Credit Crisis Watch: Update – discount window borrowing declines
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May 20th, 2009 by Prieur du Plessis, Investment Postcards from Cape Town
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I reviewed a number of credit measures in yesterday’s post and concluded: “Most indications are that the credit market tide has turned on the back of the massive reflation efforts orchestrated by central banks worldwide and that the credit system has started thawing.”
Further evidence that the convalescence process is on track has just arrived, courtesy of Asha Bangalore (Northern Trust). It comes in the form of data showing a sharp decline in primary institutions’ borrowing at the discount window - down by almost 65% since the “panic peak” recorded during the week of October 29, 2008.
Source: Northern Trust - Daily Global Commentary, May 18, 2009.
Read together with the impressive tightening in credit spreads since October/November 2009, this measure serves as a further indication of progress that has been made with the fixing of the credit machine. However, the unclogging process still has a way to go before confidence in the world’s financial system is restored to pre-crisis levels and liquidity starts to move freely again.
Dr. Prieur du Plessis is an investment professional with 26 years' experience in investment research and portfolio management. More than 1,200 of his articles on investment-related topics have been published in various regular newspaper, journal and Internet columns, including his blog, Investment Postcards from Cape Town. He has also published a book, Financial Basics: Investment. Prieur is Chairman and principal shareholder of South African-based Plexus Asset Management, which he founded in 1995. The group conducts investment management, investment consulting, private equity and real estate activities in South Africa and a number of foreign countries. He also serves as Honorary Consul of Slovenia for South Africa, actively developing economic, cultural and scientific relations between Slovenia and South Africa. Prieur is 54 years old and live with his wife, television producer and presenter Isabel Verwey, and two children in Cape Town, South Africa. His leisure activities include long-distance running, traveling, reading, motor-cycling and scripophily. Read more from the author/contributor here.
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