{"id":667376,"date":"2010-02-17T12:34:59","date_gmt":"2010-02-17T17:34:59","guid":{"rendered":"tag:http:\/\/www.economist.com,2009:21004867"},"modified":"2010-02-17T12:34:59","modified_gmt":"2010-02-17T17:34:59","slug":"premature-tightening","status":"publish","type":"post","link":"https:\/\/mereja.com\/index\/667376","title":{"rendered":"Premature tightening"},"content":{"rendered":"

FOOD for thought, from Buttonwood<\/a>:<\/p>\n

\n

The ever-assiduous David Rosenberg of Gluskin Sheff has some interesting data in his latest note. US bank lending fell by $30 billion in the past week, and has declined $100 billion this year so far, or 16% at an annualised rate. Total bank lending has fallen $740 billion from the peak. If you break the data down, credit card balances are off 28%, real estate loans have declined 13.5% and commercial and industrial loans 19.3% (all annualised figures).<\/p>\n

This shows up in the broad money data. Growth in M2 is 1.9% year-on-year, the lowest since 1996. Capital Economics calculates a figure for M3, which the Fed has stopped publishing; it has shrunk 3% year-on-year and 5.6% if you annualise the latest quarterly data.<\/p>\n<\/blockquote>\n

An important question is to what the decline is due to tightened lending standards rather than falling demand. As Buttonwood suggests, a demand-side drop points more toward a Japanese lost decade than a Depression-type episode. Demand shortfalls seem the more likely culprit at this point; while the National Federal of Independent Business continues to warn of tight credit conditions, its latest discussion of small business conditions indicated that the biggest problem facing small employers is a “shortage of customers”. Still, this is something to keep an eye on.<\/p>\n

And speaking of the Great Depression, here<\/a>‘s more interesting stuff from Scott Sumner’s book-in-progress, including a blow-by-blow account of central bank and market moves in 1928 and 1929.<\/p>\n","protected":false},"excerpt":{"rendered":"

FOOD for thought, from Buttonwood: The ever-assiduous David Rosenberg of Gluskin Sheff has some interesting data in his latest note. US bank lending fell by $30 billion in the past week, and has declined $100 billion this year so far, or 16% at an annualised rate. Total bank lending has fallen $740 billion from the […]<\/p>\n","protected":false},"author":2918,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"advanced_seo_description":"","jetpack_seo_html_title":"","jetpack_seo_noindex":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[4821],"tags":[],"class_list":["post-667376","post","type-post","status-publish","format-standard","hentry","category-news"],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9NivD-2NC8","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/mereja.com\/index\/wp-json\/wp\/v2\/posts\/667376","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.com\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.com\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.com\/index\/wp-json\/wp\/v2\/users\/2918"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.com\/index\/wp-json\/wp\/v2\/comments?post=667376"}],"version-history":[{"count":0,"href":"https:\/\/mereja.com\/index\/wp-json\/wp\/v2\/posts\/667376\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.com\/index\/wp-json\/wp\/v2\/media?parent=667376"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.com\/index\/wp-json\/wp\/v2\/categories?post=667376"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.com\/index\/wp-json\/wp\/v2\/tags?post=667376"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}