Wednesday, September 24, 2008

Let's take another look at the "credit crisis"

Why is bank lending UP?

"As Robert Higgs points out consumer loans are up, commercial and industrial loans are up, even real estate loans are up. Overall, total bank credit is up with just a slight sign of leveling off in recent weeks. So where is the credit crunch?"

"First, one reason that bank lending is up may be that firms with good projects have already turned to the substitute bridge of ordinary bank loans. Second, I wonder how much real lending was actually being generated by asset backed securities. Could it not be that most of the funds generated were used to buy more asset backed securities? (The growth in these securities is certainly suggestive of that possibility). If that is the case then it explains why the real economy has been remarkably resilient to the 'credit crunch.'"


I wonder if one of our local financial rocket scientists can figure this out.

4 comments:

  1. Government sanctioned BS due to mark to market. If mark to market didn't exist there'd be no crisis of note now.

    Milo

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  2. This comment has been removed by the author.

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  3. I have been saying for a number of years now that George Soros was behind the slowdown of the US economy and folks have laughed and said that one man could not have that much influence. Well, bully , he dang well has pulled this one off and in time for the elections so that he can almost guarantee that his new sock puppet Obama is elected.

    I will be cross posting Bubba's article and adding more on the Soros connection to this entire mess on my blog tomorrow. Stay tuned.

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