Wednesday, February 17, 2010

At least Gordon can blame it on America again

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. 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. 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.

Posted by cat and canary @ 11:17 PM (1228 views)
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9 thoughts on “At least Gordon can blame it on America again

  • do you know why? banks are so short of liquidity that they hold on to any cash that comes their way. it is a result of massively overblown money multiplier that banks are desperate to reduce (in order to be able to service ongoing cash obligations)

    a model described by pytel clearly explains how it works and why it is so. in fact he predicted such things happening over a year ago. so it is really no news.

    for more visit: http://gregpytel.blogspot.com/

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  • danny says…

    It’s really quite simple. All together there were between 500 trillion to 1.5 quadrillion dollars worth of derivative valuation of various sorts in the world financial system. Although most of this wasn’t real, it was used as a basis for worldwide finance and expansion. Now that it has been revealed that the emperor has no clothes, the only thing that the Fed and other central banks can do is to bail out and print money to fill that unfillable Black Hole just long enough to keep current administrations and countries worldwide from being tagged as the ones who presided over the Greatest Depression Ever.

    devo adds….

    you’re close with the latter figure, danny (+ $1 quadrillion )

    however, why the past tense?

    the figure is still valid

    see BIS ( Bank for International Settlements) for more details

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  • the key phrase above is ‘unfillable black hole’

    once this is recognised a new way of thinking becomes necessary

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  • @devo: as these figures relate to OTC transactions to a great degree, i have heard that they are not fully reported any more. i have even heard $6 quadrillion of notional value of derivative. i am not sure however how accurate it is. someone with inside knowledge should comment/explain where we are now with this.

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  • Without even bothering to read the article I knew this had to be written by Ambrose Evans Pritchard. Same guy along with Edmund Conway in the DT who were writing articles on a dialy basis about a year and a bit ago about how we were going to have deflation and we must adopt QE to avoid it. Well the deflation was a smokescreen to enable the US and UK governments to buy their own debts and we never got deflation in fact we now have sharply risiing inflation as most sane people expected. So why are you worrying about deflation again Ambrose? US and UK governments having trouble selling their debt without QE are they?

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  • the more apocalyptic hpcers expected a global economic crash in 2007

    extraordinary measures such as QE kicked the can down the road for a few years

    my question is, has this short-term deferral of the inevitable made the medium term outlook ( 10 – 20 years) better or worse? ( say why)

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  • the lib dem banner ad above reminds me…

    this morning on sky news, vince cable acknowledged we are in a depression

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  • fallingbuzzard says:

    who told vince cable?

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  • it wasn’t me

    perhaps he worked it out for himself

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