In response to this post, Alex Tabarrok says:
Do either of the cited links present any data at all on the quantity of credit? No. Many people cite prices/rates/spreads as evidence for the crisis but what we ultimately care about is quantity not price. The Fed. piece had lots of data on the quantity of credit. Where is the rebuttal?
Here is every loan series the Federal Reserve Band of St. Louis finds it worthwhile to report in FRED (the title of the section is "Banking: Loans"). These are all percentage changes in quantities (expressed in billions of dollars) from a year earlier, not prices:
I suppose now I'll get told why the St. Louis Fed data doesn't answer the question, or something, but if it's evidence of a decline in loan growth that Alex is after, I don't think it's hard to find.
[Update: I realize that growth rates are still positive and relatively high in some cases -- even real estate loan growth remains above previous troughs -- and that can be interpreted as lack of evidence of a big problem. But I thought the claim was there is no evidence of a fall off in loan activity. The graphs above show there has been an impact, it's not negative yet, but there has been a sharp downturn. It also suggests that if the downturn follows previous patterns - and hopefully Fed intervention or private sector adjustment will prevent that (see the hopeful signs at the end of some of the series above) - but if it does repeat the pattern, we still have a long way to go before things turn around.]
Update: See Tyler Cowen's evidence in There is a Credit Crunch.
Posted by Mark Thoma on Thursday, October 23, 2008 at 02:25 PM in Economics, Financial System |
You can follow this conversation by subscribing to the comment feed for this post.