byzantine_ruins writes:
First?
byzantine_ruins | Homepage | 05.05.08 - 3:49 pm | #

barkingtribe writes:
You bet.
barkingtribe | 05.05.08 - 4:00 pm | #

Elvis writes:
A conversation in 2040 --

"So, Dad, what did Grandpa do for a living."

"Well, son, for the first part of his working life he was a construction worker and then owned his own construction company. But, then he lost everything in 2008 and..."

"Dad, what is a construction worker, anyway?"

"Remember how I told you once that there use to be great icebergs and ice caps in the ocean?"

"Yes, and that there was an island in in New York called Manhattan."

"Right, and remember that those disappeared quickly once the climate changed? That is sort of what happened to construction workers. One year, they just disappeared when the climate changed..."
Elvis | 05.05.08 - 4:03 pm | #

Rob Dawg writes:
The bagholder of last resort says no.

Okay, snark aside; serious question. The chart says "Fed Tighter Lending Standards (Inverted)." Just exactly how do you graph lending standards inverted or not? The chart says standards have risen 80% y-o-y. Not 70%? Not 60?
Rob Dawg | Homepage | 05.05.08 - 4:09 pm | #

ac writes:


"Right, and remember that those disappeared quickly once the climate changed? That is sort of what happened to construction workers. One year, they just disappeared when the climate changed..."

Note that you can't have global warming once oil prices get over $97/bbl.

At those levels you can't generate enough industrial output to overcome the cooling effect of haze created by cosmic ray bombardment.

ac | 05.05.08 - 4:11 pm | #

El Cliffo writes:
So, Bernanke lowers interest rates, which leads to higher lending standards, and to fewer loans. Is that what they're teaching at Princeton? Aren't lower interest rates supposed to lead to more loans being made?
El Cliffo | 05.05.08 - 4:16 pm | #

Calculated Risk writes:
Rob Dawg, the Fed asks institutions "Have you tightened or loosened lending standards (or no change)?" (Or something similar). The 80% number is the difference between those that say they tightened and those that say they loosened standards.

The Fed reports it as a positive number when banks are tightening (80% net tightened lending standards), but it makes more sense when comparing to demand and investment in non-residential structures - to graph it inverted. That way down is bad for all three lines.

The Blue line will follow the red and green lines.

Best Wishes.
Calculated Risk | Homepage | 05.05.08 - 4:17 pm | #

Anonymous writes:
It was odd that loan demand seemed to uptick this quarter vs last.
Anonymous | 05.05.08 - 4:17 pm | #

Calculated Risk writes:
Anonymous, loan demand didn't uptick - it declined at a slightly slower rate than last quarter! Anything below zero is less demand.

Best Wishes.
Calculated Risk | Homepage | 05.05.08 - 4:19 pm | #

Sebastian writes:
Here are a couple of other quotes from the survey.

"...Questions on commercial real estate loans. About 80 percent of domestic banks and 55 percent of foreign banks—fractions similar to those in the January survey—reported tightening their lending standards on commercial real estate loans over the past three months. Concerning loan demand, about 35 percent of domestic banks and 45 percent of foreign institutions reported weaker demand, on net, for commercial real estate loans over the past three months...."

They tightened their standards but only 35% of banks and 45% of foreign institutions reported weaker demand. Wouldn't that mean the 65% of banks and 55% of foreign institutions reported the same or greater demand, despite tighter standards?

"...About 25 percent of domestic respondents, on net, experienced weaker demand for prime residential mortgage loans over the past three months, and 30 percent indicated weaker demand for nontraditional mortgage loans over the same period. The net fractions of respondents that reportedly experienced weaker demand for these two types of loans in the current survey were significantly smaller than in the January survey. Finally, about 65 percent of domestic respondents—a net fraction similar to that in the January survey—reported weaker demand for subprime loans...."

Same deal. If 25% of respondents reported weaker demand for prime residential mortgage loans, doesn't than mean 75% experienced the same or stronger demand despite tighter standards? And isn't there a demonstrable aversion for subprime loans, which is surely good news?


Sebastian
Sebastian | 05.05.08 - 4:23 pm | #

Interesting Times writes:
CR - That's exactly why I love these charts.

An uptick is not an uptick (they'd realize that if they thought more about Year over Year % changes). These charts are scarier (and more honest)than anything being else being pumped out by MSM.

