Yesterday an article about evaporating bank loans described exactly why a credit crunch is so dangerous to the macroeconomy. Having felt stung by underperforming real estate loans, banks are restricting credit to businesses and consumers.
A telling statistic: the $99 billion decline in credit from $3.36 trillion last year to $3.27 trillion this year comes close to the amount of stimulus in the tax rebates that Congress injected into the economy this year, a number quoted at about $150 billion.
