http://globaleconomicanalysis.blogspot.com/2011/05/pending-home-sales-plunge-116-nar.html
Excess Reserve Nonsense
Banks lend when they think they have a good credit risk provided they are not capital impaired or concerned about capital impairment. That provision is critical.
Banks do not lend from reserves or even need reserves to lend. Loans come first, reserves second.
----
Capital Impairment the Critical Problem
That banks are not lending is a sign of at least one of the following problems, and likely all three.
In spite of what the Fed or the FDIC may want you to believe, many banks are capital impaired. They hold massive amounts of garbage on their balance sheets (especially real estate and commercial real estate), at marked-to-fantasy prices, not marked-to-market prices.
The excess reserves Yun cites are a mirage.
Excess Reserve Nonsense
Banks lend when they think they have a good credit risk provided they are not capital impaired or concerned about capital impairment. That provision is critical.
Banks do not lend from reserves or even need reserves to lend. Loans come first, reserves second.
----
Capital Impairment the Critical Problem
That banks are not lending is a sign of at least one of the following problems, and likely all three.
- Capital impairment
- Lack of good credit risks
- Lack of consumer demand
In spite of what the Fed or the FDIC may want you to believe, many banks are capital impaired. They hold massive amounts of garbage on their balance sheets (especially real estate and commercial real estate), at marked-to-fantasy prices, not marked-to-market prices.
The excess reserves Yun cites are a mirage.
No comments:
Post a Comment