Credit/No Credit

We can dance if we want to
We've got all your life and mine
As long as we abuse it
Never gonna loose it
Everything will work out right
--Men Without Hats

Mike Shedlock shares some charts on interest rates and credit over the past few decades. One of them is pasted below.

As Mish notes, many folks are concerned about the 'huge' drop in bank credit during this recession. But it almost requires highlighting (the red circle) in order to offset it from the main feature of this chart: the parabolic run up in credit during the previous 20+ yrs.

It is interesting that this is the first decline in bank credit since the 1970s. Moreover, returning to 'trend' as reflected by the red lines on the chart suggests quite a bit more credit needs to be wrung out of the system.

Despite Fed and other bureaucratic efforts to the contrary, market forces are seeking to reverse the credit/debt extreme.