Thursday, October 29, 2009

GDP Up, But Commercial Lending Down

That chart shows % growth (or decrease) in commercial lending. Note that the contraction of this year (10%) is the worst since the late 1940's. That lending, my friends, is critical to the growth of the economy over the next several quarters.
The rest of this post is not too encouraging, either.
The Gummint Securities holdings, in contrast, are going up rapidly. This is really a "carry trade;" the Fed lends banks money at 0% and the banks buy Gummint bonds to earn 1-3% or so.
Helluva deal for SOME people.
ADDITIONALLY: The picture is even starker in America where M3 has shrunk at an annual rate of 6.5pc over the last three months, a pace of contraction not seen since the 1930s. US bank loans have plummeted since May.
Actually, that's the other side of the same coin.

1 comment:

J. Strupp said...

...and 3.5% GDP growth (which was almost all stimulus spending) is still not enough to lower the unemployment rate. Keep in mind that 5%-6% GDP growth over a couple of quarters is not uncommon, coming out of recession. 2-3% GDP growth will keep the unemployment rate high enough to get Obama thrown out in 3 years. Yuo can count on that.

As for the Fed., they are runnibg the Japanese playbook step for step in regards to the "carry trade" you site. They're attempting to let the banks earn their way out of this mess. It ain't working.

You can either take your medicine all at once (nationalization) or you can take it over a decade (what we're doing now).

I know you don't agree with me Dadster, but do you at least see what I was saying about nationalization earlier this year? This bullshit we're doing right now isn't going to get any better. You can bet those M3 numbers are going to be bad for a long, long time if this keeps up.