It's no secret that our "friends" across the pond continue to hold a grudge for a little tea party that we threw in Boston. How else can you explain the export to our fair shores of such cultural atrocities as the Spice Girls and Mr. Bean? Now we even see blood pudding showing up on menus in NYC.
But when people really want to hit Americans where it hurts, they go for our wallets. The British Bankers Association has been doing its part with a rapid rise in the London Interbank Offered Rate or LIBOR. This matters because LIBOR is one of the key indexes that determines the interest rates paid on the adjustable rate mortgages that we Yankees so love.
Approximately 25% of all U.S. home mortgages are adjustable rate loans and LIBOR is the most widely used benchmark for short term interest rates world-wide. Despite the efforts by the Fed and other central banks to keep interest rates low and the world economy juiced, LIBOR has been rising for several reasons, mainly tied to the (now) global credit crunch.
This chart shows the recent spike in the 3-month rate.
I would consider this LIBOR business the last straw, but we Americans are a kind and patient people. I'll just put on a Beatles album, grab a pint of Guinness and write a blog post.
In English.
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