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| The Fed Deployed Its 2008 Arsenal All in One Weekend | The Fed Deployed Its 2008 Arsenal All in One Weekend |
| (about 4 hours later) | |
| If the Federal Reserve’s surprise Sunday evening announcement of sweeping efforts to guard the economy from coronavirus reminded you of the 2008 global financial crisis, you’re not alone. | If the Federal Reserve’s surprise Sunday evening announcement of sweeping efforts to guard the economy from coronavirus reminded you of the 2008 global financial crisis, you’re not alone. |
| In that episode, policymakers’ tendency to make surprise weekend announcements became a running joke. But the similarities between the Fed then and now go deeper than the timing of news conferences. | In that episode, policymakers’ tendency to make surprise weekend announcements became a running joke. But the similarities between the Fed then and now go deeper than the timing of news conferences. |
| Think of what the Fed did over the weekend this way: It resurrected most of its aggressive, unconventional and extraordinary policies used to combat the global financial crisis. But this time, instead of doing so over about 16 months, from late 2007 through early 2009, it announced versions of them in a single weekend, before solid evidence of economic damage even materialized. | Think of what the Fed did over the weekend this way: It resurrected most of its aggressive, unconventional and extraordinary policies used to combat the global financial crisis. But this time, instead of doing so over about 16 months, from late 2007 through early 2009, it announced versions of them in a single weekend, before solid evidence of economic damage even materialized. |
| That’s quite a busy weekend of central banking. | That’s quite a busy weekend of central banking. |
| The Fed is taking a “whatever it takes” approach to a crisis, using multiple tools at once — and the ones that matter most may not turn out to be the ones that end up in the headlines. | The Fed is taking a “whatever it takes” approach to a crisis, using multiple tools at once — and the ones that matter most may not turn out to be the ones that end up in the headlines. |
| Cutting interest rates by 1.5 percentage points (including both Sunday’s action and an emergency rate cut 12 days earlier) isn’t going to be much help to millions of workers who may soon find themselves without a paycheck because of large-scale business shutdowns. | Cutting interest rates by 1.5 percentage points (including both Sunday’s action and an emergency rate cut 12 days earlier) isn’t going to be much help to millions of workers who may soon find themselves without a paycheck because of large-scale business shutdowns. |
| Rate cuts are the Fed’s main tool for stabilizing the economy. Now that the central bank has brought rates to zero and pledged to keep them there until it is confident the economy has weathered the storm, its main stabilization tool is spent. | Rate cuts are the Fed’s main tool for stabilizing the economy. Now that the central bank has brought rates to zero and pledged to keep them there until it is confident the economy has weathered the storm, its main stabilization tool is spent. |
| To the degree more help for the economy is needed, it will have to fall to other actors in the government to provide it: public health authorities who might help contain the spread of the virus, and Congress, which can spend money to offset ill effects. | To the degree more help for the economy is needed, it will have to fall to other actors in the government to provide it: public health authorities who might help contain the spread of the virus, and Congress, which can spend money to offset ill effects. |
| But the Fed still has other ways to keep recent problems evident in financial markets from causing an even deeper downturn. The Fed on Sunday stepped into its role as the global lender of last resort — the entity that will do whatever it takes to keep dollars moving through the United States economy and around the world. | But the Fed still has other ways to keep recent problems evident in financial markets from causing an even deeper downturn. The Fed on Sunday stepped into its role as the global lender of last resort — the entity that will do whatever it takes to keep dollars moving through the United States economy and around the world. |
| One of the oldest roles for central banks, and the reason the Fed was created more than a century ago in the first place, has been to ensure that credit can still flow freely even when panic sets in and lenders are fearful. | One of the oldest roles for central banks, and the reason the Fed was created more than a century ago in the first place, has been to ensure that credit can still flow freely even when panic sets in and lenders are fearful. |
| In the last several days, financial markets have been freezing up in strange ways that suggest banks and other major players are hoarding dollars. That is driving up the interest rates that major corporations; state and local governments; and even individuals taking out a mortgage must pay for credit. | In the last several days, financial markets have been freezing up in strange ways that suggest banks and other major players are hoarding dollars. That is driving up the interest rates that major corporations; state and local governments; and even individuals taking out a mortgage must pay for credit. |
