These are essentially refinancing mechanisms.

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).

In July 1996, it slimmed down to 50 percent, and further down to 30 percent in June 1997.

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).

Second, the IMF should let Argentina and its creditors work out a refinancing or rescheduling agreement.

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.

In the United States, the Federal Reserve has lowered its benchmark interest rate ten times since August 2007, from 5.25 to a zone between zero and 0.25 , and has reduced the discount rate 12 times (by a total of 550 basis points since June 2006), to 0.75 .

In the previous tightening cycle, which began in 2004, it took the Fed two years to normalize the policy rate.

The European Central Bank has lowered its main refinancing rate eight times, by a total of 325 basis points, to 0.75 .

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.

Lower interest rates worked (a little), but for the most part by encouraging households to refinance their mortgages, not by stimulating investment.

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.

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 ).

public provision of credit to the solvent parts of the corporate sector in order to avoid a short term debt refinancing crisis for solvent but illiquid corporations and small businesses

Indeed, some experts, too, believe that the crisis can be resolved simply by refinancing banks, and that the impact on the real economy will be relatively limited.

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.