Rob Cox on BreakingViews.com gives us a far too insightful reading of the current state of financial markets. I would quote at length but there are content protections on this site so you will need to go there directly.

But here is the gist of the piece: The chiefs of Citi Bank and Bank of American are both crowing because they booking billions of dollars in revenue, despite the state of financial markets or the fact that they are making almost no new loans.

To quote the chief of Bank of America:

That kind of cash flow can solve a lot of problems, given time and an improving economy.

Which seems to be the current business plan of these major banks. Don't take on any new risks - like loans - but instead rake in the operating revenues. That would be fees on your checking and savings accounts, ATM charges, interest and late fees on extant credit card balances . . .

No doubt many readers are already living in this brave new world.

Now, as Cox points out, this is more or less the strategy that Japanese Banks followed in the 1990's, which period was called the lost decade on account of its economic stagnation.

In an earlier post Wonks Anonymous asserted that putting your money in the bank now has about the same impact on the availability of credit as putting your money in the mattress. Cash goes in but it does not go out.

Banks are no longer financial intermediaries that match savers with borrowers. They are institutions that have a monopoly on moving money about and they intend to use this monopoly to make us pay for their mistakes.

In another ten years, if the economy grows on its own and we are quite good, they might start lending again. In the meantime government intervention would be counterproductive.