Thank you again.
Interesting Times | 05.05.08 - 4:25 pm | #

Rob Dawg writes:
CR,
I wasn't at issue with the inversion at all. you are a master at graph. My problem is with the very inexactitude of the methodology. If every respondent had changed their prime lending FICo from 670 to 680 then 100% would have reported tightening. I am of the opinion that such reportage is not quantifiable even though it is qualifiable.
Rob Dawg | Homepage | 05.05.08 - 4:28 pm | #

giacutter writes:
These charts are scarier (and more honest)than anything being else being pumped out by MSM.

They're not in the MSM because "math is hard" and "graphs are boring".

At least, to a large portion of our friends and neighbors, I would guess.
giacutter | 05.05.08 - 4:29 pm | #

Interesting Times writes:
giacutter | 05.05.08 - 4:29 pm | #

Yup.

And there is absolutely nothing boring about these charts today !

Thank glod I didn't sleep during math classes.
Interesting Times | 05.05.08 - 4:31 pm | #

Calculated Risk writes:
Rob Dawg, I agree. It would be nice to know how much they tightened - but I guess we take what we can get.

Best Wishes.
Calculated Risk | Homepage | 05.05.08 - 4:34 pm | #

Emma Anne writes:
What I find amusing is how few banks ever admitted to loosening loaning standards (peak of 20-something percent in 2005), when clearly nearly all of them were.
Emma Anne | 05.05.08 - 4:52 pm | #

jkiss writes:
interesting chart. Chart shows we entered recession Q407, not much data to support this. 01 recession began after all three indicators turned down, seems more likely that this is true here, with recession beginning dec 07 earliest and more likely jan 08.

This is an odd recession, many indicators still fairly strong... not at all like Fed induced high interest recessions on account of too much demand. Wonder how current spending/employment trends compare with 1928-30.
jkiss | 05.05.08 - 5:01 pm | #

Anonymous writes:
Thanks CR, but surprising it didnt accelerate - that what I should have said.
Anonymous | 05.05.08 - 5:04 pm | #

Gary writes:
There's a joke about throwing a rate cut down a hallway in all this somewhere.
Gary | 05.05.08 - 5:05 pm | #

boob writes:
The flip side of the bank bailout. Surprised? How about those CD rates?
boob | 05.05.08 - 5:18 pm | #

dav writes:
Sebastian, those demand figures are measuring just that... Demand. Not all people who want a loan actually get one. So when standards tighten more than demand falls, you get more people who want a loan but can't get one. That report jives with the anecdotal evidence that we've all been hearing (it's harder to get a loan these days!)
dav | 05.05.08 - 5:54 pm | #

jus me writes:
I'm with Rob Dawg.
The vertical axis is sort of uninterpretable, since not all tightenings are equal.
(A criticism of the Fed's method, not of CR.)
jus me | 05.05.08 - 7:54 pm | #

FFDIC writes:
Cash is not king; caution is
Commentary: Can your company survive a cash crash or a bank bust?

"Banking will never be the same. The uncertainty in the banking industry has been severely complicated over the past year. Subprime mortgage securities are embedded in banks -- grenades ready to explode in unexpected places."
http://www.marketwatch.com/news/...E%7D& dist=msr_2
FFDIC | 05.05.08 - 8:30 pm | #

MiTurn writes:
This is a little OT, but I just received an offer in the mail from Countrywide (who holds my mortgage). The offer said I can get up to $84,000 (on a $150,000 house!) and I was prequalified. I didn't need to get an appraisal or document my income. What kind of lending standards are those??!!
MiTurn | 05.05.08 - 8:59 pm | #

Tom Stone writes:
MiTurn,the kind you have when you think you already sold the risk,and want the commission.
Tom Stone | 05.05.08 - 10:47 pm | #

k harris writes:
Despite the limitations of the Fed's method in its loan officer survey, the results tend to be highly predictive of trends in and timeing of economic activity. We also need to keep in mind that this is a fairly large sample, so that odds are against the sort of event that Rob Dawg uses as an illustration, though the illustration is good to keep in mind. It is very likely that when a large number of banks tighten (or loosen) standards, that the tightening (loosening) is not trivial at for most of the banks involved.
k harris | 05.06.08 - 8:18 am | #

Pondering the Mess writes:
This is a "disaster" - without absurd, toxic loan products, how can we keep housing prices unaffordability high?! Oh, the horror!
Pondering the Mess | 05.06.08 - 8:30 am | #