Banks aren't lending. It's a circular argument...

The current recovery, based in very large part on the end of de-stocking, simply cannot be sustained while credit is disappearing at this debilitating dehydrating rate...the great deleveraging will only be over when there is an end to the unprecedented decline in the pace of bank lending.
---Neil Hume, Financial Times Alphaville, 3/16

Bill:  So, we see that banks aren't lending.  As said here before, banks aren't lending mainly because there is no where to sell the loans.  That's a structural issue.  It' s circular:  You have to have decent employment to have a housing market.  You can't have a housing market unless there is lending.  You can't have lending unless there is somewhere to sell the loans...  Unless banks go back to keeping loans on their books.  But they can't do that unless the rates are higher so they make some money.  The rates can't go higher unless the Economy mends.  The Economy won't mend until there is decent employment.  We may gradually tick up, year by year, in these areas. but it will be very slowly.