In Europe, Tighter Lending but Not a Squeeze

From the NYT:

Over all, an outright credit squeeze, broadly defined as a situation in which even solid borrowers cannot obtain cash, has not arrived in Europe, according to business leaders, economists and central bankers. That contrasts with the situation in the United States, where figures collected by the Federal Reserve have shown an abrupt contraction of credit since August. But European confidence has its limits, especially since an end to turbulence in the credit markets is not yet in sight. As in the United States, interest rates for short-term lending among banks in Europe have remained elevated as banks have hoarded liquidity and gobbled up new infusions from central banks. Borrowing costs in euros eased last week after huge central bank cash injections, but they remain far higher than normal, and at some point banks will have to pass the borrowing costs on to corporate customers. “If this does not change in the next few weeks,” said Jochen Felsenheimer, head of credit strategy at UniCredit in Munich, “then the credit market will leave much deeper footprints in the real economy than it has so far.”