Thursday, December 3, 2009
Bank lending continues cliff diving
I went back and looked throughout the entire data set available (back to 1973) for bank loans and loan growth has never been this negative, ever.
If you notice on the graph, bank lending levelled off and slowly resumed growing after each of the two previous recession. So far bank lending continues to fall and shows no sign of even levelling off.
The year over year deceleration in US government securities owned by banks is curious considering loans dropped as well. Are banks deleveraging their balance sheets or is it just seasonal noise?
Until bank lending stabilizes and starts growing again we will not have any meaninful recovery.