More Economic Imbalances

The tightly wound economy is such that when adjustments to contradictions take place in one spot they create new contradictions elsewhere, at least that is what an old German philosopher once said. Here is an example:

“Washington Mutual Inc. got what it wanted in 2005: A revised bankruptcy code that no longer lets people walk away from credit card bills. The largest U.S. savings and loan didn’t count on a housing recession. The new bankruptcy laws are helping drive foreclosures to a record as homeowners default on mortgages and struggle to pay credit card debts that might have been wiped out under the old code, said Jay Westbrook, a professor of business law at the University of Texas Law School in Austin and a former adviser to the International Monetary Fund and the World Bank. “Be careful what you wish for,” Westbrook said. “They wanted to make sure that people kept paying their credit cards, and what they’re getting is more foreclosures”.”

Howley, Kathleen M. 2008. “Bankruptcy Law Backfires as Foreclosures Offset Gains.” http://www.bloomberg.com/apps/news?pid=20601109&sid=ar909uO1CqHw&refer=patrick.net

Also, I wonder how much the increasing Japanese yen will unwind the carry trade, which is been a major source of cheap finance for speculation.

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