This article was originally published at Zero Hedge on September 15, 2009.
It was just yesterday that Tim Geithner was lying that banks are constantly increasing lending to consumers. Well, yet another lie refuted. Banks, and not just any banks, but those receiving government bail outs and subsidies, continued constricting lending in July, with total average loan balance outstanding declining by $54 billion from $4,295 billion to $4,241 billion, a 1.3% decline, following a 1.1% decline in June.
As for the reason why loan originations in July declined a whopping 10% after posting a 12.7% increase in June, the government simply noted that this was due to “decreased demand from borrowers.”
And so the circular lie continues: the government claims lending is increasing, when in fact, it is not, and when confronted with this fact, the government claims this is due to lack of interest. Furthermore, with retail sales reportedly higher, the consumer is allegedly spending more, with average wages declining, meaning consumer need to borrow to finance purchases, or else eat into their meager savings. Yet all this is occurring on the foreground of a rapidly increasing savings rate. So consumers are not borrowing, they are saving more, yet somehow sales are increasing: the lie is so circular that if there was a Kudlowbot, its head would explode trying to “spin” this null argument.
Last but not least, the primary politically correct reason for bailing out banks was to ensure that they can continue lending. So here are the numbers: $4,434.7 billion in loans outstanding in January, $4,241.4 billion in July: a 4.4% decline, which, all else being equal, would have to be offset by a comparable increase in the rate of savings. However, with wages declining and more and more people becoming unemployed, all else is anything but equal. At least bank CEOs get their precious bail out capital and golden parachute packages (ref: John Thain) as popular media outlets continue spinning lies and spewing factless propaganda.