Is it Too Late for a Do-Over?

Three scholars associated with the Federal Reserve Bank of Minneapolis decided to do a little quick fact-checking of "widely held claims about the nature of the [financial] crisis and the associated spillovers to the rest of the economy," and put their findings in a new working paper [PDF]. What'd they learn?

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.

Whole thing, well worth a read (and probably a drink), here.