Clown-Free Zone... sorry, no clowns allowed Message Board

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Pastimes : Clown-Free Zone... sorry, no clowns allowed

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To: NOW who wrote (73464)	2/28/2001 7:19:45 PM
From: patron_anejo_por_favor	Read Replies (1) of 436258

<<well the M3, along with FNM 's balance sheet means that credit is soaring, not contracting, doesnt it?>> The simple explanation is that mortgage lending is booming due to new home buying and refinancings, while C&I lending is contracting somewhat (albeit off of a very high base): stls.frb.org Add to that some stock market refugee ClownBux moved to the rat futures-infested money markets (the better to avoid the money heaven express), and you get rising M3 WITH contracting business lending. Rather typical example of money chasing inflated assets, and avoiding the areas where it might actually do some good, as Noland might say..... EDIT: One reason for this anomaly is that the mortgages are rapidly securitized and moved off the bank's books, whereas the typical C&I loan or lease is kept on the books and therefore exposes the bank to the default risk. Clearly they will be more careful when times are tight on this sort of exposure compared to MBS's, which are destined for the nearest money market fund and don't threaten the bank's own finances (for very long)

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