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.

Panic ensued and credit stopped circulating.

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?

Salary scale for staff in the Professional and higher categories showing annual gross salaries and net equivalents after application of staff assessmenta

Salary scale for staff in the Professional and higher categories showing annual gross salaries and net equivalents after application of staff assessment

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.

How much would it cost to insure them if the gross cost is now projected at 800 billion for the easier to insure 35 million? And how could that cost be financed if the proposed taxes on existing health policies and the reductions in Medicare outlays have already been used?

How much would it cost to insure them if the gross cost is now projected at 800 billion for the easier to insure 35 million?

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.

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.

According to IMF data, gross investment spending in these countries has declined from 24.9 of GDP in 1990 to just 20 in 2013.

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

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 ).

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.

For the same reason, IMF loans can be a burdensome legacy from a market perspective.

Why, then, were the bank loans so short term and therefore so prone to panic?

But, until 1980, Germany continued repaying the loans that it had incurred to pay the reparations.

Insolvent businesses close, bad loans are written off, and lenders can lend with new confidence again.