Article

2020-03-16 Government

In emergency pandemic move, Fed cuts rates to zero and will purchase $700B in bonds

[WASHINGTONEXAMINER] The Federal Reserve lowered its interest rate target to zero and announced large purchases of goverment bonds Sunday to protect the economy against the coronavirus

...the twenty first century equivalent of bubonic plague, only instead of killing off a third of the population of Europe it kills 3.4 percent of those who notice they have it. It seems to be fond of the elderly, especially Iranian politicians and holy men...
pandemic."The effects of the coronavirus will weigh on economic activity in the near term and pose risks to the economic outlook," the central bank's monetary policy committee said in an unscheduled statement. The Fed will also purchase $700 billion in goverment-backed bonds in the "coming months," a move it said was meant to ensure the functioning of financial markets.

The statement said that the central bank would leave short-term interest rates at a range of between zero and 0.25% until "it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals."

Sunday's changes put the Fed back in the policy stance it adopted in the wake of the financial crisis, when it lowered rates to zero and engaged in large-scale bond purchases to try to prop up spending.

Posted by Fred 2020-03-16 00:00|| || Front Page|| [11131 views ] Top

#1 Ah'm thinking it's time for a refi.

Posted by Skidmark 2020-03-16 11:58|| 2020-03-16 11:58|| Front Page Top

#2 Yes. And when nobody wants to buy other's debt, what happens then?

Posted by M. Murcek 2020-03-16 12:47|| 2020-03-16 12:47|| Front Page Top

#3 And...they are out of ammo.

This had better work.

Posted by The peanut gallery 2020-03-16 12:49|| 2020-03-16 12:49|| Front Page Top

#4 The problem is not that companies are burdened with high-rate debt; the problem is that revenue is way down as customers stay home.

Lower rates will do nothing to fix that. Until PANIC TIME is over, I don't see any solution in sight.

Posted by Tom 2020-03-16 15:19|| 2020-03-16 15:19|| Front Page Top

#5 Well. Think of the companies which should have zero revenue: Netflix, Gurgle, Apple (services) Fartbook, Twitter, ESPN, all sports leagues. A guy could start paying down the national debt with all that money...

Posted by M. Murcek 2020-03-16 16:27|| 2020-03-16 16:27|| Front Page Top

#6 I don't see any solution in sight.

Same as ever.
Small B&M boutique high priced product, service and spontaneous purchase(malls) stores (Starbucks, asian Nail Salons, haircuts, cell stores...) will move online or drop their prices, or both, or die.
High end B&M will grow their online footprint, diversify product lines, refinance already capitalized inventory, reduce VMI churn and make money.
Durable goods manufacturing and transport will slow, materials will finance new inventory with slow delivery anticipating a midsummer turnaround.
Academia will move further online. Closed housing may be institutionalized as assisted living.

Those with money will make money.
Huge disruption for service labor.

Posted by Skidmark 2020-03-16 16:31|| 2020-03-16 16:31|| Front Page Top

#7 Based on the markets reaction maybe they should have raised rates

Posted by airandee 2020-03-16 16:56|| 2020-03-16 16:56|| Front Page Top

#8 Can't help the feeling they are jerking the wheel.

Posted by swksvolFF 2020-03-16 17:34|| 2020-03-16 17:34|| Front Page Top

#9 If I ran Wrangler, for example, I'd run my lines until my raw materials were used up. Instead of buying more raw materials I'd reach out to my suppliers and say let's work together on financing to get through this.

As for Starbucks, I hope they go bankrupt.

Posted by M. Murcek 2020-03-16 18:11|| 2020-03-16 18:11|| Front Page Top

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12:59 Regular joe
12:55 Skidmark
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12:52 Abu Uluque
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12:48 NN2N1
12:46 Skidmark