A picture is worth a thousand words!

http://www.businessinsider.com/chart-of-the-day-commercial-and-industrial-loans-at-all-commercial-banks-2010-2

Can the economy revive if banks don't start to lend again?

Let's hope so.

Today the St. Louis Fed released its latest monthly look at commercial and industrial loans at major banks -- a measure that some would say represents the essence of the US banking system
.

As you can see, this measure is still falling like a knife -- a bad sign for the ongoing health of the economy. (And also not what we were promised when we bailed out the banks.)
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Can't get the chart to link.

What were we told would happen if the banks stopped lending back in 2008 and 2009?

Oh yeah we'd go through a long term economic slump with high long term unemployment. That happened anyway, I think I'm going to call all of the bailouts of 2008 and 2009 the paying the people who beat the fuck out of you tax when after things finally do get righted, I'm paying higher taxes and getting less government services to pay back the debt.

Saved the world my ass.

If we just give them lots of money, with absolutely no restrictions, they'll do the right thing.

Trusting the bankers is the only way to save America.

no doubt.

that is the dirty little secret.

cover up the dips from the Bush Sr. and Dot.Com recessions and it's plain as day.

Are businesses loaning to banks now?

brain fart, there.

for themselves, not so much for the rest of the world.

:grr:

So last year it was UP $300 billion, and this year it's DOWN $300 billion, but that would put us where we were in 2008, right?

This chart is very misleading IMHO. Why not just chart the lending numbers? Because this is more dramatic and scary looking.

Take it up with them.

:rofl:

I'm sure they are in the business of anti-banker propaganda

I'm not saying the data is wrong, but it's presented in a very misleading manner. And why isn't the horizontal axis in even increments? And who the fuck is "Clusterstock" anyway?

Nobody here is able to interpret it plainly, but everyone agrees it looks horrible... which is the intention of whoever charted this. Doesn't even say what the base amount of lending is, or what sort of percentages these numbers represent.

As someone once said, "There are lies, there are damned lies, and then there are statistics."

It's the change from 12 months before.

If loans were $700 billion last year then they're only $400 billion last year. (Figures entirely made up.)

that it would be a good thing for the government to substantially increase funding for small business growth and development seeing as how (1) the banks certainly are not lending to these folks and (2) the economy will take years to replace the jobs that have been lost and (3) some of those unemployed folks have the skills to be successfully self-employed.

It's too fucking bad that all we want to do is stimulate established businesses and let the after effects trickle down to the rest of us. Voodoo economics is not dead.

Nifty economic theory.

You can give money to the banks and have economic progress, you just can't let the banks be what they were before they failed.

... ahh the holy grail of economics. But what is small business? When I think of small business I think of small manufacturers, or restaurants or other service businesses.

But what will help such businesses? Loans? Kickbacks for hiring people?

No, the problem with our economy on the DEMAND SIDE not the SUPPLY SIDE. Small business cannot grow when there is nobody to buy their goods or services.

I get somewhat annoyed at listening to politicians sound like 80s anachronisms. The consumer is the problem and no amount of SUPPLY SIDE bullshit is going to do ANYTHING.

If you were one of those long-term unemployed folks who was forced to create your own source of income you might have a different point of view regarding small business funding. Even now the two biggest obstacles to success are start-up capital and health insurance.

And yes there are supply side issues. But I guess folks who embrace big box stores with internationally standardized and branded products don't get that. After all, everybody in the whole frickin world should wear Levis made in one of a handful of styles and finishes.

Our economy is fucked because we embrace consumerism and wealth creation rather than real productivity. Consumers are price conscious and ignorant of value. Workers don't want to get their hands dirty or break a sweat.

Cnsumer based economies that value wealth creation over real productivity are doomed to fail. Regardless of how many stimulus dollars we throw at banks that don't lend and multi-national corporations that outsource labor.

It doesn't matter if you own the company store if nobody can afford the merchandise. Voodoo economics.

but most can't even get that, until they can show they don't need it.

for credit unions - community charters that allow for locally-based business banking, as well. This way the money stays in the community, and members are more likely to support the business-members, as they own a stake in the loan. www.the350project.net

To extend from that, why can't credit union members get the same negotiating power for large group health insurance that big businesses have?

Too bad the bank lobbys are at war with credit unions.

Even if I don't know what I'm looking at.

They aren't even, even.

They are essentially black holes where money goes right now.

folks who have money to invest are probably willing to lend it to small businesses and such, only they don't trust the banks either right now.

There should be some way to get around the freeking banks. I'm all for a credit revolt. Even though I've never even had a credit card, I would love to organize the public into holding up payment on their cards for a while. My guess is that within three months the banksters could be forced to the bargaining table. I really believe that is what it will take to get the ball rolling on any type of reform. Like putting an end to the usury and outright fraud and extortion.

The book value of the properties on the banks' books far out numbers the market values of the properties.

They are in a deep hole. And the only way up is an inflationary bubble.
If they loan today at 5% and next year inflation is at 10% they will lose money even more.

The banks are being subsidized by the fed so they can stay afloat. The only way they can be saved is for inflation to drive the values of the properties they hold above what their present book values are.

The fed have saved the banks and the economy from utter collapse. Otherwise your credit card wouldn't be working today.

If they are depending on the government so much...why is financial reform so hard

:rofl:

Place yourself there. The power he is dealing with is tremendous. The responsibility is his. And Obama is out on a limb.

