A report from Barrons shows that credit for US small businesses and consumers is still not available…
“IF YOU’RE LOOKING FOR CREDIT, you’re better off being a junk-rated company or, even better, a hopelessly over-indebted European country than a small American business or consumer.”
Still No Credit Where It’s Due
Banks’ lending standards remain stringent while junk-bond market is free and easy. What’s different this time.
The Federal Reserve’s latest survey of senior bank loan officers showed lending standards remain stringent, with only a slight loosening for large- and medium-sized business. But sales of junk bonds are booming and the European Union and the International Monetary Fund agreed to a €110 billion ($147 billion) bailout for Greece.
A sharp decline in the yields of speculative-grade bonds historically has meant, ipso facto, an economic expansion was to follow. That’s because it always worked that way. The forces that drove the capital markets and bank credit were one and the same. But that is the record of typical economic cycles, not one resulting from a debt bubble and ensuing credit collapse.
“Most banks kept their lending standards unchanged in the first quarter, but that moderate net fractions of banks further tightened many terms on loans to businesses,” according to the Fed’s latest quarterly survey, the results of which were released Monday.
Read more: http://online.barrons.com/