| That tightening of credit, if unchecked, can steer an economy to recession even if the effects of the virus are contained. And it is what Chair Jerome Powell has signaled determination to stop. | That tightening of credit, if unchecked, can steer an economy to recession even if the effects of the virus are contained. And it is what Chair Jerome Powell has signaled determination to stop. |
| To that end, the Fed on Sunday offered more generous terms at the “discount window,” where banks can borrow money at increasingly favorable rates by showing up and pledging collateral. It reopened so-called swap lines with leading global central banks, ensuring the flow of dollars can continue overseas despite a freeze-up in certain money markets. | To that end, the Fed on Sunday offered more generous terms at the “discount window,” where banks can borrow money at increasingly favorable rates by showing up and pledging collateral. It reopened so-called swap lines with leading global central banks, ensuring the flow of dollars can continue overseas despite a freeze-up in certain money markets. |
| In recent years the Fed’s quantitative easing programs of buying bonds have been discussed in the context of how they might help stabilize the economy. The new installment announced Sunday — $700 billion in planned purchases, if you’re counting — actually has more in common with the first rounds of bond buying announced in late 2008 and early 2009. | In recent years the Fed’s quantitative easing programs of buying bonds have been discussed in the context of how they might help stabilize the economy. The new installment announced Sunday — $700 billion in planned purchases, if you’re counting — actually has more in common with the first rounds of bond buying announced in late 2008 and early 2009. |
| Updated June 16, 2020 | Updated June 16, 2020 |
| The steroid, dexamethasone, is the first treatment shown to reduce mortality in severely ill patients, according to scientists in Britain. The drug appears to reduce inflammation caused by the immune system, protecting the tissues. In the study, dexamethasone reduced deaths of patients on ventilators by one-third, and deaths of patients on oxygen by one-fifth. | |
| The coronavirus emergency relief package gives many American workers paid leave if they need to take time off because of the virus. It gives qualified workers two weeks of paid sick leave if they are ill, quarantined or seeking diagnosis or preventive care for coronavirus, or if they are caring for sick family members. It gives 12 weeks of paid leave to people caring for children whose schools are closed or whose child care provider is unavailable because of the coronavirus. It is the first time the United States has had widespread federally mandated paid leave, and includes people who don’t typically get such benefits, like part-time and gig economy workers. But the measure excludes at least half of private-sector workers, including those at the country’s largest employers, and gives small employers significant leeway to deny leave. | The coronavirus emergency relief package gives many American workers paid leave if they need to take time off because of the virus. It gives qualified workers two weeks of paid sick leave if they are ill, quarantined or seeking diagnosis or preventive care for coronavirus, or if they are caring for sick family members. It gives 12 weeks of paid leave to people caring for children whose schools are closed or whose child care provider is unavailable because of the coronavirus. It is the first time the United States has had widespread federally mandated paid leave, and includes people who don’t typically get such benefits, like part-time and gig economy workers. But the measure excludes at least half of private-sector workers, including those at the country’s largest employers, and gives small employers significant leeway to deny leave. |
| So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement. | So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement. |
| Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks. | Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks. |
| A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study. | A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study. |
| The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April. | The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April. |
| Mass protests against police brutality that have brought thousands of people onto the streets in cities across America are raising the specter of new coronavirus outbreaks, prompting political leaders, physicians and public health experts to warn that the crowds could cause a surge in cases. While many political leaders affirmed the right of protesters to express themselves, they urged the demonstrators to wear face masks and maintain social distancing, both to protect themselves and to prevent further community spread of the virus. Some infectious disease experts were reassured by the fact that the protests were held outdoors, saying the open air settings could mitigate the risk of transmission. | Mass protests against police brutality that have brought thousands of people onto the streets in cities across America are raising the specter of new coronavirus outbreaks, prompting political leaders, physicians and public health experts to warn that the crowds could cause a surge in cases. While many political leaders affirmed the right of protesters to express themselves, they urged the demonstrators to wear face masks and maintain social distancing, both to protect themselves and to prevent further community spread of the virus. Some infectious disease experts were reassured by the fact that the protests were held outdoors, saying the open air settings could mitigate the risk of transmission. |