When a situation is this dire, you don't go in and make radical changes. You don't do a massive operation on a sickly patient, if you do it might kill the patient.

Obama is working to shore up a fallen system. It is going to take sometime to get it back on its feet.

That is the biggest bunch of bullshit I've ever heard in my life.

Banks aren't a patient, they are a fucking bully, and when a bully is on it's knees is when you get them to behave themselves.

You don't let the bully back up and negotiate afterwards.

30 million unemployed people need help, these banks and their executives who made bad bets fuck them.

Institutions can be rebuilt, people can't.

Be fucking glad they still work.

The 'patient' was a metaphor. But ask yourself, is the banking system happy to be where it is? Of course not.

But then again, maybe they know, or think they know the end is coming soon and they are gathering all the loot they can, while they can. Scary, eh?

But it is one or the other, imo.

and btw on the credit card thing.

How many Americans got their interest rate boosted for no good reason and their credit lines cut despite the fact they have jobs.

Yeah, I'm glad the credit cards are still working :rofl:

If I was desperate enough for survival I could take out money and end up having even more future earnings go to someone else to pay off my trying to survive right now.

The banks are about to fall flat and the whole financial system with it.

They would have bit the dust already, but they managed to save it.

Still, the future doesn't look good, radical changes would make it look worse.
The only way to save the system now is for assets to rise to above book values.
Hang on tight, it's gonna get rocky(ier).

fucked up world their predecessor created instead of trying to create a better one.

...........I'd say that the numbers take a nosedive right around 1988 or so, then they climb steadily upward starting around 1992. Then the bottom drops out again around 2000. Then the number explodes upward again around 2006. I'm sure there's absolutely no correllation between those numbers and anything significant that happened in those years, is there?

the billions more coming - all for nothing. At least not for us anyways.



Edited to add chart.

We the People would spend it on stuff here at home, which WOULD stimulate the economy. Which is more than Wall Street Banksters ever did. Thanks to Phil Gramm and Co., they moved their loot offshore.

Back to 2007 levels. If you do a linear fit, it should start turning up soon. The previous levels seemed like an unsustainable spike IMO.

The money they are lending isn't their own, it's federal dollars

:rofl:

95% of mortgages in the 4th quarter of 2009 were funded by a government agency or GSA that is bankrupt that has been given federal money.

Why are you going to try on this topic with me Hugh?

My, aren't we the arrogant ass of late - go get laid or something - sheesh.

BTW, going to the comments section of the website and pulling debate points over, is not going to sneak past me.

I read those as much as the articles.

Now you've stumped me - everything I've posted in this thread is all me - I'm naturally smart and snarky :P



Edit: BTW, your "as of late" comment was funny - I do like that you can take a ribbing :hi:

.... they kicked the can down the road a couple years and made it possible for the banksters to collect a few more bonuses.

And Obama ought to be smart enough to know better.

and made it worse by transferring the debt onto the taxpayer.

But hey as long as your 401(k) is OK right now, nothing to worry about or see folks.

... have their 401Ks in stocks are going to get a really harsh surprise in the next year or so.

And yes, rather than unwinding this mess the attempt to bail it out is going to be a long term disaster for all Americans. And Obama cannot blame all of that on the other party. He had a chance to grow a pair and do what had to be done but he's not that tough.

... but among the most important is that small business cannot make money when there are few people with the wherewithal to buy their products. And banks don't lend to businesses that aren't making money.

I'm as disgusted with the banksters as anyone, but the "lending" issue is not the reason. In this case bankers are doing what they are SUPPOSED to do, lend to entities that have a good chance of paying them back.

Since the small businesses are having to deal with the consequences of this depression, I don't see why the banks should not learn to suffer with the small businesses since they will not be providing a use for them anyway.

.. and what should be are two different things. Yes, it would be nice if banks had a different outlook but right now they are hunkered down for survival like every other business.

I guess I can respect restraint a lot more than I can respect bravado for greed.

The post seems to assume "cause," but that's not clear to me.

What's needed is application volume versus approval, with some idea as to the relative creditworthiness. Otherwise it's not news, it's op-ed.

All I have to go on is anecdotal info, business owners saying there's no way they'd incur greater indebtedness to expand their business now, and the idea of starting up a new business or going into debt for recurring expenses makes them break out in hives. Which nicely matches what a number of bank reps have said, that they have money but (a) applications are down and (b) many of the applications they get don't meet criteria. As for (b), I can't help but recall all the complaining in 9/09 about how banks made loans to poor credit risks and we needed regulations to make sure that they didn't engage in risky loans, but now a significant amount of complaining goes towards complaining that banks aren't making risky loans and we need to make sure that they do. (The only constant seems to be complaining about banks, which seems not unreasonable and a sure long-term crowd pleaser.)

...putting millions of people back to work and creating demand. A program that would dwarf CCC and WPA.

Once demand is created.. protective tariffs should be put in place and manufacturing brought back home. All economic activiity starts with Demand.. not supply.

It is a very simple solution. A peace dividend is the answer, and for just that reason it will never happen.

All engineers know that is the sign of an extremely unstable mechanism.

I've forgotten exactly what mathematical formula describes that, but I certainly remember that there are VERY few ways to stabilize a system that's doing that without completely rebooting.

and you can see when there was more deregulation.

Flat line from the 40s into the 70s than total ups and downs from the 80s to the massive spike in 2008 followed by the massive dip in 2009.

This is what happens in a market when you have no rules.

Great post, Jake. Rec.