Is the age of easy money over? After years of cheap credit worldwide, the U.S. Federal Reserve has been raising its short-term rates for two years, and now comes new signs that long-term rates are finally starting to rise, too. The 10-year U.S. Treasury bill broke the 5 percent barrier last Friday, for the first time since 2002. As America goes, so goes the world. The European Central Bank is now tightening credit, too, and the Japan Central Bank looks likely to end a decade-old zero interest rate policy soon.

The first victim could be the U.S. housing market: the price of a 30-year mortgage closed last week at 6.4 percent, up from around 4 percent three years ago. That's likely to dampen a housing boom already showing signs of exhaustion. Soaring house prices made Americans feel rich, and home-equity loans fueled a consumption boom that kept the world economy growing through shocks of all kinds--war, terror, oil. "Rising long-term rates eat into household income, and that will slow growth," says Jared Bernstein, an economist at the Washington-based Economic Policy Institute.

The effect on nations from Latin America to Asia that rely on exports to the United States could be huge. With real interest rates in the developed world at or below zero in recent years, investors have been pouring money into emerging markets in search of higher returns. But those risky investments could dry up if Americans and Europeans can find a solid return on safer bonds at home. Morgan Stanley economist Joachim Fels warned last week that the situation could get "nasty" for risky assets of all kinds, from emerging markets to commodities and stocks.