Telegraph UK: US bank lending falls at fastest rate in history

[marmar]

US bank lending falls at fastest rate in history
Bank lending in the US has contracted so far this year at the fastest rate in recorded history, raising concerns that the Federal Reserve may have jumped the gun by withdrawing emergency stimulus.

By Ambrose Evans-Pritchard, International Business Editor
Published: 8:43PM GMT 17 Feb 2010


David Rosenberg from Gluskin Sheff said lending has fallen by over $100bn (£63.8bn) since January, plummeting at an annual rate of 16pc. "Since the credit crisis began, $740bn of bank credit has evaporated. This is a record 10pc decline," he said.

Mr Rosenberg said it is tempting fate for the Fed to turn off the monetary spigot in such circumstances. "The shrinking in banking sector balance sheets renders any talk of an exit strategy premature," he said.

The M3 broad money supply – watched by monetarists as a leading indicator of trouble a year ahead – has been contracting at a rate of 5.6pc over the last three months. This signals future deflation. The Fed's "Monetary Multplier" has dropped to a record low of 0.81, evidence that the banking system is still broken.

Tim Congdon from International Monetary Research said demands for higher capital ratios and continued losses from the credit crisis are both causing banks to cut lending. The risk of a double-dip recession – or worse – is growing by the day. .........(more)

The complete piece is at: http://www.telegraph.co.uk/finance/economics/7259323/US-bank-lending-falls-at-fastest-rate-in-history.html

[anonymous171]

1. If they won't lend then they there is no reason that they should exist

[kenny blankenship]

2. Trickle down fails again.

But nowadays they don't even pretend that it's supposed to work. It doesn't have to justify itself as a policy with results. It's just the "right thing to do", because anything else would be socialism or something.

[DJ13]

3. The banks will lend, but first you have to take their candy away

They need to be restricted from being investment firms again before they will turn to lending to make money.

They make too much easy money playing the (rigged by the Treasury) stock market right now.