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Further to my previous post, Total Bank Credit shows no sign of any significant slowdown in banks' lending activities. If anything, one might argue that the pace of bank lending in recent years has been quite a bit more generous than it was during the 2001 recession.
UPDATE: This directly contradicts one of the central tenets of Obama's policies. He claimed in his speech to Congress that "banks aren't lending." This is simply NOT true. Why isn't he being questioned on this?
7 comments:
Thanks for this series of charts, Scott. They are especially welcome in advance of President Eyore's speech tonight. Now that the stimulus bill is law you'd think he could use the word "crisis" less often and avoid using the word "catastrophe" altogether. Maybe he'll talk about at least a little hope again tonight.
Thanks, and I plan to have more charts still. I'll be very interested to see if Obama has good words to say about those who create jobs and manage the companies that employ the great majority of the workforce that doesn't work for the government or subsist on handouts.
Scott,
He's certainly paying lip service to entrepreneurs. He obviously doesn't have the foggiest idea how to help them, however.
"Now is the time." "It is time."
This guy needs some new empty cliches.
Our neophyte President has had a rough few days, and 1) Axelrod has told him that he is vulnerable unless he starts to talk a good game about entrepreneurs and American vitality yada yada, 2) his various Wall St fundraisers (Goldman liberals) have told him to rein in the bank nationalization/evil banker rhetoric and 3) Nancy Pelosi has told him that they won't be able to socialize America thoroughly if he doesn't slow down...the natives are getting restless... patience...Rome wasn't destroyed in a day.
Pure theatrics. Hang on tighter to your wallet than ever before.
Most credit is not provided by banks, it's provided through securitization, hedge funds, insurance companies, foreign investors, etc. We could have rising bank credit and swiftly contracting overall credit all at once.
Banks are the only ones who can "create" credit. Securitization recycles the money that banks have created. It can't create new money. As you say, it's possible for bank credit to expand but for securitization to contract, and that's exactly the situation we have today. But all that means is that there is lots of money out there that is not being lent. There is no shortage of money, but there is a shortage of people willing to lend their money. That can change as confidence improves.
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