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Summation of Commercial Paper Outstanding AND Combined Commercial and Industrial Loans Outstanding

Combined commercial and industrial loans and commercial paper show a leveling off after the initial drop.

Back in mid 2006, I remember commenting that I thought the government deficit was no longer high enough (given everything else that was going on) to support the credit structure.

The last push up was largely a product of fraudulently obtained sub prime and Alt-A loans.

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2008-06-05 C&I Loans Outstanding 5yrs back

2008-06-05 Commercial Paper Outstanding SA 5yrs back

Seems banks have taken up much of the slack from the commercial paper markets, but at wider spreads.

Bodes well for bank earnings while it lasts, as the real economy manages to chug along, led by exports.

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Proposal for Congress:

Increase FDIC insurance to include deposits up to $10 million for private sector agents.

Unlimited FDIC insurance for Fed advances to US banks.

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News Headline:

Over the last few years, I’ve been saying that with diversity risk is pretty well spread out.

Seems to have been the case - risk seems to have been well diversified.

Losses seem to be spread around more evenly than in the past with no one major US company failing as of yet due to losses per se.

But that also meant that in the adjustment process total losses would build to higher levels before the ‘cycle’ reversed and might be higher than in previous cycles.