Happy Canada Day!
Kudos to Wellington Financial for identifying a worrying trend yesterday: a steep decline in bank lending.
In their blog post, Bank business lending down for 5th consecutive month, the Toronto-based supplier of bridge financing & venture debt dug into the latest Bank of Canada data and discovered that "the stats aren’t pretty."
Here are the totals of “Business loans to Canadian residents for business purposes:”
December 2008: $191.967 billion
January 2009: $186.086 billion
February 2009: $184.168 billion
March 2009: $184.5 billion
April 2009: $182.228 billion
May 2009: $180.619 billion
As Wellington points out, "A 5% drop in drawn business credit in the space of 5 months."
And as they ask, "what’s a $100 million line of credit program from the Business Development Bank of Canada (only for “strong balance sheets”) going to do in the face of a 5-month, $12 billion withdrawal from the system? By the time the program is up and running, loans will have been reduced by another few billion dollars."
As Wellington concludes, "The free market is doin’ its thing, and there is nothing anyone can do to stop it." Though that strikes me as a non-entreprneurial sentiment.