Credit demand, supply, and conditions: A tale of three crises

Some of the Central Bank’s main contributors to Friday’s SME conference report on how debt overhang is constraining bank lending to SMEs in this VOX article.

5 replies on “Credit demand, supply, and conditions: A tale of three crises”

How many jobs have this government destroyed since they got into power by not dealing with the UORR issue? The jobs initiative is just more lies and reflects this governments cowardice in not confronting the vested interests. Retail Excellence Ireland produced stats to say 4% have achieved rent reductions. Let the LIARS lead on…..

For all those who are massively over-rented and been bled dry by the most anti-tenant lease law in the world–the work goes on-the cause endures -the hope still lives -and the dream of market rents will never die.

We will not be silent.

Well – the real economy supplied by credit was in the main a Grot economy – it chiefly involved the production 7 export of useless or at least over engineered luxury goods.
The west primarily due to its opiate addiction to cheap oil encouraged by the Saudi / Swiss connection has forgotten how to Build real goods & especially core capital.

To sustain this sham people will be destroyed as the car based economy slowly moves up the European food chain.
This desperate attempt to save mercantile Germanys & the cores recycled petro based exports via firewalling or more accuretly merely burning Greece , Ireland ,Iberia , Italy to continue this failed business model of providing Germany with cheap capital is very telling.
Consider this ……….fixed capital tale.
2005 Irish Buildings & construction : 33.405 Billion
2006 : 38.037 Billion
2007 : 36.582 Billion
Total : 108.024 Billion

If Germany spent 108 Billion on the very expensive EPR reactor how many could it build ?
Well at 7 billion a pop thats 15+ 1.6Mwe reactors – coal depletion problem mostly solved.

Irish Imported capital goods (half of this is vehicles)
2005 :8.31 Billion
2006 :7.99 Billion
2007 :9.16 Billion
Total : 25.46 billion
Enough to stick electricity cables above all urban Bus route in Germany I imagine.
Imagine the scale of the credit malinvestment in Iberia ?????

The Germans merely had a Reggie Perrin like moment back in the 50s era of cheap abundant oil but without the Humour and bad engineering.

Europe is a Failed entity – its time we move on from this mercantile debacle and concentrate on increasing redundancy & core capital in each indivdual state.

Why does it take three economists to tell Padraig Public, what PP already knows with 101% certainty? – that if you owe someone a lot of moolah, and your own moolah stream is low (on the volume side) you maybe, just maybe, will be a bit squeamish about asking for more credit which will magically (no effort, nor energy needed) metamorphose into toxic debt and leave you with an even bigger predicament.

ps: ‘volume’ is used for measuring liquids, not objects. Use a counting unit.

“Q: Why are you so down on the U.S. economy?

A: It’s become super-saturated with debt.

Typically the private and public sectors would borrow $1.50 or $1.60 each year for every $1 of GDP growth. That was the golden constant. It had been at that ratio for 100 years save for some minor squiggles during the bottom of the Depression. By the time we got to the mid-’90s, we were borrowing $3 for every $1 of GDP growth. And by the time we got to the peak in 2006 or 2007, we were actually taking on $6 of new debt to grind out $1 of new GDP.

People were taking $25,000, $50,000 out of their home for the fourth refinancing. That’s what was keeping the economy going, creating jobs in restaurants, creating jobs in retail, creating jobs as gardeners, creating jobs as Pilates instructors that were not supportable with organic earnings and income.

It wasn’t sustainable. It wasn’t real consumption or real income. It was bubble economics.

So even the 1.6 percent (annual GDP growth in the past decade) is overstating what’s really going on in our economy.”

Jesper: Its known as ‘olde math’. I understand that we have been teaching something called New Math for some time now, but recently we have embarked upon New New Math!

Olde Math: 2 + 2 = 4

New and New New Math: 2 + 2 = “Well its probably between 3 and 5”! 80-)

And for God’s sake don’t mention exponentials, well not in front of the adults!

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