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Today we have a crossover piece with @theprospect & @theintercept. I wanted to quantify just how much the Federal Reserve's corporate bailout *announcements*- not spending any money- has been worth to the investor class. Turns out it's trillions of dollars https://prospect.org/coronavirus/how-fed-bailed-out-the-investor-class-corporate-america/
Since the Fed announced March 23 that it would purchase corporate bonds, the three biggest weeks in the history of corporate bond sales have happened. Dozens of companies that couldn't otherwise borrow at such low rates got in on it https://prospect.org/coronavirus/how-fed-bailed-out-the-investor-class-corporate-america/
Funds that track the corporate bond market all resemble a panoramic view of the Grand Canyon, hitting a low point on March 23, before shooting back up. https://prospect.org/coronavirus/how-fed-bailed-out-the-investor-class-corporate-america/
Bond spreads, the cost of borrowing, have shrunk, even in the risky junk bond market, as investors rush in, confident of a Fed guarantee. https://prospect.org/coronavirus/how-fed-bailed-out-the-investor-class-corporate-america/
The Fed’s support disproportionately flows to large corporations with access to credit markets. “Small and midsized businesses with much more need are more likely to struggle.” https://prospect.org/coronavirus/how-fed-bailed-out-the-investor-class-corporate-america/
Congress made the choice to empower the Fed, rather than figure out how to adequately support the rest of the citizenry. We have a system for central bankers to throw a life preserver at capital; everyone else must swim several miles to shore themselves. https://prospect.org/coronavirus/how-fed-bailed-out-the-investor-class-corporate-america/
Thanks to the research and graphics team at @theintercept. This is available on both sides. I really wanted to document how the Fed didn't even need to spend a dime to save capital. Check it out! https://prospect.org/coronavirus/how-fed-bailed-out-the-investor-class-corporate-america/
