retired aviator

Shadow Banking System: Death from Nowhere

Too bad the name "shadow banking" came into use. It implies a shady activity, when really by your explanation it was simply securitized lending going on in the markets outside the banks, and largely on the up and up. It was made to look bad when real estate came crashing down. The layperson will not understand this though if they hear of "shadow banking".

It sounds like you are saying the lack of shadow banking lending (90 some percent reduction in securitization being originated), is much of the problem slowing down consumer demand. You are not clear on the mechanism though.

Are you saying consumers who have greater need to borrow (as opposed to those with good credit but little need to borrow)are in fact applying for loans but not signing when the rates are much higher now due to greater spreads, or are you saying the supply of funds is inadequate to meet loan demand that actually exists, or are you saying the consumers are simply not applying for the loans?