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Fed to inject $1.5T to prevent ‘unusual disruptions’ in markets

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Re: Fed to inject $1.5T to prevent ‘unusual disruptions’ in markets

#351

Post by anonu »

munk-a wrote: post #49
anonu wrote: post #43

Earlier quoted context omitted.

This is not a wall Street bail out. This is a main Street bail out. Every American's life savings is in the stock market... Don't conflate the two please.

Nope, sorry - this is literally an injection of cash into Wall Street. Political spin can do massively crazy things but this particular injection is specifically going straight into Wall Street - saying otherwise is extremely disingenuous.

Just plain wrong. There are financial markets (stock, bond markets, etc..) and there are financial market companies that operate in that market. The two are distinct.

This is analogous to: oil in the ground (the financial market) and companies like Exxon and Chevron (financial market companies).

The financial markets are connected to every aspect of the "average" American's life. 65%+ of working-age Americans are invested in some way through the markets - either a brokerage account or a retirement account (401k, IRA, defined benefit plan, etc...).

So if the US Government steps in to stabilize the markets with an injection of capital, yes, you can argue ad infinitum that this helps the Goldman Sachs of the world. But guess what, financial market companies love volatility. That's when the real money is made. So sure, theyll make money on the way up, but they will also make plenty of money on the way down as well.

An injection of capital into the markets helps the average American. It brings stability to people's nest eggs and retirement funds. It puts a floor on panic selling.

There's nothing disingenuous in my distinction of financial markets vs financial market companies. I a merely pointing out that the market is way more complex and interconnected than is being portrayed in this thread.

Re: Fed to inject $1.5T to prevent ‘unusual disruptions’ in markets

#352

Post by mythrwy »

tw04 wrote: post #69
gdubs wrote: post #13

As 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. You say that like both parties are trying to deny testing and are refusing to provide the social safety net for workers to stay home when they're sick. This is very much not a "both sides" discussion. This is: the GOP needs to stop trying to pretend like nothing is wrong and actually DO SOMETHING to prevent this from becoming an even bigge…

Yes, the response from GOP leadership has been bad. No argument.

However you are making (in my opinion) a very bad assumption that the other party who couldn't put up a healthcare website for millions (billions?) and as far as I know has never effectively done _anything_ would have performed any better.

It's certainly not the time for partisan finger pointing and haymaking. That is simply stupid. However you are correct, we do need to look at causes and how we can do better. Maybe in general the incompetence of the federal government at responding to emergencies should be looked at. And perhaps putting too much responsibility in the hands of very old people who's entire careers and have been bullshit lip flapping instead of performance and career game of thrones do-nothing bureaucrats isn't a good idea in time of crisis and we need to be prepared next time.

Re: Fed to inject $1.5T to prevent ‘unusual disruptions’ in markets

#353

Post by mythrwy »

AncientTree wrote: post #306
lend000 wrote: post #55

In times of panic, remember that in the worst likely scenario, this virus will slow consumer spending, increase demand for hospitals, stagnate productivity for about 12 months, and kill about 0.4% of the world's population (using Spanish flu infection patterns for reference, which infected ~25% of the world population). At that point, there will be sufficient herd immunity (and likely effective treatments or vaccines…

Agreed, we need to just push onwards and all will be back to normal in 12 months. The facts remain that children, young adults, adults and even elderly without comorbidities will survive. Deaths are still restricted to those with existing health problems, particularly the elderly. From an economic perspective, this is the perfect pandemic. We should maintain all schooling and social activities to spread the virus as…

WTF? Maybe we could just shoot all the old people now and get even a quicker competitive advantage? (yes, it's sarcasm but this line of thinking is evil).

Re: Fed to inject $1.5T to prevent ‘unusual disruptions’ in markets

#354

Post by nathancahill »

rlt wrote: post #320
nathancahill wrote: post #158

Earlier quoted context omitted.

If we're getting in to the weeds on the ebb and flow of money to and from the government, universal healthcare saves the government money rather than costing it money.

I'm genuinely curious what evidence there is for this?

https://journals.plos.org/plosmedicine/article?id=10.1371/jo...

Re: Fed to inject $1.5T to prevent ‘unusual disruptions’ in markets

#355

Post by [deleted] »

glitcher wrote: post #292
lbotos wrote: post #76

Earlier quoted context omitted.

