Robert Higgs Told Us So!
According to Reuters:
The credit crunch is not nearly as severe as the U.S. authorities appear to believe and public data actually suggest world credit markets are functioning remarkably well, a report released on Thursday says.As a result, governments 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….The report, much of which is based on U.S. Federal Reserve data, challenges a long list of assumptions one by one, arguing that there is indeed a financial crisis but that, on aggregate, the problems of a few are by no means those of the many when it comes to obtaining credit….The picture appeared to be broadly similar in much of Europe and Japan, said the report, based on publicly available data on trends in bank lending to industry, households and among banks themselves in the so-called interbank markets. [Emphasis added.]
The taxpayers are on the hook for over $7 trillion in federal commitments that were supposedly critical to easing the credit crisis. We have been scammed.Hat tip: Steve Horwitz
Comment by Carl Clegg on 12 December 2008:
The Austrian business cycle theory holds that credit crunches are in fact the result of a central bank that made interest rates too low thus producing speculative bubbles followed by busts. Obviously we’re in a bust now. Just as Mises predicted the Great Depression so too today the Austrians have predicted the current implosion. What’s disappointing is how few economists can objectively study the Great Depression and as a result be able to make intelligent recommendations and opinions regarding today’s problems. Most of the difficulties in today’s market are based on panic and feeding frenzy of bad news and not the actual data — as pointed out in the Reuters article.