Since I am not a real economist, I’ll admit that this phenomenon may be strictly dependent on the fact that I do not know where to look.
But I cannot find the credit crunch! Can anyone tell me where it is? Everyone is saying that it is becoming hard for businesses to loan, and that we must “coerce” the banks to increase lending. So I went over to the FRED and pulled some statistics over US business and consumer lending. This is what I found :
I expected to see at least a tendency of a drop there at the end, but apparantly there is none. Business lending appears to have increased rather steadily from $1400 billion to $1600 billion during 2008, and customer lending from $800 to $900 billion. Hmh. I guess we better zoom in a bit :
Still nothing but a sort of mediocre slightly flat tendency at the end. Notice that the figures are still around $1 trillion for business loans, and $900 billion for customer loans. I guess we will have to resort to looking for change in the values over the last year.
This is somewhat interesting, but actually all we see is that there has been a rather steady increase (pretty much all of both graphs are over the 0-increase line). I must confess, I do not really understand what happens at the end – the additional $60 billion that is lended out and then rather quickly returned back between Sep-Nov ’08, but I guess that may be one of the effects of a stock market crash, recession and illiquid banks. Is the solution to EVERYTHING more credit these days?
Anyways, I cannot make sense of this, so I went to the Swedish central bank (known as Riksbanken) and tried to find some data. I found the latest “financial stability report” and manage to pull this graph :
This graph is annual percentage change, so I suppose that the dive there in the end could signify some sort of reduced lending, but note that the graph is still showing an annual increase of at least 12%, which means that this is not a decrease but a decrease of the increase. Also note that there are at least two sharper declines occuring ’98 and ’02-’03.
I can only come to one conclusion and that is that the problem is not that banks cannot lend as much as they used to – the problem is that so many companies are in such poor shape that they cannot survive without INCREASING the amount of loans. I will admit that maybe these graphs only show general trends, so maybe there is a decrease in short-term financing that isn’t showing up. But still – after the enormous media noise and politic pressure of MORE LENDING, you’d expect to see something a bit more drastic then this. My final graph is again from the US, showing the yield on corporate bonds (illustrating how much more expensive credit has become for businesses)
I guess the peek upwards on the BAA bonds (7% to 9 %) is somewhat of a sign that banks do not want to hold the crappier kind of papers as security anymore. But still – look at the earlier peaks – they are immensly higher. So, where is this legendary credit crunch, and what credit is it actually crunching? Any economist is welcome to set me straight and explain how I misinterpreted all of the data. Until then – I remain confused.