| States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people. | States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people. |
| Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days. | Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days. |
| If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.) | If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.) |
| Taking one’s temperature to look for signs of fever is not as easy as it sounds, as “normal” temperature numbers can vary, but generally, keep an eye out for a temperature of 100.5 degrees Fahrenheit or higher. If you don’t have a thermometer (they can be pricey these days), there are other ways to figure out if you have a fever, or are at risk of Covid-19 complications. | Taking one’s temperature to look for signs of fever is not as easy as it sounds, as “normal” temperature numbers can vary, but generally, keep an eye out for a temperature of 100.5 degrees Fahrenheit or higher. If you don’t have a thermometer (they can be pricey these days), there are other ways to figure out if you have a fever, or are at risk of Covid-19 complications. |
| The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing. | The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing. |
| If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others. | If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others. |
| If you’re sick and you think you’ve been exposed to the new coronavirus, the C.D.C. recommends that you call your healthcare provider and explain your symptoms and fears. They will decide if you need to be tested. Keep in mind that there’s a chance — because of a lack of testing kits or because you’re asymptomatic, for instance — you won’t be able to get tested. | If you’re sick and you think you’ve been exposed to the new coronavirus, the C.D.C. recommends that you call your healthcare provider and explain your symptoms and fears. They will decide if you need to be tested. Keep in mind that there’s a chance — because of a lack of testing kits or because you’re asymptomatic, for instance — you won’t be able to get tested. |
| At that time, financial markets were going haywire, and Fed officials hoped that by flooding the system with liquidity — the newly created dollars used to buy hundreds of billions of dollars in bonds — they could speed a return to normal functioning. | At that time, financial markets were going haywire, and Fed officials hoped that by flooding the system with liquidity — the newly created dollars used to buy hundreds of billions of dollars in bonds — they could speed a return to normal functioning. |
| That was exactly the rationale for the new actions Sunday. | That was exactly the rationale for the new actions Sunday. |
| Referring to the $700 billion in quantitative easing, Mr. Powell said in his news conference that “the primary purpose of these securities purchases is to restore smooth market functioning so that credit can continue to flow,” with the economic boost from the usual channels of monetary policy more a secondary benefit. | Referring to the $700 billion in quantitative easing, Mr. Powell said in his news conference that “the primary purpose of these securities purchases is to restore smooth market functioning so that credit can continue to flow,” with the economic boost from the usual channels of monetary policy more a secondary benefit. |
| The Fed stopped short, for now, of deploying some of the most unconventional tools in its lender-of-last-resort toolbox. During the 2008 crisis, a series of complex programs was enacted using emergency authority to funnel dollars into various corners of the credit markets, and the Fed may well need to use some of them again if the damage worsens. | The Fed stopped short, for now, of deploying some of the most unconventional tools in its lender-of-last-resort toolbox. During the 2008 crisis, a series of complex programs was enacted using emergency authority to funnel dollars into various corners of the credit markets, and the Fed may well need to use some of them again if the damage worsens. |
| Referring to programs created under that authority, Mr. Powell said, “That’s part of our playbook in any situation like this — so as I said, we’re prepared to use our authorities as is appropriate to support borrowing and lending in the economy.” | Referring to programs created under that authority, Mr. Powell said, “That’s part of our playbook in any situation like this — so as I said, we’re prepared to use our authorities as is appropriate to support borrowing and lending in the economy.” |
| Mr. Powell has a big advantage over the former chair Ben Bernanke from a dozen years ago: He and his colleagues have had all these years to study, assess and build upon the tools that the Bernanke Fed invented and deployed to combat that crisis. | Mr. Powell has a big advantage over the former chair Ben Bernanke from a dozen years ago: He and his colleagues have had all these years to study, assess and build upon the tools that the Bernanke Fed invented and deployed to combat that crisis. |
| “We think we have plenty of policy space left, plenty of power left in our tools,” Mr. Powell said on Sunday. Over the coming weeks, the world will find out if he’s right. | “We think we have plenty of policy space left, plenty of power left in our tools,” Mr. Powell said on Sunday. Over the coming weeks, the world will find out if he’s right. |