Financial stress levels are spiking, one reason why the Fed announced a truly massive ($1.5T! ) liquidity injecti0n today. There are signs that rising financial stress and falling bank stock prices has begun to leak into credit restriction. We need to remember that during times of financial stress, the interest rates we see in the newspaper tell us little about the true cost of borrowing. Non-price credit rationing, not interest rates, are what triggers recessions.
JR
