Tuesday, 28 February 2012
Credit growth US has almost left the credit crunch phase
At long last credit growth is accelerating in the US to an almost decent level. Infinite liquidity of FED didn’t get traction until now: the FED was seen pushing at a string to seduce banks to give credit. But the chart of Bianco shows that credit growth is now at a post credit crisis high. It is still too low for normal times (and so we are still in the grey area of the credit crunch).
Striking is further that the recovery on the equity markets so strongly correlated with stronger and weaker credit growth.
The growth of M2 has become quite high and when the velocity of Money remains somewhat constant that should be a sign for faster nominal GDP growth. The volatility as measured by the VIX is low and that is creating a good climate for investments: investments in software & equipment, structures and even residential investment will be leading economic growth up.