Posted by Matt Hawes on 12/12/08 08:10 AM   [Newer: "New rule lifts ban on firearms in national parks"] [Older: Jim Rogers: Most U.S. big banks bankrupt]

Again, from Reuters:

The credit crunch is not nearly as severe as the U.S. authorities appear to believe and public data actually suggest world credit markets are functioning remarkably well, a report released on Thursday says....

"It is startling that many of (Federal Reserve) Chairman (Ben) Bernanke and (Treasury) Secretary (Henry) Paulson's remarks are not supported or are flatly contradicted by the data provided by the very organizations they lead," said the report.

Read the rest here. (thanks to the LewRockwell.com blog for the link)

Posted 12/12/08 09:33 AM StatusQuoJoe Phoenix, AZ

So you mean that TARP really was the greatest bank heist (U.S Treasury) of all time? A lot of gold bugs seem to know what the problem is and have been speaking candidly for a while now, i.e. the derivative monster grew to something like $1,000 trillion on the global markets the biggest players being the Big 5. So when the bets soured, they needed cash to settle bets, perhaps that is why Bloomberg's request for information from the Fed has been stonewalled? The bailouts are no where near enough to settle all bets and the economy continues to sour. What a web we weave....

Posted 12/12/08 09:54 AM sweetliberty San Rafael, CA

Interesting. This is what my brother (an economist in Canada) has been saying as well. But: "*The cost of interbank lending, as measured by the interest rates banks charge each other for lending overnight Fed funds, dropped to its lowest level ever in early November and remains at very low levels." Isn't this because the Fed has lowered interest rates to incentivize inter-bank lending?

Posted 12/12/08 10:03 AM Paul S. Brighton, MI

1960s First there is a mountain then there is no mountain then there is. 2000s First we make a mountain but there is no mountain now there is. "The Federal Reserve is a fraudulent system." ~Lew Rockwell

Posted 12/12/08 10:06 AM StatusQuoJoe Phoenix, AZ

sweetliberty I guess so, but from what I read from the gold bugs (I understand their commentaries better than the other "financial wizards") the continual de-leveraging from the derivatives debacle is causing the deflationary effects. Once the dust settles (if it does settle) then inflationary effects will kick in and all the commitments the Fed has made (up to some $8 trillion) will become monetized. I am no financial guru and I am learning on the fly, probably too late as it will do me no good anyway since I will be left with zip to invest. Peace.

Posted 12/12/08 10:06 AM AuthenticAuthor Canutillo, TX

Good point on Bloomberg's info request, StatusQuoJoe. Incredible how this credit-crunch fraud has permeated the media without much skepticism at all. This article is a welcome change, but still: "The credit crunch is not nearly as severe as the U.S. authorities appear to believe" Give me a break, you mean to say that they actually BELIEVED that the economy's flow of money was stuck? That either means Congress and the administration are total suckers or that they're playing one of the biggest cons of all time...and we're the mark. I OPTIMISTICALLY prefer the latter.

Posted 12/12/08 10:08 AM AuthenticAuthor Canutillo, TX

Posted 12/12/08 10:08 AM AuthenticAuthor Canutillo, TX

Correction: That must mean Congress and the administration are total suckers. The latter is more likely to be true.

Posted 12/12/08 10:19 AM Heather D Port Byron, IL

From a lowly average citizen's perspective, nothing has changed in the credit market. I continue to receive credit offers out the wazoo (my paper shredder works in overdrive), I got a loan for a new/used car just a couple of weeks prior to the original bailout, and my husband's business just received an increase on the visa. I can't speak for the corporate cronies, but the wheels of "average Joe's" credit possibilities continue to turn.

Posted 12/12/08 10:59 AM BruceKoerber Cedar Rapids, IA

Could it be that they are unaware?!!! Or could it be one of their famous 'weapons of mass destruction' schemes? Their ability to convince the public to go to war in Iran or anywhere else on earth has lost all political viability. So what are they going to do to justify printing up money at these phenomenal rates? Rates that are necessary to cause the dollar to lose its value so they can repay their exponential debt with a depreciated currency during a corrective period when prices are adjusting downward? Fabricate a domestic crisis and promote cronyism at the same time. That as good as satisfying the military complex by invading Iraq and then getting access to their oil fields as a bonus.

Posted 12/12/08 12:42 PM mjcholko Annandale, VA

I own a small business, and I personally have a decent (but not great) credit score. My company has not seen any change in available credit, though we have not tried to get any new credit. Personally, I have refinanced a car loan and applied for and been approved for 2 new credit cards in the last 6 weeks. I also spoke to the lender about refinancing 2 company vehicles, and was told that there should be no problem getting new loans. So, as a business person and an average Joe, I see no credit problems at all. The problems in the credit market were almost solely related to troubled financial (and other) firms. Of course nobody wanted to lend them money, because they didn't think it would be paid back. This all surfaced over the last year or so as default rates started to rise due to the fall in housing prices. Normal people and most businesses weren't so heavily leveraged that a 3% decrease in income (due to a 3% increase in the default rate on mortgages or whatever loans a given financial firm is holding) would push them into a position where they could no longer pay their obligations. However, many of the giant financial firms were this heavily leveraged. In fact, the 3% figure that I used makes it seem much worse than it really has been, since we know that most of these firms didn't make all of their money from interest payments. Conclusion: the market for debt issued by companies that can't pay it back has dried up. This is a good thing. THERE IS NO SIGNIFICANT PROBLEM REGARDING CREDIT WORTHY CONSUMERS OR BUSINESSES GETTING CREDIT!

