[Marxism] More bourgeois nonsense Re: "no 'credit crunch'" The real crisis is in the real economy
spalmer999 at yahoo.com
Mon Dec 22 08:20:52 MST 2008
Oh yeh? Well, go check line 21 of Friday's H8 release from the Fed. There's $1,018.7bn of cash lying in the banks - up from a normal $300bn, in just 3-4 months - a greater than 300% jump. That's $700bn of money which could be loaned to businesses, sitting idle.
Actually, it's not really idle, as H3 shows, excess reserve balances at the Fed jumped from $2.0bn in August to $774.4bn last week. (Cool chart here: http://research.stlouisfed.org/fred2/series/EXCRESNS) It's not entirely idle, because the Fed has started paying out interest on excess reserves (based on some absurd bourgeois theory I won't go into here). The effective Fed funds rate (interbank lending ) is around 0.11%-0.15% - below the target rate. Meanwhile the fed is paying the lowest *target* rate on excess reserves. In short, the banks make more money by stashing it safely in the Fed than by risking it by lending to other banks. The Fed is paying the banks to not lend money, then complains about it.
The crisis has been in the 'real economy' (another bourgeois ideological term) for years and years. It has been prevented from manifesting itself because of the massive extension of credit. Now that credit has overreached itself and is forced to contract, the locus of the crisis is moving back to where it originated: in production, in an insufficiency of surplus-value to adequately expand capital. This is experienced by manufacturing firms as a lack of credit. The commercial paper market was in deep doo-doo until the Fed stepped in, and the Fed now IS the CP market maker for all practical purposes. The auto makers can't raise money privately. It's not Paulson, Bernanke and co who can't read a balance sheet, but this bourgeois analyst.
--- On Fri, 12/19/08, Darrel Furlotte <darrel.furlotte at gmail.com> wrote:
> As the Minneapolis Federal Reserve reports, the major
> claims about a credit crisis that justified Congress cutting
> a trillion-dollar blank check to Wall Street were
> demonstrably false. And new data and reports show they
> remain demonstrably false.
> For instance, take a look at line 1 and line 5 of this
> DecemberFederal Reserve report on bank lending. That's
> right -- you see no significant decrease in lending, and in
> some cases, an increase. Interbank lending has dropped some,
> but certainly not at the crisis levels the Bush
> administration and banks claimed.
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