retail prices.

Credit tightened sharply.

Losses are spreading from sub prime to near prime and prime mortgages, commercial mortgages, and unsecured consumer credit (credit cards, auto loans, student loans).

It's also good with credit.

They supply supermarkets and smaller retail outlets across the country.

Some of Apple's retail stores closed briefly so employees could attend the memorial.

Panic ensued and credit stopped circulating.

But other important indicators like retail sales and housing show upticks.

Their consequent reluctance to lend constrains investment.

Banks magnify the boom by making credit too easily available, and they exacerbate the bust by withdrawing it too abruptly.

Pinjaman Tiongkok kepada Brasil hampir sebesar 1 PDB nya, sementara pinjaman yang diterima Meksiko relatif kecil (lihat grafik).

To be sure, some domestic banks continue to provide credit.

But when the entire international system becomes entwined with an excessive amount of short term inter bank lending, the world economy becomes subject to financial panic.

Its credits and swaps have never been activated.

Moreover, mortgages are usually securitized.

Short term inter bank loans are seemingly less risky than long term lending.

In your opinion, to what extent is the demand for credit by business owners being met?

Delinquencies, defaults, and foreclosures are now spreading from sub prime to near prime and prime mortgages.

Growth requires financial institutions that lend to domestic firms.

Yet the EBRD does more than make much needed loans.

Credit will soon come to everyone else as easily as it has to the banks.

The government will provide interest free loans to firms that participate in the program.

There was a housing bubble, and loans were made on the basis of inflated prices.

As their capital declines, so, too, do their future loans.

Since the loans that had been offered were so short term, they could be pulled out nearly all at once.

A prudent lender should have considered these facts before making the loans.

The old NPL problem was resolved, primarily by establishing asset management companies to take over doubtful assets, and injecting new capital into the commercial banks.

It is a composite accounting unit in which the IMF issues credits to its members.

Short term bank lending from abroad is unstable and therefore dangerous

Now, reported NPLs amount to little more than 1 of assets.

Public sector firms have incentives to lobby for subsidies, protection and cheap credit.

Other creditors, too, will continue to provide financing, because they expect that the (national) authorities will intervene either by providing emergency funding or by arranging a merger with another institution before the bank fails.

Firms get to be large by exploiting economies of scale, refining and mass producing the radical innovations developed by entrepreneurs (discussed next).

German banks grant mortgages only to a maximum of 60 of the value of a house, instead of the 100 mortgages that were frequently seen in the US and United Kingdom.

Some local borrowing can be justified by the central budgetary allocation to local projects.

Some retail banks went belly up, like Northern Rock, while others stayed afloat (Santander s UK subsidiary, for example).

British spread betting markets for home prices, and some retail online markets, have never amounted to much either.

Banks and other lenders are extending credit to lower quality borrowers, to borrowers with large quantities of existing debt, and as loans with fewer conditions on borrowers (so called covenant lite loans ).

In the US, consumer prices fell 27 between 1929 and 1933, and the unemployment rate topped out in 1933 at 23 .

Rich countries should therefore lend their allocations to the countries in need.

Centering attention on reactivation makes clear why the focus on IMF credits is misguided. IMF credits will go to repay the IMF, not to reactivate the economy.

For banks to start lending again, even more intervention may be needed.

Households are running scared, so they cut expenditures as well, and businesses are being dissuaded from borrowing to finance capital expenditures.

Politicians gained influence and popular support by directing state owned banks to make loans to favored constituencies.

Centering attention on reactivation makes clear why the focus on IMF credits is misguided.