On Christmas Eve, the Wall Street Journal had two interesting articles on the credit situation in the U.S., one from the banks' perspective and one from the households' perspective. In general, the data were positive but I believe the analysis was incomplete because it fails to consider net interest margins, which are coming down.
The first analysis was about the Fed and its provision of cheap money to banks. This cheap money has not translated into a huge surge in credit. Rather, according to the Wall Street Journal, it has increased bank margins.
Since the Fed began buying mortgage-backed securities to lower interest rates four years ago, rates on 30-year fixed-rate mortgages have fallen nearly three percentage points and averaged 3.37% last week, according to Freddie Mac .
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Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He has also been a regular economic and financial commentator in print and on television for the past decade. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.