> It’s one thing to misread history; it’s another to use that misreading
> to misread the present. The crisis is real. The credit markets are
> frozen. Even the normally admirable Dean Baker claimed that there is
> no credit crisis because interest rates are low. Leaving aside the
> fact that not all interest rates are equally low—junk bonds are at
> historic highs—the main problem isn’t the price of credit, interest
> rates, but its availability—whether you can get a loan. And getting a
> loan is tough: mortgages and even auto loans are hard to come by, and
> banks are about to cut back on credit card spending limits. Ordinary
> lending to business for day-to-day operations—the credit that allows
> manufacturers to buy raw materials and retailers to stock the shelves
> with inventory—present a mixed picture. One part of the market,
> commercial paper—the unsecured short-term borrowing by big, blue-chip
> companies—virtually ground to a halt for a year, but a new Fed program
> to stimulate the market is having an effect. So-called commercial and
> industrial lending by banks hasn’t dried up, but growth is slowing. If
> it slows much more, the economy will grind to a halt.
Doug, I'm not one of those saying the credit crunch is a fraud. But the chart and text if anything make it seem like there wasn't such a crisis. In your chart, the 2008 drop in CP volume growth looks no steeper than the drop in 2001, which was not a very serious recession. And C&I loans grew faster in 2008 than they were growing in the late 90's (?!)
SA