Can anyone help me not worry about the following:
1) Everything we buy is made in China.
2) They have gobs of our dollars, with nowhere to invest but in our treasuries.
3) Thus, our mortgages are cheap. Our houses have utterly ballooned in cost. We're in massive, massive amounts of debt. The rates may be low, but the principal balances are high and people aren't using nice low fixed rates, they're getting ARMs.
What if long-term interest rates rise (or another shock) and housing prices go under? Fannie and Freddie really concern me. I read at the OFHEO web site that they had one (stupid) computer problem that skewed some of their figures for 20 years. It seems like a horrible idea to let lenders sell their trashy loans to a Government-supported entitiy.
Does China somehow benefit if/we go under? Or will they be up a creek too?
If U.S. goes down, China will, too. Actually, the whole world will.
I took a fixed rate...