Are we really experiencing a "Credit Crunch" or "Credit Crisis"?

According to Federal Reserve banking data (via the St. Louis Fed) released yesterday, %26quot;weekly bank credit of all commercial banks%26quot; hit an all-time record high of $9.49 trillion on March 19, 2008. What%26#039;s even more impressive though is the growth in total bank credit measured as the %26quot;percent change from a year ago%26quot; (see chart above). Compared to the same week a year ago, bank credit in the third week of March (the most recent week available) increased by 12.62%, the largest annual percent increase in bank credit in more than a quarter century!

You would never know from media reports on the %26quot;credit crisis%26quot; (1.81 million Google hits) and %26quot;credit crunch%26quot; (3.61 million Google hits) that total U.S. bank credit is higher in absolute terms than ever in U.S. history, and is growing at the fastest rate in percentage terms since 1979!

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Are we really experiencing a %26quot;Credit Crunch%26quot; or %26quot;Credit Crisis%26quot;?horses for loan

The %26quot;credit crunch%26quot; has been caused by a small percentage of foreclosures in the sub prime market. Loan defaults are up, but are still a small percentage of the total.

This has caused lenders to have trouble selling the %26quot;paper%26quot; that allows them to make loans. Appraisers used to be able to use sales from going back 1 year. That is now 6 months. Also credit scores has to be much higher to qualify.

Any one in real estate should have seen this coming years ago.

Are we really experiencing a %26quot;Credit Crunch%26quot; or %26quot;Credit Crisis%26quot;?

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Possible, but the on the ground reality is what counts. A significant number of wage-earning Americans are in significant trouble financially, and those Americans that have lost high or moderately high paying jobs are no longer able to continue any of their consumption. The concept of an ever increasing economic universe is what%26#039;s at fault. Great booms are followed by busts. Smoothing out those busts is the point of Keynsian economics...government purchasing when times are slow and cutbacks when times are not. All this worked well until the world changed. Eventually the world got over the effects of WW2. Suddenly the US wasn%26#039;t the only big producer of goods. Third world countries, with large poor populations and no thoughts of environmental issues could produce %26#039;stuff%26#039; cheaper...not that it sold for that much less than if it was manufactured in the US with union labor, but the profit margin was higher. Couple that with trade policies that are rigged to screw the American worker and we get what we paid for....a world of very rich and a world of poor, very poor and piss poor people with a few shoals of moderately well off folks to create the illusion that %26#039;all is well%26#039;. Basically by sticking it to the American working class, and that 90% of us, the world of banking, credit, trade and taxation have, if not killed the goose that lays the golden eggs, its made the goose one sick puppy...how %26#039;fowl%26#039; is that?