Chart of the Day – 10.22.2008

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CHART OF THE DAY….Via Alex Tabarrok, a trio of boffins at the Minneapolis Fed argue that the credit crisis is a myth. Using Fed data they demonstrate that bank credit is up, loans and leases are up, commercial loans are up, consumer loans are up, and interbank loans are up. This is all potentially interesting, but unfortunately they then proceed to ruin their credibility by saying blandly that “while commercial paper issued by financial institutions has declined, commercial paper issued by nonfinancial institutions is essentially unchanged during the financial crisis.” Technically that’s true, but commercial paper from financial institutions makes up 80% of the entire market, and Figure 6A shows it plunging over the past month like a barrel jumper at Niagara Falls. You’d think that might have been worth a more vigorous mention.

I’m going to go out on a limb and suggest that using aggregate data like this somehow misses the story. It also probably doesn’t take into account all the term facilities and loan guarantees that the Fed has put in place over the past year. Still, seeing some data that challenges the conventional wisdom is always worthwhile. Even if it turns out to be wrong, reading the explanation of why it’s wrong should be instructive. Perhaps some enterprising econblogger will provide us with just that.

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Fact:

In-depth journalism that investigates the powerful takes real money and is so damn important right now.But it doesn’t take a Mother Jones investigation to know that billionaires and corporations will never fund the type of reporting (like they do politicians) we do that exists to help bring about change. Instead, our mission-driven journalism is made possible by people power, and has been for 46 years now since our founding as a non-profit.

In “TITLE TK” Monica Bauerlein writes about the perilous moment we’re in, and why it’s so important that we raise $325,000 by the time November’s midterms are decided so we can be ready to throw everything we have at the big issues facing the nation no matter what happens. Please help MoJo’s people-powered journalism with a donation today.

$400,000 to go!

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