce. But the little fact that the majority of bankruptcies are the result of these causes has done little to deter the bills passage through committee...So much for compassionate conservatism. If creditors want to limit their losses, they need to stop extending credit to dead-beats. Can you say "responsible lending"...? I knew you could.

So, I hope you see that the fiscal irresponsiblity of the Bush administration has broad and far reaching consequences, both at home and abroad. My wife and I are going to be re-financing out of our ARM for a fixed rate mortgage in May, I would suggest anyone else with an ARM do the same.

Links:

http://news.bbc.co.uk/2/hi/business/4287413.stm

http://news.ft.com/cms/s/6934a1a6-8541-11d9-a172-00000e2511c8.html

http://www.consumeraffairs.com/news04/2005/bankruptcy_bill.html