Posted on 10/27/2009 8:30:39 PM PDT by blam
Deflation Fears As Eurozone And US Credit Contracts
Bank lending to firms and households in the eurozone has fallen for the first time, raising fears of an economic relapse and a slide into deflation next year.
By Ambrose Evans-Pritchard
Published: 8:26PM GMT 27 Oct 2009
Data from the European Central Bank shows that the M3 broad money supply has contracted over the last six months, confounding expectations that ultra-low interest rates would soon boost monetary growth. Loans to the private sector fell 0.3pc from a year earlier, the first such decline since the data started in 1983.
The M3 figures include a wide range of bank accounts. They are watched closely by experts for early warnings about the economy a year or so ahead.
The picture is even starker in America where M3 has shrunk at an annual rate of 6.5pc over the last three months, a pace of contraction not seen since the 1930s. US bank loans have plummeted since May.
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(Excerpt) Read more at telegraph.co.uk ...
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