. . . not really.
The second (bottom) data-image is Mr. Krugman's. It shows a spike in borrowing rates for AAA and Baa grade relative to 30-year Treasuries. Mr. Krugman concludes, "So yes, we do have a credit crunch. It’s not the whole story, but it’s part of the story."
The first (top) data-image is Mr. Baker's, via the NY Times. Mr. Baker points out that while corporate debt issuance dipped dramatically in 3Q of 2008, 4Q saw a return to levels of borrowing similar to preceding months and years. Mr Baker concludes, "the economy is not in a downturn because banks aren't lending. It is in a downturn because we have just lost $6 trillion in housing wealth and $8 trillion in stock wealth. The expected effects of this loss of wealth is the huge falloff in consumption that is driving the downturn. The condition of the banks is very much a secondary issue."
The debate between these two, as I read it, centers then on whether the 'credit crunch' is helping drive the loss of our nation's wealth, or if the 'credit crunch' is a residual effect of the downturn in housing and stocks.
My question to them would center around the loss of wealth in terms of credit. Specifically, is the act of 'de-leveraging' -- which as I understand it is the systematic adjustment of credit-capital ratios back to historically normal ratios -- deemed part of the 'credit crisis' or not? To me, de-leveraging's a primary story. And it has to do with both (a) a deteriorating credit environment, in which the collective debt of US organizations isn't worth what we got used to it being worth, and therefore we can't say as easily, lend me more money; and (b) the drop in the stock prices of companies, who all of a sudden aren't as capitalized, again, as we thought.
Indeed, a lot of things we thought we knew are disappearing into thin air.