If those credit lines are not declining, then perhaps Higgs and Reynolds are right on their view of the overall market.

That's true, I've only looked in detail at one series, not all of them. I don't have that kind of time right now. If I get that kind of time I will post more on this. I guess my view is in the middle, but closer to the Higgs/Reynolds viewpoint. If we aren't already in recession we very well could be if credit contracts enough.

Note I'm not predicting catastrophe; just that the economy isn't going to be doing well for awhile.

Yes. Not sure if your correct or not. For example, my home loan is in there somewhere and that assets value probably hasn't changed a whole lot since I haven't refinanced in years. On the other hand, a mortgage that definitely goes south and the borrower has stopped paying? I don't know what that does. I'd think it would lower the value. In any event it is a crude measure to be sure. And I don't think comparing the current values to the value a year ago is all that good a way to look at the data. A graph and some basic statistics go much further, IMO.

Things can't be looking bright there if the Fed is stepping in to make short term loans to businesses.

I still think it would have been better had the government borrowed money from these banks that have the money but are worried about making a bad load, like I suggested a while ago.

Steve,
Those numbers look to be the value of assets in commercial banks at that time, am I right? If that is the case, then wouldn't the mark-down in the value of existing mortgage-backed assets account for the drop in mid-July, and not necessarily a drop in the amount of credit being issued for real estate? Overall credit for the same time period didn't decline significantly, so this seems isolated to real estate investments, not things like commercial paper, right?

Sorry no, that trend line is flat. Statistically the result is indistinguishable from zero.

Oh and the trend since 4/2 is negative and statistically significant, so no that assertion is false too.

Robert,

Small declines in outstanding credit are not accurately described by terms such as "drying up," "frozen credit," "locked-up credit markets," "melting-down credit markets" and others now current in the financial press and among commentators, especially when we recognize how rapidly credit has grown in recent years.

I guess that depends on what we are looking at. The week-to-week changes are usually not very large when taken as a percentage of the whole. Going from an average change of just under 5 billion to negative 2 billion is a big change. Is there a melt-down? That is hyperbole to be sure, but there is less credit than there was and the pinch is starting to be felt. Will it lead to the catastrophe some have predicted...I doubt it.

I've read your work, especially Crisis and Leviathan, and I don't think we are at a point that justified the bailout bill. Maybe something needed to be done, I'm still not convinced, but that was just stupid, IMO.