[Marxism] "no 'credit crunch'" The real crisis is in the real economy

["Darrel Furlotte" <darrel.furlotte@xxxxxxxxx>]

>From an article at:http://www.alternet.org/workplace/113758?page=entire

As the Minneapolis Federal Reserve reports, the major claims about a credit 
crisis that justified Congress cutting a trillion-dollar blank check to Wall 
Street were demonstrably false. And new data and reports show they remain 
demonstrably false.

For instance, take a look at line 1 and line 5 of this DecemberFederal Reserve 
report on bank lending. That's right -- you see no significant decrease in 
lending, and in some cases, an increase. Interbank lending has dropped some, 
but certainly not at the crisis levels the Bush administration and banks 
claimed.

Then take a look at this story from Reuters, recounting a big report from a 
widely respected financial analysis firm:

  "The credit crunch is not nearly as severe as the U.S. authorities appear to 
believe, and public data actually suggest world credit markets are functioning 
remarkably well, a report [from Celent consulting] released on Thursday says. 
... The report, much of which is based on U.S. Federal Reserve data, challenges 
a long list of assumptions one by one, arguing that there is indeed a financial 
crisis but that, on aggregate, the problems of a few are by no means those of 
the many when it comes to obtaining credit.

  "It is startling that many of (Federal Reserve) Chairman (Ben) Bernanke and 
(Treasury) Secretary (Henry) Paulson's remarks are not supported or are flatly 
contradicted by the data provided by the very organizations they lead," said 
the report.

  Regarding U.S. business access to credit, the report says: Overall U.S. bank 
lending is at its highest level ever; U.S. commercial bank lending is at record 
highs and growing particularly fast since May 2007; corporate bond issuance has 
declined, but increased commercial lending has compensated for this; 
[interbank] lending hit its highest level ever in September 2008 and remained 
high in October and that overall interbank lending is up 22 percent; the cost 
of interbank lending ... dropped to its lowest level ever in early November and 
remains at very low levels; [consumer credit] was at a record high in 
September; and local government bond issuance had continued at similar levels 
to those before the credit crisis, while bank lending for real estate reached a 
record level in October 2008, it says. (emphasis added)

Then there's this from the Wall Street Journal looking at a new study by the 
National Federation of Independent Business:

  The report found that among small businesses "no 'credit crunch' has appeared 
to date beyond the normal cyclical tightening of credit." The NFIB found that 
worries about interest rates and financing were a concern to only 3 percent of 
respondents. ... By and large, the story of the NFIB report was that if credit 
is going untapped, it's largely because company operators are not choosing to 
pursue the credit. It's not that companies can't get the extra money, it's that 
they don't want or need it because of the broader slowdown in economic 
activity. (emphasis added)

That last point is the big one: The real crisis is in the real economy -- ya 
know, the real world of jobs, wages, health care premiums and pensions that 
Washington has totally ignored as it keeps writing checks to its well-heeled 
campaign contributors on Wall Street under the guise of a lending crisis. 
Adding insult to injury is the last thing I discussed with Rachel -- the fact 
that because the bailout money came with almost no strings attached, the 
financial-industry recipients of the taxpayer largesse are either hoarding the 
money, using it to pay shareholder dividends and executive bonuses, or devoting 
it to efforts to buy up smaller competitors.
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