As I understand, they stepped in to bridge the bid/ask spread and act as a temporary market maker to solve a liquidity crunch. Can someone more knowledgeable tell me why the bid ask spread is so wide to begin with?
Fed to inject $1.5T to prevent ‘unusual disruptions’ in markets
141–150 of 367 posts
Re: Fed to inject $1.5T to prevent ‘unusual disruptions’ in markets
#142Earlier quoted context omitted.
I 100% agree that the Fed's actions are troubling and it's boxed itself into a corner, and has very ineffective tools for what it's trying to do, but ... This injection isn't really comparable because those other things are expenditures, while the 1.5t refers to short-term loans to very creditworthy borrowers. It really doesn't come at the cost of providing universal healthcare.
The very creditworthy borrowers are very creditworthy because they receive 1.5t in short term loans from the Fed.
Not really, the assessment is made before extending the credit.
Re: Fed to inject $1.5T to prevent ‘unusual disruptions’ in markets
#143As the joke goes, a trillion here a trillion there and pretty soon you're talking about some real money! But in seriousness, the next week is a critical time in the world. I remember sitting in an airport when news of Lehman Brothers collapse was flashing on the TV screens. I'm reminded of that time. We learned later about how Hank Paulson got down on one knee and begged Nancy Pelosi to go along with is plan to save…
> But if there were ever a time for us not to be partisan and tribal, it's now.
We are in the middle of a problem exacerbated by politics, that will require political decisions to solve.
When politicians are doing nothing, or making the problem worse, this is not the time to shrug our shoulders, and be apolitical. Political decisions have consequences.
Re: Fed to inject $1.5T to prevent ‘unusual disruptions’ in markets
#144I thought that the US never really unwound QE and the risk there was that when another financial crisis hit there wouldn't be any more tools in the kit to fix the economy. Is that where we are now?
Re: Fed to inject $1.5T to prevent ‘unusual disruptions’ in markets
#145Earlier quoted context omitted.
>> They are providing short-term loans If I want to give my friend a loan, I need to earn that money first by working hard. FED does not conduct any profitable activity that would earn them any money, they DO PRINT that money from thin air.
Why do people keep telling the lie that the FED "does not print money"? As you say, these "loans" are the FED printing $1.5t, no other way to look at it.
There is at least one other way to look at it. These loans will primarily, if not exclusively, go to large financial institutions. Due to the wonders of fractional reserve lending, those institutions will get to loan out several multiples of the original $1.5T. Another way to look at it is that they've probably "printed" closer to $15T.
Re: Fed to inject $1.5T to prevent ‘unusual disruptions’ in markets
#146Earlier quoted context omitted.
South Korea has been running 10k tests per day since February. The US has run less than 10k in total . That is a colossal failure.
> The US has run less than 10k total. That is a colossal failure. Question claim in fact, although it is persistently being repeated everywhere constantly, for propaganda purposes. Three of the major private lab companies indicate they'll be at a 10,000 combined per day test capacity before the week is out. The US doesn't know how many tests have been run in total nationally. A large volume of tests have been distrib…
> the majority of which do not report their numbers back to a central authority (such as the CDC).
State infectious disease registries are absolutely receiving ELRs (electronic lab reports) and transmitting case reporting back to CDC and data is currently moving for novel coronavirus as well.
The term you are looking for is NEDSS/NETSS reporting.
> Today, all 50 states and Washington, D.C., use NEDSS-compatible integrated surveillance information systems to send case notifications to NNDSS.
Re: Fed to inject $1.5T to prevent ‘unusual disruptions’ in markets
#147Earlier quoted context omitted.
For sure. People still get up in arms about the 2008 bank bailout without realizing that it ended up resulting in a $121B profit to the government: https://projects.propublica.org/bailout/
I tried to click your Propublica link because I want to see their numbers, since the wiki article on TARP points out that the "profit" the government made comes out to a 0.6% annualized interest rate, so once you take inflation into account the government actually lost money. https://en.wikipedia.org/wiki/Troubled_Asset_Relief_Program
The Propublica link includes both TARP and the government's investments in Fannie/Freddie, which provided heavy dividends and is where a large portion of the profits have come from.
That aside, the common misperception of TARP is that the government gave away $400+B of taxpayer money, which is a very, very far cry from a small inflation-adjusted loss.
Re: Fed to inject $1.5T to prevent ‘unusual disruptions’ in markets
#148Wait for it. Next week stock buybacks will be all over the news. I bet AT&T will be leading the charge.
Next week the coronavirus cases and death tolls will be 2-3x what they are today. Little chance of a V-shaped recovery. We are a long way from the bottom.
maybe, but china has already solved the issue and other countries will as well.
Re: Fed to inject $1.5T to prevent ‘unusual disruptions’ in markets
#149Only corporations get a welfare net.
Re: Fed to inject $1.5T to prevent ‘unusual disruptions’ in markets
#150When the Fed says that they will "pump 1.5 trillion dollars into the financial system", in reality what they mean is "pump 1.5 trillion into Facebook, Google, Amazon, Apple and all other crony-capitalist institutions which already have a ton of money and which couldn't exist without this constant injection of free cash".
The Fed has turned the system is a giant pyramid scheme which rewards the rich for being rich and systematically locks out value producers.
This new Fed money is not going to reach value producers; it will go to straight financiers, venture capitalist, investment bankers, shareholders, lawyers, fund managers. In the meantime farmers in the US are committing suicide and nobody gives a crap. This is profoundly immoral.
I bet the Fed chose this very opportune moment to announce this injection because they know that with the Coronavirus news, people are not going to gather in large crowds to protest. They're exploiting the situation to give their cronies handouts.