highalpine

C&I Loans Are Starting to Unravel

Good work! The charts, as they say, are better than a thousand words. Unfortunately, most of the press (and hype) has been focused on the political ramifications of the collapse of the "shadow banking system", and all of the sturm & drang around mark-to-market of toxic structured debt instruments. The collapse of Lehman, and the resulting seizing of the financial system brought a speedy halt to spending last fall. Now, as the charts show, we are entering into a classic business cycle credit contraction. The banks are already wounded, and the climbing asset problems will cause them to husband their capital. Any other response, like making new business loans into the teeth of a downturn, is irresponsible. This will play out over the next 9 -18 months, as it allways does. Pretty soon we will hear the inevitible talking heads expound on the recovery being delayed.