Michael,
Did you see this in David Tice's commentary today?
btw, who the heck invited this guy to the party, anyway? any way we can get him to just go away???? <vbg>
Peter
from prudentbear.com
<<Just look at the government statistics. Total US domestic debt,
including both non-financial and financial, now totals almost $22.7
trillion, or 260% of GDP. Throw in current stock market values of $14
trillion, and you have paper claims on the economy of more than $36
trillion, or 420% of total economic output (GDP). Total net credit
growth in 1998 was a stunning $2.1 trillion, fully 45% greater than
total credit growth in 1997. Moreover, in 1998, for the first time ever,
the financial sector actually had more net borrowings than the
non-financial sector. Total non-financial sector borrowings were $953
billion, while total financial sector debt growth was more than $1.1
trillion. Net additional borrowings by the non-financial sector were 29%
greater than 1997, while financial sector net borrowings were greater by
a stunning 71%.
...
The recently released
fourth-quarter data from the Federal Reserve show, unequivocally, the
unprecedented explosion of credit growth in our financial sector.
Of the total $1.1 trillion of financial sector borrowings during 1998,
Commercial Banks and Savings and Loans were only responsible for about
$126 billion, or about 11%. Most of the borrowings were by the
Government-Sponsored Enterprises (GSE1s), largely Fannie Mae, Freddie
Mac, and the Federal Home Loan System, and also Federally Regulated
Mortgage Pools and Asset-backed Security Issuers that borrowed
aggressively to purchase mortgages. These groups combined to increase
borrowings by an astonishing $814 billion in 1998, as these largely
government related institutions increased borrowings by a staggering 95%
from 1997 borrowings. Finance companies and REITS rounded out much of
the remaining credit growth, combining to increase borrowings $126
billion.
During the tumultuous 4th quarter, the government-related entities and
asset-backed issuers borrowed almost $280 billion, using proceeds
largely to fund mortgage purchases. Fannie Mae and Freddie Mac were
particularly frenetic buyers of assets during the fourth quarter,
growing their balance sheets by $88 billion. For all of 1998, Fannie and
Freddie balance sheets grew by $220 billion, or almost 40%. The Federal
Home Loan System was also very aggressive during the fourth quarter,
advancing almost $43 billion of loans during the quarter. For the year,
the Federal Home Loan Bank System increased lending by $90 billion,
compared to $36 billion in 1997. Clearly, today1s stock market and
economic environment would be much much different today if these
government related financial institutions had not pursued an
unprecedented lending spree of more than $300 billion last year.>> |
