Sunday, January 12, 2014

Sober Look — Growth in loans at US banks continues to weaken



Sober Look 

3 comments:

Ryan Harris said...

After years of above-trend growth, the hangover could last awhile.

The charts on US exports suggest economic activity is strong if you live in a state that can sell goods elsewhere. It has boosted business investment as well.

I suspect financial improvement in net-exports have reduced the impact of a slow credit environment amid falling government deficits. I expect this is what has stymied Mosler's predictions of slow down and falling equities this year, as normally the trade deficit gets larger and not smaller during a recovery which requires larger government fiscal deficits and more household credit. This time was the opposite.

Ralph Musgrave said...

Weak growth in loans at US banks - a contributing factor might be big increase in base money in the hands of the private sector as a result of QE. That is, the more money issued by the central bank (base money), the less money private banks need to issue, and for every dollar of money issued by a private bank, there’s a corresponding dollar of “loan” or “debt”.

Matt Franko said...

Usually, we have fiscal expansion that leads the recovery, ie an increase in govt spending.

That has not been the case over the last 5 years as policymakers believe "we're out of money!" and have implemented cuts in govt spending.

So bank credit cannot expand meaningfully as there is no income increase being provided from govt to the the non-govt sector that can be used to service any potential new bank loans.

The deficit is the 'savings account', ie 'leakage'.

rsp,