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.