Posted 12/12/08 1:28 PM Kevin7D Phoenix, AZ

Has anyone tried to go out and get a mortgage lately? How about an option ARM? The credit crunch is uneven right now. But it will creep over into car loans, credit cards, SMB loans etc.)....the blast is centralized on the mortgage industry still. Bernanke believes that the great depressions was caused by a lack of "liquidity". His solution? Pump in more money. He's calling it a credit crunch, but really it's sane lending (or lack there of). The problem with his plan is, to get deflation to turn around, he has to create inflation. The only way to get housing prices to go back up (as I do believe that has been their primary focus), and other assets by extension, is to create an environment of foolish lending again. Give a bank more money than it knows what to do with (again) and it will start making bad decisions (again).

Posted 12/12/08 2:30 PM meambobbo New Orleans, LA

Please please please keep in mind the credit standards during this boom. There were none. Now they are tightened. Unworthy borrowers will feel the sting, not us. And government solutions will insure we all feel it. Plus, there is VERY, VERY little real credit in the US. Remember, real credit isn't what gets printed and loaned out through the banks. Real credit comes from loaning real savings, which come from greater production than consumption. Our personal savings rate is in the tank. Our credit is artificial. Given that it's still flowing, our system should be quickly unraveling. Buoying up the big banks prevents them from selling their garbage in the open market, which would fuel much greater write-downs and deleveraging in other banks, adding to credit. When we get through this, we'll be a lot like Japan. Try to get a credit card over there...or a car loan...

Posted 12/12/08 2:42 PM recooperjr Gilbert, AZ

While I am sympathetic to those that believe we are being "gamed" by the Master Manipulators, this article, the report it cites, and the related notion that there is no credit crunch are just wrong. I work in commercial banking, and banks are simply not making many (or any, depending on the institution) new commitments for large projects, companies, M&A, or whatever. The statistics pointed to in the article only prove that the total amount of debt is at or near record levels. This is from PREVIOUSLY provided loan commitments that are still being funded in accordance with their terms - for now anyway, given the Fed's now seemingly unlimited back-stopping of all banks' solvency risk. Banks do not - and will not - want to make significant new loans (a car loan or two here or there notwithstanding) in this vicious, self-reinforcing deleveraging cycle. It will only serve to increase losses and the capital they (or the taxpayers) must raise down the road. The important point is not the amount of total loans out there, but the ability to finance new production, growth, etc. It just is not going to be there anytime soon, folks. Unless the government provides it. In which case it almost certainly won't go to productive growth... Anyhow, if you doubt me, take a look at the following website, which has current data on the market for commercial mortgage-backed securities (where there has been zero issuance since 2Q08): http://www.cmalert.com/Public/MarketPlace/MarketStatistics/index.cfm This market (along with life insurance companies and pension funds, which have liquidity and other problems of their own now) was critical to the commercial real estate market. It provide take-out financing for all of the construction loans on shopping malls, office buildings, apartment complexes, etc. Unless this take-out market comes back, there will be virtually no future starts for commercial real estate projects, because the construction loans will not be made. And this is just one industry. Energy project finance, dealer finance, LBO's, etc. There will be very little development (read: growth) being financed (by private-sector debt anyway) in the next year or more. The credit crunch is very real, even if the government is dealing with it in wrong and evil ways (which it is).

Posted 12/12/08 2:59 PM recooperjr Gilbert, AZ

While I am sympathetic to those that believe we are being "gamed" by the Master Manipulators, this article, the report it cites, and the related notion that there is no credit crunch are just wrong. I work in commercial banking, and banks are simply not making many (or any, depending on the institution) new commitments for large projects, companies, M&A, or whatever. The statistics pointed to in the article only prove that the total amount of debt is at or near record levels. This is from PREVIOUSLY provided loan commitments that are still being funded in accordance with their terms - for now anyway, given the Fed's now seemingly unlimited back-stopping of all banks' solvency risk. Banks do not - and will not - want to make significant new loans (a car loan or two here or there notwithstanding) in this vicious, self-reinforcing deleveraging cycle. It will only serve to increase losses and the capital they (or the taxpayers) must raise down the road. The important point is not the amount of total loans out there, but the ability to finance new production, growth, etc. It just is not going to be there anytime soon, folks. Unless the government provides it. In which case it almost certainly won't go to productive growth... Anyhow, if you doubt me, take a look at the following website, which has current data on the market for commercial mortgage-backed securities (where there has been zero issuance since 2Q08): http://www.cmalert.com/Public/MarketPlace/MarketStatistics/index.cfm This market (along with life insurance companies and pension funds, which have liquidity and other problems of their own now) was critical to the commercial real estate market. It provide take-out financing for all of the construction loans on shopping malls, office buildings, apartment complexes, etc. Unless this take-out market comes back, there will be virtually no future starts for commercial real estate projects, because the construction loans will not be made. And this is just one industry. Energy project finance, dealer finance, LBO's, etc. There will be very little development (read: growth) being financed (by private-sector debt anyway) in the next year or more. The credit crunch is very real, even if the government is dealing with it in wrong and evil ways (which it is).

Posted 12/13/08 8:10 PM mjcholko Annandale, VA

Nobody is denying that there isn't a "credit crunch", we are just saying that it is not nearly as bad as people are saying. On top of the loans that I recently received, I can tell you that my mother (who has average credit) just got a home equity loan on a home without much equity and at a reasonable rate. A friend of mine was also recently approved for a large mrotgage loan, and his credit score is about 700. The point is, you CAN get a car loand, and you CAN get a mortgage, and you CAN bet a business loan, and you CAN get credit cards - IF YOU ARE CREDIT-WORTHY!

Posted 12/14/08 3:11 PM recooperjr Gilbert, AZ

We're just going to have to agree to disagree then, because not only is it going to be as bad as people are saying, it is going to be worse. If you are creditworthy and need a loan, I suggest you get it soon.