Posts filed under “Economy”

Is Dodd-Frank Choking Small Banks & Businesses?

@TBPInvictus here.

AEI’s Peter Wallison recently described why America is in the midst of a “slow economic recovery,” which we have been, but not for the reason Mr. Wallison cites.

According to Mr. Wallison, “Dodd Frank has burdened small banks – and the businesses that rely on them – much more than large businesses that have access to capital markets.” The point Mr. Wallison drives home: “While larger firms have access to credit in the capital markets, millions of small firms, limited to borrowing from beleaguered community banks, are not getting the credit they need to grow and create jobs.”

Sadly, though completely unsurprisingly, Mr. Wallison’s claims do not withstand even a modicum of scrutiny. Barry took Mr. Wallison to task here: Don’t Blame Dodd-Frank for the Slow Recovery.

Below are Commercial and Industrial (C&I) Loans for both small (blue, right hand scale) and large (red, left hand scale) domestically chartered commercial banks. If there’s a meaningful difference to be seen in the recent pace of lending between the two, it’s lost on me. But the fact that both series are at all-time highs is not.


small large candi loans


Beyond that, as fate would have it, the National Federation of Independent Business (NFIB) released its Small Business Economic Trends (SBET) report yesterday. As it relates to credit conditions, the SBET said this (my bold):

Two percent of owners reported that all their borrowing needs were not satisfied, a record low. Thirty percent reported all credit needs met, and 57 percent, a record high, explicitly said they did not want a loan.

Of course, Mr. Wallison could not have known a week or so ago what NFIB members were going to say in the most recent report. All he could have (and by all means should have) known when he published was what they said last month, which was this (my bold):

“Three percent of owners reported that all their borrowing needs were not satisfied, historically low. Thirty-three percent reported all credit needs met, and 49 percent explicitly said they did not want a loan. For most of the recovery, record numbers of firms have been on the “credit sidelines”, seeing no good reason to borrow. Only 1 percent reported that financing was their top business problem compared to 20 percent citing taxes. In the Great Recession, no more than 5 percent cited credit availability and interest rates as their top problem compared to as high as 37 percent in the Volcker era. Thirty-three percent of all owners reported borrowing on a regular basis, up 3 points. The average rate paid on short maturity loans rose 20 basis points to 5.4 percent. The net percent of owners expecting credit conditions to ease in the coming months was a negative 7 percent, down 2 points.”

The facts of the matter – supported by both the Federal Reserve’s H.8 and the NFIB – put the lie to Mr. Wallison’s claims.

Federal Reserve economists Bhutta and Ringo debunked his claim that the housing bubble of decade ago was caused by the Community Reinvestment Act of almost four decades ago (“…the current best evidence suggests that the CRA was not a significant contributor to the financial crisis.”)

AEI is no longer even trying to be a thoughtful, respectable thinktank with independent analysis and intelligent commentary. Instead, it has morphed into a showcase of discredited ideas, disproven myths, and empty-headed rhetoric.

AEI stands as a stark warning to other (so-called) think tanks what not to do: Don’t become some billionaire’s ideological bitch.

Category: Credit, Current Affairs, Data Analysis, Economy, Really, really bad calls

Coming to Asia: 5,000 New $100 Millionaires

click for full discussion Source: Visual Capitalist

Category: Digital Media, Economy, Wages & Income

Migrant Maps

Source: WSJ

Category: Current Affairs, Economy, Politics, Travel

Emerging Markets of the Future

Source: Visual Capitalist

Category: Economy

Economic and Financial Decision Making in China

  Fascinating graphic from Goldman Sachs via FT Alphaville:   click for ginormous graphic Source: FT Alphaville  

Category: Economy, Politics

Economic Data Misperceptions in Political Discourse

Category: Economy, Politics, Really, really bad calls, Think Tank

Commodities Return to the 1990s

    The chart above is the Bloomberg Commodity Index. It consists of baskets of common commodities, including energy, metals, foodstuffs, softs and precious metals. After a fairly flat period in the 1990s, the index leapt upward beginning in the early 2000s. The context explains the jump: High inflation, weak dollar and low interest rates….Read More

Category: Commodities, Currency, Economy, Markets

Curly Joins Moe & Larry on Seattle Min Wage

@TBPInvictus Moe and Larry on Seattle’s minimum wage are now joined by Curly, a fellow by the name of Mike Patton, whose recent screed on the topic can be found here. To demonstrate the deliterious effects of Seattle’s new law, Patton provides us the following chart: (Let’s disregard the fact that what Patton cites as 3.7%…Read More

Category: Current Affairs, Data Analysis, Economy, Employment, Wages & Income

Most Competitive Countries in the World

113 indicators from the World Economic Forum’s Global Competitiveness Report 2015-16 (via  Bloomberg) leads to a not at all Lettermanesque top 10 list of most competitive countries in the world.  Here’s a look at this year’s top 10: Switzerland Singapore United States Germany Netherlands Japan Hong Kong Finland Sweden United Kingdom Fascinating list . . ….Read More

Category: Corporate Management, Economy, Taxes and Policy

Job Creation in the United States

Source: US Census

Category: Digital Media, Economy, Employment