The Oregon Biz Report - Business News from Oregon

Read about accutane journal moderate acne here

Credit Crunch: Is it Real?

April 6, 2009

By Bill Conerly, Conerly Consulting, Businomics

In a recent post I compared bank loans to businesses in this recession with the pattern in past recessions. I couldn’t see anything that resembled a credit crunch.  I cautioned readers that those statistics did not include non-bank credit.  So I dug up the data on all credit to non-financial businesses, which includes corporate businesses, non-corporate businesses, and farm businesses.  Here’s data for the last five quarters:


The underlying data are available here.

The only noticeable drop in credit was commercial paper, but check out the dollar magnitudes; they are small.  The increase in bank loans was almost twice the decrease in commercial paper.  As I pointed out last week, some of that decline in commercial paper probably triggered an increase in bank loans, as borrowers exercised standby lines of credit they had been paying fee for.

One could argue that this rate of increase is small, and that it’s not sufficient for a healthy growing economy.  (Hey, you seen one of those lately?)  However, it’s hard for me to say that the credit crunch was the cause of the recession, given the increases in credit to the business sector.

Now we have to reconcile the data with some of the horror stories I’m hearing from business contacts, including clients whom I trust.  It’s probably true that some businesses are crunched, but plenty of others aren’t.  The most credit-worthy businesses may be sucking down credit like beer in a frat house, while riskier businesses are getting turned down.  That suggest a sectoral problem rather than a system problem.

I’m growing increasingly skeptical that the massive Treasury operations are necessary.  Either they are unnecessary, or they have already worked.

##

Bill Conerly is principal of Conerly Consulting LLC, chief economist of abcInvesting.com, and was previously Senior Vice President at First Interstate Bank. Bill Conerly writes up-to-date comments on the economy on his blog called “Businomics” and produces a monthly audio magazine available on CD. Conerly is author of “Businomics™: From the Headlines to Your Bottom Line: How to Profit in Any Economic Cycle”, which connects the dots between the economic news and business decisions.

  
Print This Post Print This Post    Email This Post Email This Post

Discuss this article

Dona April 6, 2009

Interesting point of view. Will be interesting to see how this whole thing plays out.

Leave a Reply

Your email address will not be published. Required fields are marked *

Top Business News

 

Top Women's News

 

Top Natural Resource News

 

Top Faith News

 

Copyright © 2016, OregonReport. All Rights Reserved. | Terms of Use - Copyright - Legal Policy | Contact Oregon Report

Stay Tuned...

Stay up to date with the latest political news and commentary from Oregon Business Report through daily email updates:

Delivered by FeedBurner

Prefer another subscription option? Subscribe to our RSS Feed, become a fan on Facebook, or follow us on Twitter.

RSS Twitter Facebook

No Thanks (close this box)