Update on the Mortgate Crisis

I have stated my tentative belief that the mortgage "crisis" isn't likely to have severe repercussions for the economy. The Independent Institute's Robert Higgs supports that argument with some real data (which my argument noticeably lacked), pointing out that there is plenty of credit still available in the U.S.

For example, commercial and industrial loans at all commercial banks were $1,503.6 billion as of June 1, 2008. This loan volume is almost 19 percent greater than it had been a year earlier, 34 percent greater than two years earlier, and 53 percent greater than three years earlier.

Or consider real estate loans at all commercial banks, which were $3,644.9 billion as of June 1, 2008. This loan volume is 5.5 percent greater than it had been a year earlier, 17 percent greater than two years ago, and 33 percent greater than three years ago.

Or consider total consumer credit outstanding, which was $2,586.3 billion as of June 30, 2008. This loan volume is 5.6 percent greater than it had been a year earlier, 10.9 percent greater than two years earlier, and 15.2 percent greater than three years earlier.

He also points out that interest rates are still low. Granted the Fed is trying to keep them that way, but I think if there had been a massive dryup of credit caused by failed banks, the Fed would have had to take much more drastic steps to keep loan rates low.

All in all, I'm not too worried about the future. Now if the housing market in my town would just warm up, so I could sell my other house...