We haven't had the raw extent of bank failures that we had in the Great Depression (far from it, in fact), but the withdrawal of credit from the economy, the knock-on hit to the economy is rapidly approaching such levels.
It isn't, (so much), that "Banks" are "not lending" --- they ARE.
It's that an entire "Shadow Banking System" (which used to buy loans from banks and securitize them... thus allowing the banks to go back and make more loans, and so on, and so on...) has VAPORIZED.
This Shadow Banking System acted like a multiplier --- actually resulted in the extension of *more credit*, more loans, in our economy than the entire regular banking system could or does acting on it's own.
So, we are seeing the same sort of effects that we would see IF hundreds of banks had been dissolved, erased from the economy --- (even though that many banks have not failed).
A huge portion of the liquidity-providing structure of our economy has vaporized... and, if we do not plug the gap with *something* then our economy must downsize to something less then it has been in recent years... and it could, realistically be a matter of DECADES before it ever regains it's previous size. |
