The defaults cometh

Commercial bank loans continue to collapse amidst signs that the banks are about to undergo a crisis of confidence and a large wave of FDIC seizures. Total loans and leases at U.S. banks have already contracted more in the first seven weeks of 2010 than they have over the course of any year since 1947 excluding last year; $132 billion in loans have defaulted or been paid off.  At 14.7%, the pace of annual credit contraction is still running more than twice that of 2009’s record decline.

The red bars show the cumulative percentage decline by week since the beginning of the year.  The light blue bars show the cumulative percentage decline by week since the financial crisis began to appear in the loan statistics on October 22, 2008; this is now in excess of 10.2%.  The bank problem is not solely an American one. In fact, as Sam explains at the RGD blog, a number of European economies are facing even more serious debt problems.

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