Friday, October 24, 2008

Paulson: Where'd You Get Your Numbers?

The Minnesota Fed folks cannot figure out why "Napoleon" Paulson and his boyzzz need all that money.

Shoebox summarizes the leadup to the Big Bailout.

The four claims were:

1. Bank lending to nonfinancial corporations and individuals has declined sharply.
2. Interbank lending is essentially nonexistent.
3. Commercial paper issuance by nonfinancial corporations has declined sharply, and rates have risen to unprecedented levels.
4. Banks play a large role in channeling funds from savers to borrowers.

And then the Minnesota folks debunk every single one of those claims.

As is clear from these figures, bank credit has not declined during the financial crisis. Indeed, bank credit appears to have risen relative to trend in the month of September. Figures 2A and 2B display analogous data for loans and leases made by U.S. commercial banks. Again, we see no evidence of any decline during the financial crisis. Figures 3A and 3B display data for commercial and industrial loans. Again, we see no evidence that the financial crisis has affected lending to non financial businesses. Figures 4A and 4B display data for consumer loans and show no evidence that the financial crisis has affected consumer lending.

The report goes on to address the "TED Spread," inter-bank lending, and commercial paper--with similar results in all cases (given the "TED spread" anomaly created by a 'flight-to-quality' immediately following revelations of problems.)

This leads us to wonder, along with Shoebox, if certain large players (i.e., Citi, Chase, Goldman Sachs, and others) might have played Congress and the President for fools--not to mention a large number of other people--myself included--who swallowed the "CRISIS!!! CRISIS!!!" line.


1 comment:

Shoebox said...

curiouser and curiouser.

The MSM sure played up the anecdotal evidence.