Uh what? Fed = Monetary policy == Make sure money can flow "appropriately" Government = Fiscal Policy == "Who gets money" I don't know how your quote is relevant at all.

You seem to be assigning the values of boolean comparison results with that syntax. So Fed and Government are both false in this example.

[deleted]

Re: Fed to inject $1.5T to prevent ‘unusual disruptions’ in markets

#356

Post by gowld »

ipnon wrote: post #59
asickness231 wrote: post #35

"inject 1.5t" by that do they mean a 1.5t panic bailout for wall street? how can we find 1.5t in the budget but no money for universal healthcare, student loan forgiveness, ubi etc. The markets wouldn't be so important if there were a safety net.

The Fed isn't printing 1.5 trillion greenbacks and handing out fat sacks on Wall St. They are providing short-term loans to increase the amount of money in circulation (liquidity). The intent is to increase the total amount of trading occurring so that the market can return to equilibrium sooner than later. The Fed wants to prevent firms from not making trades solely for lack of liquidity in the market. edit: "from m…

Why do banks get these sweetheart loans instead of civilians?

Re: Fed to inject $1.5T to prevent ‘unusual disruptions’ in markets

#357

Post by MrMember »

gowld wrote: post #356
ipnon wrote: post #59

Earlier quoted context omitted.

The Fed isn't printing 1.5 trillion greenbacks and handing out fat sacks on Wall St. They are providing short-term loans to increase the amount of money in circulation (liquidity). The intent is to increase the total amount of trading occurring so that the market can return to equilibrium sooner than later. The Fed wants to prevent firms from not making trades solely for lack of liquidity in the market. edit: "from m…

Why do banks get these sweetheart loans instead of civilians?

What is the average person going to do with an overnight loan?

Re: Fed to inject $1.5T to prevent ‘unusual disruptions’ in markets

#358

Post by stevenwoo »

asickness231 wrote: post #35

"inject 1.5t" by that do they mean a 1.5t panic bailout for wall street? how can we find 1.5t in the budget but no money for universal healthcare, student loan forgiveness, ubi etc. The markets wouldn't be so important if there were a safety net.

Yes. The 500 million they injected yesterday stopped the freefall for 30 minutes. https://www.bloomberg.com/news/articles/2020-03-12/n-y-fed-t...

Re: Fed to inject $1.5T to prevent ‘unusual disruptions’ in markets

#359

Post by dev-ns8 »

01100011 wrote: post #167
dev-ns8 wrote: post #17

Speculation on my part as I still don’t fully grok repo markets and only have a vague sense of how the treasuries market impacts equities but I’ll continue. I see some people saying this should alleviate some of the losses incurred by the recent market crash. I however, don’t see how that is the case. To me this seems like a move from the fed to make sure we don’t enter into a liquidity crisis which doesn’t necessari…

Will the fed's move fail to move asset prices higher but also cause inflation? If they're only making funds available for short-term loans, I'd figure neither equities or inflation will be significantly affected by the fed actions today. I would not be surprised if we see inflation though. The virus is going to lower productivity due to all the extra overhead. Prices in many areas will probably go up even as the econ…

Based on your opinion, you think productivity will slow and inflation will rise (regardless of cause) that is the definition of stagflation and by definition bad for the economy, bad for equities. Given these two things, higher inflation lower productivity, we would expect to see the price of equities go lower.

Also side note which is interesting, but not entirely sure how it effects things.

This article hints that the Fed might be moving to a longer term asset purchase plan

https://www.morningstar.com/news/dow-jones/2020031215079/fed...

Re: Fed to inject $1.5T to prevent ‘unusual disruptions’ in markets

#360

Post by ChuckMcM »

ksec wrote: post #323
ChuckMcM wrote: post #175

Earlier quoted context omitted.

I think it is a bit more nuanced than that. My experience in large enterprises are that there are two kinds of "politics" that get played. In one form, the leadership makes moves or take actions that benefit themselves but also help the company. Often that is called out as "leadership." In the other form, the leadership makes moves or take actions that benefit themselves but hurts the company. That form is called "po…

So what is the term for leadership makes moves that benefits the company but not gain interest on their own or even hurt their own reputation / interest ?

The term is 'heroic' for acts of leadership that sacrifice one self for the greater good.

In my experience, if the move "benefits the company" and the overall company governance is not dysfunctional, then the leader responsible does not get hurt by it. At least not in the long term.

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