Friday, August 19, 2011

As the Stock Market Crashes....

The annual growth of credit at all commercial banks is close to turning positive for the first time since late 2008. Thus, while stock market volatility continue to confuse many, underlying data from commercial banks suggest an improving domestic economic picture.


Click for larger view (Chart via Federal Reserve)

Data like this and continuing growth in money supply suggest that current stock market weakness is the result of problems in the eurozone rather than underlying problems with the U.S. economy.



6 comments:

  1. C&I Loans (YoY) turned positive earlier in 2011 and are about 4%. Consumer credit, a bit later, and now at 2%.

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  2. Robert Wenzel,

    You said, " current stock market weakness is the result of problems in the eurozone rather than underlying problems with the U.S. economy."

    I think the problem with this statement is that you are conflating the performance of the stock market with the health of the economy. It could also be inferred that you are implicitly suggesting that you believe the US economy is on sound footing, something I am sure you would disagree with considering the amount of malinvestment due to inflation.

    Would it not be better to say, at least from an Austrian perspective, "that current stock market weakness is the result of problems in the eurozone" but money and credit growth should eventually find their way to the stock market and push prices higher?

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  3. Europe looks worse at the moment, so it makes the US markets look better in comparison. Possibly even to the point to where money flows to the US markets in the very short term.

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  4. Zach,
    He's been saying that for weeks now. Of course he doesn't think the US economy is on sound footing!

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  5. Anon,

    I know he has been saying that for some time. My point was what one could infer from this post in particular.

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  6. Wenzel,

    Late 2008? You mean, right before the stock market/US economy melted down?

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