I said it a couple of weeks ago:
Economists will be poking through this situation years from now, and may well find the bunkers
empty of WMD's. Another trillion dollar commitment and unprecedented
expansion of executive power ramrodded on the back of fear mongering
and chicken-little crisis declaration.
And even before that on October 1
Well, they're picking through the bunkers now, and its not at all clear the threat was what it was portrayed to be. The Fed of Minneapolis debunks four myths (pdf)
Myth 1. Bank lending to non…nancial corporations and individuals has declined sharply.
Myth 2. Interbank lending is essentially nonexistent.
Myth 3. Commercial paper issuance by non…nancial corporations has declined sharply and rates have risen to unprecedented levels.
Myth 4. Banks play a large role in channeling funds from savers to borrowers.
Apparently, others are starting to make the WMD comparison.
A couple of examples below. First, sure looks like all the inter-bank lending has dried up:
Yep, and no one is lending to Main Street businesses either, so we better do something!
Just to avoid confusion, that upward spike began in September, well before the Lehman bankruptcy. Similar stories in commercial paper, consumer lending, leases, etc. See the whole thing.