No, it isn't. Late last year the Capemax ships almost ground to a halt. Capemax ships are the 100k+ ton capacity ships that move things like grains, iron ore, coal, etc. The reason why they stopped moving was that the banks no longer trusted letters of credit for those large amounts. Without the letters of credit, no shipments could be authorized.
It really IS an exaggeration. It is true that when the so-called "crisis" first hit, nobody knew who had money and who didn't, so things slowed down a bit. But this is a natural reaction. The price of letters of credit went up, and people who needed to ship badly enough paid the price. Everyone has a price.
Over time, as the US stood behind the banks -- which everyone knew they would do -- the issues eased. But if the US hadn't stood behind the banking industry here, things would have slowed but still not stopped. There is still cash in the system, there are other ways of guaranteeing payment, and there are sources of guaranty and security other than banks. If there is a tanker full of oil destined for refineries in America, it may take longer to get here, but the financing can be worked out.
As I stated at the time, it was nothing more than a "cash flow problem". After Bush injected cash into the situation, the problem eased. There is no evidence that anything done after that has made a difference. Had Bush not injected the cash into the system, I'm not sure what might have happened -- my guess is things would have worked themselves out but we'll never know. |
