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Finance: Wasn't it just a week ago that Fed Chairman Ben Bernanke sketched out how he would soon undo last year's central bank stimulus? A look at some recent data suggests that might be premature.
The economy, it seems, has begun to show some modest growth. This can especially be seen, believe it or not, in the industrial sector, which in January grew by 0.9% year over year — the first annual gain since April 2008.
At the same time, the Conference Board's Index of Leading Indicators rose 0.3% last month, extending a yearlong series of gains and signaling that the economy is likely to continue to expand at least through spring.
Yet, a look at key banking and monetary indicators is troubling. Money and credit are the fuel for economic expansion, but as Britain's Telegraph newspaper noted this week, U.S. bank lending is now falling at its fastest rate in history, at least in dollar terms.
Quoting David Rosenberg at the investment house of Gluskin Sheff, writer Ambrose Evans-Pritchard notes that U.S. bank lending has declined by more than $100 billion since the start of the year, for an annualized decline of nearly 16%.
And sure enough, government financial data show that despite zero percent interest rates by the Fed, and an estimated bailout and stimulus combination totaling nearly $12 trillion, banks just aren't making loans.
Commercial and industrial loans, a key gauge of business activity, are declining at a yearly rate of 17.7%. After expanding at double- digit rates through the early part of last year, C&I loans have now declined for eight months in a row — and each month has seen a deeper drop than the month before.
Worse, key monetary indicators signal a steep plunge in money supply growth, despite the Fed's printing of well over $1 trillion in new money in the past year and a half.
M2 money supply, the most frequently used gauge for measuring the economy's demand for money, has fallen from solid 8% to 9% growth just last summer to growth of less than 2% since the start of the year. This level is often seen just before recessions, and thus may augur another downturn. Despite two quarters of GDP gains, no rule says we can't have a double dip.
Likewise, total lending at all banks has been falling since September and was off another 3.6% in January. Since activity peaked just before the recession began, total lending at all commercial banks has plunged $538 billion.
Terrorism: Indonesia has fallen off the map of the most-terror-prone places on Earth, corporate intelligence forecasters say. How did that happen in a nation once plagued by Bali's bombers? By annihilating the enemy. This week, Britain's Maplecroft group, an assessor of corporate risk, ...
States' Rights: A revolt against economic hardship imposed by unelected bureaucrats based on junk science is brewing. This Tea Party movement wants the faulty finding on carbon dioxide to be reviewed and dumped. They say you shouldn't mess with Texas, and on Tuesday the state filed suit to ...
Change: The United Nations' global warming chief is resigning. Now how about firing the head of its Intergovernmental Panel on Climate Change and dismantling that worthless agency? Yvo de Boer, the Austrian executive secretary of the U.N.'s Framework Convention on Climate Change, will leave ...
How big a deal was Marco Rubio's speech to CPAC Thursday? If you are asking, as former President George W. Bush did jokingly the other day, "Who the hell is Marco Rubio?" you probably won't be for long. Rubio is the 38-year-old former speaker of the Florida House and a conservative challenger to ...
Current economic and fiscal challenges demand a critical review of all federal programs with an eye toward positive, responsible reform. The Federal Housing Administration is one such program crying out for oversight and assessment. By every accounting measure, those used by private industry as ...
Posted By: Osamas Pajamas(825) on 2/19/2010 | 1:54 AM ET
Restore the gold standard. Hang the paper-money addicts.
Posted By: Mdono(5) on 2/19/2010 | 12:04 AM ET
Good solid facts, unlike the typical Rah Rah on CNBC!
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