World credit crunch ……. except for China

Global banks lending growth (2003-2008, source: FT).

Bank lending evolution is key in recent world economies. From 2003 to 2007 internal loans made in their countries by global banks grew at rates of between 5% in 2003 and 2004, 10% in 2006 and 2007. In contrast, loans to other countries and areas grew at rates of 20% annually. For example credits to Eastern Europe countries result in real state investments now completely unrecoverables. 

2009 lending to another countries has negative growth, and domestic lending growth has lowered.

US bank lending and M2 growth (2005-2009).

In United States, between 2005 to 2008, credit grew at higher rates as bank loans internally grew near 15% annually. It was in 2009 when credit crunch began with credit decreases at rates of -15% ¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡¡. is very optimistic to think in economic recovery with this credit destruction.

Only in China, things are different, the Chinese government has led its banks to lend even more than in previous years. Credit growth in 2009 is reaching 35% ¡¡¡¡¡¡¡¡, 3 times more than in previous years, a genuine madness, which is leading many economists to publicly express the risk of creating new bubbles. Now the Chinese throw more gasoline on the fire.

Lending and M2 money supply growth in China (right chart, source: FT).