Links: 2010-02-21 – shadow inventory, depression in Latvia and more


I am back from a week in Mexico.  And here in DC there are still mountains of snow on the ground. Here are some links I picked up on yesterday on my way home.


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PS. – the article from Worthwhile Canadian Initiative is another disappointing one.  I told you on Thursday that the fallacies of composition post left me very sceptical. This one has me scratching my head too. Winterspeak’s comment on the post sums it up best.

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Banks do NOT lend reserves…The only reason why solvency concerns might cause banks to hoard reserves is because credit risk seeps into the overnight interbank lending market. In effect, potentially insolvent banks get frozen out of their reserve accounts by their peers. But this has to do with poor discount window design, it has nothing to do with lending being reserve constrained, or the "money multiplier" fallacy at core of Monetarist beliefs.

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