Uh, oh....
This is a bad portend for the future. This is when the money supply starts to constrict and the economy starts to convulse. I will never forget when things tightened up in 2008 and I was part of the team to re-allocate our 777 orders due to operators not being able to get their hands on cash. It threw our entire supply chain into chaos.
It took a year and a half to two years for things to iron out and begin to function at the "new normal".
I was busy over the weekend helping a neighbor sheetrock his basement so his SIL could move in. Apparently, they were having marital trouble, and they were one of three couples who did not get their loan renewed by the bank due to "too high of a risk". In Canada, the loans are for 30 year terms, like in the States - but you renew the terms every five years; thus limiting the liability to the bank, in exchange for slightly better terms for the consumer. If you are deemed a risk - they demand you pay them off in full and do not renew your loans. Lots of people lose their places due to this. This gal was the third one they would not renew the loan with.
ECONOMY red alert! Banks too scared to loan to ONE ANOTHER!Interbank loans, for all commercial banks suddenly dropped to all time lows in real and nominal terms: [link to fred.stlouisfed.org (secure)]
This is either a data error (a fucking huge one), or something just broke like 08-09, but WAY worse.
Same data in logarithmic form: [link to fred.stlouisfed.org (secure)]
And expressed in percentage form: [link to fred.stlouisfed.org (secure)]
IT. IS. ON.
Banks too scared to loan to even each other! It has never been this bad before, not by a long shot, not even in the darkest hours! With the failure of the XIV (inverse volatility) fund last week, and the volatility of volatility having never been higher... this looks legit. Something has royally broken. Buckle up! Hold on to your butts!
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