Despite the multi-trillion dollar taxpayer bailouts and rescues of the major financial institutions, the US credit crunch continues with the broader measures of the money supply [M2 and M3] *FALLING* at rates not seen since the depths of the depression.
This appears to be a world wide problem, not just a US one.
The contracting money supply/credit has severe potential impact beyond restricting economic expansion of new and existing businesses. A large fraction of the outstanding residential ARMs [adjustable rate mortgages] will reset in the next few months, and many of the short term commercial mortgages will need to be renewed.
Question: Given that the existing commercial financial institutions are largely refusing to extend or "roll over" credit, why does the Federal government keep giving them taxpayer money? Why not lend or grant the money directly to the credit worth businesses, possibly through the SBA.
For more information about the amazing contracting money supply see
By Ambrose Evans-Pritchard, International Business Editor Published: 11:59PM BST 14 Sep 2009
Similar concerns have been raised by David Rosenberg, chief strategist at Gluskin Sheff, who said that over the four weeks up to August 24, bank credit shrank at an "epic" 9pc annual pace, the M2 money supply shrank at 12.2pc and M1 shrank at 6.5pc.
"For the first time in the post-WW2 [Second World War] era, we have deflation in credit, wages and rents and, from our lens, this is a toxic brew," he said.
=========== If this is of interest to you, and it should be if you live and work in the money economy, be sure and review the reader comments. Many of these have far better/deeper insights than do the talking heads/gas bags on US TV, and the "whack jobs" are no worse.
Unka' George [George McDuffee]
------------------------------------------- He that will not apply new remedies, must expect new evils: for Time is the greatest innovator: and if Time, of course, alter things to the worse, and wisdom and counsel shall not alter them to the better, what shall be the end?
Francis Bacon (1561-1626), English philosopher, essayist, statesman. Essays, "Of Innovations" (1597-1625).