The credit crunch is not nearly as severe as the U.S. authorities appear to believe and public data actually suggest world credit markets are functioning remarkably well, a report released on Thursday says.
As a result, governments are pumping masses of public money into the economy across the world because of the difficulties of a few big, vocal banks and industries such as car manufacturing, which would be in difficulty anyway, according to the report published by Celent, a financial services consultancy.
"It's just stabbing in the dark with trillions of dollars," Octavio Marenzi, report author and head of Celent, told Reuters in a telephone interview where he questioned the depth of the analysis that preceded numerous fiscal stimulus packages.
The report, much of which is based on U.S. Federal Reserve data, challenges a long list of assumptions one by one, arguing that there is indeed a financial crisis but that, on aggregate, the problems of a few are by no means those of the many when it comes to obtaining credit.
"It is startling that many of (Federal Reserve) Chairman (Ben) Bernanke and (Treasury) Secretary (Henry) Paulson's remarks are not supported or are flatly contradicted by the data provided by the very organizations they lead," said the report.
Perhaps the U.S. central bank and treasury department, and authorities in other countries by extension, know something they are not telling anyone and which is far more worrying than the public data shows, the report says.
Or, more plausibly, they were generalizing erroneously from the bad experience of a limited number of big banks and companies that are in any case in difficulty.
"I don't think they're fabricating stuff but what I think they are doing is taking the situation of a handful of institutions and generalizing that to the market as a whole, incorrectly," said Marenzi.
The picture appeared to be broadly similar in much of Europe and Japan, said the report, based on publicly available data on trends in bank lending to industry, households and among banks themselves in the so-called interbank markets.
So, really, what's going on here is that a couple of well-publicised business failures due to bad practices have not been allowed to be punished by the market and now governments are making it worse by actively throwing tax money around at anyone who asks.
And still the socialists claim that this was a market failure?
Stop the planet, I need to get off.