US credit shrinks at Great Depression rate

[Runum]

US credit shrinks at Great Depression rate prompting fears of double-dip recession - Telegraph

Real bad news. I can see the negative pressure on rent rates in my area in the last 3 months.

 

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[randallg99]

this article probably nailed it on the head better than any other I've read. The banks are really stuck between a rock and a hard place: they can't lend frivilously as they once did and they need to practically carelessly lend if they want to stay alive.

Out of one side of the mouth, the government instructs the banking system to stop making bad loans out and yet the Barney Franks are screaming bloody murder to get banks throwing money out the window again. And those same politicians are tightening regulations on banks forcing higher tier requirements.

This is a very good statement from the article that makes it as clear as day:

>Referring to the debt-purge policy of US Treasury Secretary Andrew Mellon in the early 1930s, he added: "The pressure on banks to de-risk and to de-leverage is the modern version of liquidationism: it is potentially just as dangerous."<

ps. this article has a very clear and frightful tone. probably rightfully so, since it is written from the British perspective. We all remember what happened while America experienced the Great Depression.

Excellent article, thanks Runum. Just surprised there weren't any other comments on it.

 

[Runum]

Thanks Randall. I thought it was a good one too. Especially since it was from a different country. I see the dilemma and I know the American citizens are going to have to make some tough quality of life choices in the near future.

 

[randallg99]

banks continue to strengthen their balance sheets by closing down credit lines.
http://www.bloomberg.com/apps/news?pid=20601087&sid=a1AE._kwvm3c&pos=3


and when $2b hits keep on coming, there's no slowing down banks consolidation of credit-
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aASVPDH5t7ZI

 

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[tbsells]

Thanks for posting a very informative article. I'm trying to organize my thoughts on the topic, so this might ramble a bit. To put it bluntly, isn't this the move that makes the house of cards (the U.S. economy) fall? I mean, how are retailers going to survive this holiday season with so much less credit available for consumers to spend? If retailers fail, it will lead to massive commercial property foreclosures and more unemployement. Which will, presumably, lead to a further tightening of the credit markets, which will lead to even further and more widespread misery.......you get my point. It goes on and on.

This whole economy has been propped up on easy money for so long. When it goes away, we're all in trouble.

I hope I'm wrong on this.

 

[hakrjak]

So far it's not the consumer credit that I've experienced being slashed so bad as it is he small business and commercial credit.... I still have 85% of my personal credit cards & lines, but I've lost about 50% of my small business/commercial cards & lines. Also I can get a private mortgage for a house I want to occupy, but I can't even get the banks to TALK to me about an investor loan.

Cheers,

- Hakrjak