{"id":7048,"date":"2015-04-03T07:04:08","date_gmt":"2015-04-03T12:04:08","guid":{"rendered":"http:\/\/olduvai.ca\/?p=7048"},"modified":"2015-04-03T07:04:57","modified_gmt":"2015-04-03T12:04:57","slug":"the-economic-wall-dead-ahead-is-hidden-behind-false-signs-of-recovery","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=7048","title":{"rendered":"The Economic Wall Dead Ahead Is Hidden Behind False Signs Of \u201cRecovery\u201d"},"content":{"rendered":"

The Economic Wall Dead Ahead Is Hidden Behind False Signs Of \u201cRecovery\u201d<\/a><\/h3>\n

This morning I had left the TV\u00a0mistakenly\u00a0tuned to CNBC with the sound on\u2014-and unavoidably\u00a0caught another bullish strategist jawing about the US economy\u2019s awesome strength.\u00a0This one\u00a0was peddling as exhibit #1\u00a0the recent surge in\u00a0C&I loans, arguing that it is a\u00a0sure sign that business is gearing\u00a0up for a\u00a0post-winter boom.<\/p>\n

It turns out that the $1.8 trillion of C&I loans\u00a0outstanding at the end of February, in fact,\u00a0were up by 14% since January 2014.\u00a0But then again, when are they going to find a guest which wasn\u2019t born yesterday.\u00a0That is to say, an analyst who\u00a0is\u00a0capable of looking at the historic context\u00a0in which the latest\u00a0data\u00a0points are\u00a0anchored, the quality of the numbers at issue and the deeper implications of the indicators.<\/p>\n

In this case, like\u00a0most of the blizzard\u00a0of bullish factoids spewed out each day on bubble vision, the\u00a0purported\u00a0business lending boom is not all that.\u00a0The upward blip during the last 13 months was from a level which had first been reached way back in October 2008. In other words, it had taken 63 months to dig out of the deep crater that had resulted from the liquidation of the mountains of\u00a0bad debt that existed on the eve of\u00a0the financial crisis.<\/p>\n

 <\/p>\n

\"\"<\/p>\n

Next consider the quality and content of the purported \u201csurge\u201d in business lending. The skunk in the woodpile is patently obvious in the graph below.<\/p>\n

The \u201csurge\u201d is almost entirely due to financial engineering and LBOs. In fact, virtually all of the growth in business lending during the past two years is due to\u00a0a dramatic rise\u00a0in leveraged loans from the deal business. Thus, overall C&I loans are up\u00a0a modest\u00a0$220 billion since October 2008, but 100% of that gain is accounted for by the 37%\u00a0rise in leveraged loans outstanding since 2008.<\/p>\n

 <\/p>\n

…click on the above link to read the rest of the article…<\/p>\n","protected":false},"excerpt":{"rendered":"

The Economic Wall Dead Ahead Is Hidden Behind False Signs Of \u201cRecovery\u201d This morning I had left the TV\u00a0mistakenly\u00a0tuned to CNBC with the sound on\u2014-and unavoidably\u00a0caught another bullish strategist jawing about the US economy\u2019s awesome strength.\u00a0This one\u00a0was peddling as exhibit #1\u00a0the recent surge in\u00a0C&I loans, arguing that it is a\u00a0sure sign that business is gearing\u00a0up […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[4591,964,195,244,4592,312,670],"class_list":["post-7048","post","type-post","status-publish","format-standard","hentry","category-economics","tag-ci-loans","tag-cnbc","tag-debt","tag-economics-2","tag-factoids","tag-financial-crisis","tag-recovery"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/7048","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=7048"}],"version-history":[{"count":2,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/7048\/revisions"}],"predecessor-version":[{"id":7050,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/7048\/revisions\/7050"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=7048"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=7048"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=7048"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}