Karl Denninger at Market Ticker is usually someone I agree with, but on this he strikes me as at least partially wrong:

“But just as occurred in the 1930s, Bernanke cannot change the dynamic because there are no willing and able borrowers left.

THAT is the dynamic that sets off deflation and makes it pervasive. This is the condition that Bernanke has ignored and claimed does not exist, but the fact remains that it does.”

No willing and able borrowers left? Even anecdotal evidence says that’s not true.

People with solid credit histories are being refused loans.. and  if you have some kind of credit glitch, forget it. And forget about getting NINJA loans and liar’s loans and all the rest of the credit that used to gush from the spigot.

The banks aren’t lending. But it’s not because there are no borrowers. Of course there are people who’d like to borrow and can. A

ll the people who weren’t flipping houses and maxing out plastic, for instance. Believe it or not, there are plenty of us.

Banks aren’t lending because they don’t want to. They have other reasons besides unqualified borrowers:

*They have to shore up their balance sheets and build reserves

* They’ve been burned before, and don’t know what kind of collateral is out there and what kind of assets.

*No one knows the correct price of anything, because values are deflating in all sectors or are badly manipulated by government subsidies and intervention; and also, because the mark-to-market model was suspended (correctly, in my opinion).

*Lenders are uncertain about the future and are waiting

*Banks can get a better return investing/speculating with their money – and there are plenty of borrowers for that.

Investors are just waiting on the side-lines for the commodities/currencies/metals/housing/you-name-it casino to reopen.