Society: The Federal Reserve is hard to save the poor

Source: Taiwan Economic Daily

Federal Federal Statistics (FED) has a 2 yards of emergency interest rate cuts on March 3 and injecting funds into the financial market on March 12, and it is amazing on the 15th.It was reduced to 0%-0.25%, and it also expanded the purchase of asset bonds and mortgage guarantee securities (MBS) to prevent the serious impact of the new crown pneumonia.However, the U.S. stock refers to not only did not rise, but was beaten to the daily limit, showing that the market response was not a surprise, but a frightened.

Is the FED move, or is it before the prevention of the problem or whether to clean up the good after the good afterwards?Is it a leading situation or a back reaction?

In fact, the call for FED to quickly reduce interest rates to 0 has recently been required to be very arrogant. Therefore, this time this time the interest rate cut 4 yards is not surprising, because the most primitive FED function is to support basic market functions; once the financial system is under pressure to withstand pressureFed should provide ample liquidity.

The financial market has tight liquidity, which has been reflected at least three levels.First, when U.S. stocks have a heavy decline, U.S. public debt usually becomes the destination of capital aversion, that is, public bonds have risen when the stock market falls.Do not throw public debt.

Second, the banking industry pointed out that a number of oversized companies are scrambling to use their due credit quotas. Many enterprises' financial executives call to ask banks to provide positions this week. The rush of cash is not afraid that the interest rate of commercial bills has also risen significantly.

Third, the culprit of the financial crisis is inseparable from debt. This is the turn of corporate debt.For more than a decade, the ultra -low interest rate has enabled many zombie companies in the United States to be panting.According to Morgan Stanley estimates, the cash flow of about one -sixth of companies across the United States is not enough to repay the interest of the debt, but it can still rely on debt issuance to obtain re -financing.Now that the corporate community has been affected by the spread of the new crown epidemic and the sharp impact of international oil prices, it is finally time to liquidate.If the enterprise does not have a good turnover, the bankruptcy will be closed, and the employee will be unemployed.

In the face of financial tightness, Fed must of course relax the credit, but it is the timing.First, although the US stocks fell sharply last week, it has rebounded more than 9%on Friday (13th). The FED does not seem to have to rush to take a break. Second, the Federal Public Marketing Committee (FOMC) will hold a decision on the 17thIn the meeting, why can't the FED even wait for three days?If the matter is abnormal, there must be a demon.There is a famous saying in the economics community. The monetary policy is either too late or too fierce; but too fierce, it is often too late.

At present, of course, the actual economic situation that the financial market is suspected to be suspected of understanding the Fed may be much more severe than the situation reflected in economic data.Meng medicine.Investors are both highly concerned and unknown.

What is the effect of the loose measures?In fact, it is not optimistic.Significant interest rate cuts are price and loose. Expanding debt purchase is quantitative and loose. Although the FED volume and price are calculated, this universal loose measures must rely on smooth financial transmission mechanisms (Transmission Mechanism).The role of the intermediary, and whether the funds can eventually be provided to the most needed manufacturers, are still uncertain.

Furthermore, this financial crisis is different from the past. The shocking effect is not from the flow of the financial market to the real economy, but the opposite.The spread of pneumonia not only disturb the supply, but also suffocate the demand. As a result, the company's regular revenue is exhausted, and the chain effect is produced, resulting in deterioration of performance and debt repayment, thereby impacting the financial market.Therefore, Fed relaxal credit can only support the financial industry without crash, so as not to worsen the economy, but it is not realistic to want to vibrate.

However, it is always better than being late.Faced with the continuous spread of the epidemic, it is necessary to support the real economy from being severely damaged. Of course, it is not possible to rely on the central bank to sing unicorn, and the government must also expand fiscal expenditure. Before the implementation of fiscal policy, it can only rely on FED to take the shot for space.

We once again emphasized that the pneumonia's epidemic impacts the real economy; the loose monetary policy can only relieve liquidity pressure and allow the corporate community to grit their teeth and support it; emergency rescue or effectiveness, but it is difficult to save the poor.As long as the epidemic can not be significantly relieved in the short term, it is inevitable that the economic recession in the United States this year is probably inevitable.The Taiwanese business community must be prepared for Xiaoyue, and investors should also suppress the impulse to rebound.Everything is at a loss.