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Saturday, April 18, 2009


empire state cites ease of credit

via econblog review -- the new york fed reports in its empire state manufacturing survey.

Most respondents cited little or no difficulty obtaining financing for either long-term commitments (capital investment) or short-term needs (operating expenses). Moreover, fewer than 10 percent of those surveyed indicated that problems obtaining credit had adversely affected their production or sales.

for all the regulatory and public hysteria about bank balance sheets and credit crunches, this eerily echoes survey results from japan during their long malaise.

as this thing drags on, we're liable to find that credit availability was never really the problem it was advertised to be -- indeed even many writedown-plagued banks have ample capital to lend thanks to various government interventions, guarantees and rule changes.

the trouble is that no one wants to borrow. loan demand is awful. household debt outstanding is contracting. there has been a secular shift in attitudes toward credit. and that can't be patched up by the fed.

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