It turns out that banks are closing the barn door after the cow has gone, and they are tightening credit standards…a lot.

In fact, it’s the worst since they started keeping records, as Paul Krugman notes, and he provides has a good graph of just how tight it has become:

He correctly calls it “grim”

Additionally, we have the Institute for Supply Management’s non-manufacturing index, which accounts for around 9/10 of the economy, dropping. See also here.

Krugman has another graph to illustrate this: