Word: creditably
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That something is the close of a remarkable era of easy money. Cheap credit helped fuel the stock bubble at the end of the past millennium and almost entirely fueled the real estate boom of the first years of this millennium. It kept us spending through the tough years that followed the stock market's collapse, and it allowed the Bush Administration to finance big budget deficits without strain. Easy money also helped enable the rise of private equity as a major economic force...
...Interest rates are set in two main ways. Short-term rates--like those on credit cards, home-equity loans and adjustable-rate mortgages (ARMS)--are determined mostly by the Federal Reserve. It sets them with an eye on inflation. If the Fed fears that prices are rising too fast, it will raise rates to slow the economy. Longer-term rates, like those on a standard mortgage, are set on the open market. They are partly a bet on how well the Fed will control inflation but also reflect supply and demand. If there are lots of people with money...
Forward to 2007. "Now the world is booming, credit demand in Asia is rising, and you don't need the U.S. consumer to be the spender of last resort," says Robert J. Barbera, chief economist at the brokerage firm ITG. The world economy is in its fifth year of nearly 5% growth. But the U.S. is no longer leading. Foreign financial markets are booming and pulling in money. Rising commodity prices are complicating the Fed's inflation-fighting job. As a result, the U.S. consumer can no longer count on a steady flow of low-interest debt...
...couldn't claim all the credit, of course; the strong global economy that spurred Britain's economy during his 10 years as Chancellor had little to do with Brown, for one thing. But Britain's longest-serving finance minister since the 1820s is owed at least some of the plaudits. For example, his bold decision to grant independence to the Bank of England in 1997 separated politics from the setting of interest rates, helping raise confidence in the U.K. economy and providing a backdrop for stable growth...
...changes to the cost of borrowing; certain taxation levels for the next couple of years were set last March, and growth in government spending until 2011 has already been capped. The good news for Darling: Rising interest rates seem to be cooling Britain's housing market, where low-cost credit and a limited supply of homes have sent house prices skyward in recent years. The value of the average home reached $401,000 in May according to Halifax, a mortgage provider. That's almost three times the average in 1997. But with new buyers treading carefully, house prices rose...