The Big Lies About the Credit Markets

Peter Robinson of The National Review reports:

Special thanks to the several readers who brought to my attention a study published earlier this month, "Facts and Myths about the Financial Crisis of 2008," a working paper published by the Minneapolis Fed. An excerpt:

The financial crisis has also been associated with four widely held claims about the nature of the crisis and the associated spillovers to the rest of the economy. The financial press and policymakers have made the following four claims about the nature of the crisis.

1. Bank lending to nonfinancial corporations and individuals has declined sharply.

2. Interbank lending is essentially nonexistent.

3. Commercial paper issuance by nonfinancial corporations has declined sharply, and rates have risen to unprecedented levels.

4. Banks play a large role in channeling funds from savers to borrowers.

Here we examine these claims using data from the Federal Reserve Board. Our argument that all four claims are false is based on data up until October 8, 2008.

Let me repeat that: Four of the central claims of the press and policymakers, repeated ad infinitum over the last couple of months, and used, very explicitly, to undermine free market political candidates, including John McCain—these claims, reputable economists believe, are false.

I guess when the NYT debt is now junk the whole world to NYT reporters is grim.