Defenestrating Thoughts from the Bivouac

Every politician and Keynesian has been telling us over and over, “The credit markets are frozen! No one can get a loan!”

Turns out that this is not true at all.

First of all, you can get a loan if you want, assuming you’re loan-worthy. The days of minimum wage workers buying half million homes are over. And that’s a good thing. We absolutely don’t want to go back to lending anyone whatever they want.

The same applies to businesses too:

[G]overnments are pumping masses of public money into the economy across the world because of the difficulties of a few big, vocal banks and industries such as car manufacturing, which would be in difficulty anyway, according to the report published by Celent, a financial services consultancy (source).

So the bottom line is companies that are not creditworthy can’t get loans. That seems like a good thing to me. If a prudent bank manager won’t lend them money, there’s probably a good reason.

From the study:

• Overall U.S. bank lending is at its highest level ever and has grown during the current financial crisis.
• U.S. commercial bank lending is at record highs and growing particularly fast since May 2007.
• Corporate bond issuance has declined but increased commercial lending has compensated for this.

So the trillions spent in the bailout are very much a giant waste of money and likely to make things worse:

All of which drove the Celent report to conclude that the U.S. and other governments may be throwing good money after bad for want of a better idea of what is really happening.

“Just like a doctor contemplating an obviously sick and suffering patient, a massive surgical intervention based on a misdiagnosis can only worsen the patient’s condition.”