The Big Heist
By David Sirota
November 18, 2008 - 11:31am ET
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In the slapstick classic Funny Farm, Chevy Chase ends up writing a novel called The Big Heist which is so bad - so painfully, terribly awful - that he ends up going insane and burning it in front of his horrified wife. With that in mind, here's my question after reading this little-noticed two-week-old story: Are we all living on a funny farm, and does this story prove that we've just experienced the big heist - ie. a pathetically unfunny rip-off scheme of trillion-dollar proportions?
Here's the excerpt:
For Banks, What Credit Crunch?
By Mike Myers, Star Tribune
The nation indeed may be facing a financial crisis, with large institutions failing in the wake of multibillion debts, but most bank-lending to business customers actually has been on the rise.
The latest government numbers, through mid-October, show bank commercial and industrial loans up, bank commercial real estate loans rising and interbank loans climbing. Indeed, from September 2007 to mid-October of this year, the numbers in all three categories have climbed consistently. It's a puzzle that's getting little attention, even as hundreds of billions of taxpayer dollars are devoted to fixing a problem that seems belied by government figures.
Federal Reserve Board and Treasury representatives declined to comment...
"Paulson said the funds stopped flowing," Christiano said. "Nobody has explained how the money system has frozen when the data says it has not."
Chari, Christiano and University of Minnesota economist Patrick Kehoe, in a working paper published in October, note that bank deposits actually have climbed even as commercial-paper borrowing fell precipitously in recent weeks.
Four claims about the nature of the nation's financial crisis appear to be myths, they concluded.
Bank lending to corporate America and individuals has not declined; Lending between banks has not dried up; Commercial paper (short-term borrowing by nonfinancial companies) has fallen, but not seized up as a source of commercial lending. (Indeed, commercial-paper levels last week started to head back up for the first time since the failure of Lehman Brothers, in mid-September.); Banks do not, as popularly believed, play a large role in channeling money from savers to borrowers.
If we are to believe this story - and it indeed quotes very credible economists - taxpayers were forced to give away hundreds of billions of dollars to banks that actually weren't experiencing nearly the credit crisis they and our government officials claimed. Even if only part of this story is accurate and statistics have somewhat changed, it still means we were royally ripped off.
I have that sinking feeling America was just the central character in the real-life version of Chevy Chase's Big Heist.
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