Saturday, September 4, 2010

Bank Credit FAIL

Click to enlarge.

The red trend line shows the exponential growth from January 1973 through November 2007.

The blue trend line shows the linear growth from the official start of this recession in December 2007 to August 18, 2010.

Click to enlarge.

April 14, 2009
Four Questions about the Financial Crisis

Credit is the lifeblood of market economies, and the damage to our economy resulting from the constraints on the flow of credit has already been extensive.

Lifeblood FAIL.

See Also:
Trend Line Disclaimer

Source Data:
St. Louis Fed: Bank Credit of All Commercial Banks


Troy said...

yup. I noticed this failure of the trend two+ years ago:


Holding to the linear 1996-1998 rate of growth would put us at $10T of household liabilities today, which is about what the asset value is worth.

One thing that only recently struck me about the Fed's treatment of the household balance sheet is that assets are valued at the margin (the last trade affects the entire asset class's valuation) and are thus volatile, while debt is, shall we say, sticky.

EconomicDisconnect said...

Welcome to the recovery FAIL?

Stagflationary Mark said...


I'm very concerned about the stickiness of our total government debt, especially since that's where most of my nest egg currently sits. Sigh.


Welcome the debt jungle
We got our wargames
We got every debt they want
Bernanke is to blame
We are the people that they fine
To get what they might need
Since we maxed our credit limit
They share our disease

The debt jungle
Welcome the debt jungle

Just a little Guns N' Butter lifeblood song. I think we're going to bleed.

mab said...


Spot the recovery?

It's coming. Just ask Hussman, the "smart" guy who keeps moving the bar and refining his past statements as he becomes more and more pessimistic.

In his latest missive, Hussman opined about the recognition phase. He also talked about the complete market cycle. Who knows? Maybe one day, Hussman will have his own recognition phase and understand that this ain't no ordinary market cycle.

I'm not holding my breath though.


Stagflationary Mark said...


Three words:

Cumulative Trade Deficit

Google now has me in the #2 spot.

Cumulative Trade Deficit Nightmares

This is similar to the economic model of the Great Depression.