Saturday, 15 December 2012

The Making of a New Credit Bubble?: U.S. Bank Credit hits another All-Time High

FRED today released the Bank Credit of All Commercial Banks numbers. As of the week ending 5th December total credit stood at $9.887 trillion beating the previous all-time high set last week. Compared to the same period last year it increased by 5.4%, representing the 41th week in a row with a YoY percentage increase of more than 5.0% on last year. The current value of bank credit is 10.7% higher than that reported at the end of 2007. This smells of the making of yet another credit bubble.

One thing that is different this time (compared to 2007/2008) is that Total Savings at all Depository Institutions is substantially higher relative to bank credit. For example, at the end of 2007 the ratio of savings to bank credit was 44.9%. Today this ratio stands at 66.3%, close to the highest ever reported of 67.1% only four weeks ago (based on data since 1980). This indicates there is plenty of liquidity this time around.

1 comment:

  1. This is the Elephant in every room in America. At least someone is still paying attention to this longstanding issue... My concern is the housing bubble will be Disney compared to what will (on a global level) come next... Buckle Up!