The Looming Credit Crunch: Signs of Instability in the Banking Sector.

Economist Torsten Slok warns that a credit crunch has already begun in the US, citing a survey of 71 banks in the Dallas Federal Reserve Bank district which shows a dramatic reversal in loan volumes. The survey found that loan demand declined for the fifth period in a row as bankers reported worsening business activity, with loan volumes falling, driven largely by a sharp contraction in consumer loans. Recent instability in the US banking system could make for a more severe and longer recession, warns Ryan Sweet, chief US economist at Oxford Economics.