For those hoping that credit conditions might gradually be returning to normal, today's IMF Global Financial Stability Report market update contained a stark warning:
Risks to financial stability have intensified since October 2008. Macroeconomic risks have risen as global growth has fallen precipitously alongside a sharp slowdown of global trade. Credit risks have also risen as a deterioration of economic and financial conditions have resulted in rising loan losses. At the same time, the flight from risky assets and illiquid market conditions has increased funding costs, even as risk-free rates have declined with monetary easing.
That is despite the massive bailouts, spending plans and other government interventions we have seen since the last report:
And if you think that prognosis was depressing, the sentence that follows is even worse:
Notwithstanding public injections of capital, many banks around the world may have an insufficient capital cushion to weather a deep global economic downturn.
Translation: many banks are insolvent and probably won't survive the global recession.
The credit crunch ain't over; not by a long shot.