Germany pledged unlimited cash to businesses hit by the coronavirus, in what finance minister Olaf Scholz described as a big “bazooka” to avert a crisis in the eurozone’s largest economy. The move was part of a series of measures taken by governments and regulators across Europe and the US designed to reassure business and steady markets, amid fears that the pandemic could trigger a severe credit crunch and global recession. It came as Ursula von der Leyen, president of the European Commission, warned that the corona crisis was delivering a “major shock” to EU economies and vowed to give member states ample leeway to ramp up spending in response. Mr Scholz said the government would provide unlimited liquidity assistance to German companies hit by the pandemic, which has played havoc with supply chains and led to a spate of production stoppages across the country. The package unveiled on Friday envisages a massive expansion of loans provided by KfW, the state development bank. Companies will also be allowed to defer billions of euros in tax payments. “This is the bazooka, and we will use it to do whatever it takes,” Mr Scholz told reporters in Berlin. He said there was “no upper limit on the amount of loans KfW can issue”. Peter Altmaier, economy minister, said the measures were “unprecedented in Germany’s postwar history”, calling them the “most comprehensive and effective assistance and guarantees there have ever been in a crisis”. Also on Friday, the Federal Reserve sped up its purchase of US Treasuries, a day after it said it would supply trillions of dollars of short-term loans in an effort to ease serious disruptions in the largest and most liquid government debt market. The New York arm of the central bank said it would buy Treasuries of all maturities on a rolling schedule throughout the day. It said the purchases were intended to “address highly unusual disruptions in the market for Treasury securities associated with the coronavirus outbreak”. Meanwhile European authorities intervened in the region’s stock and bond markets with a series of measures intended to bring stability to prices. Italian and Spanish market regulators banned investors from betting against the prices of a combined 154 stocks, in a bid to calm the worst of the tumult in equities. At the same time, the London Stock Exchange eased requirements for market makers who trade fixed-income exchange traded funds. In Spain, which is dealing with one of Europe’s biggest surges in coronavirus cases, Prime Minister Pedro Sánchez decreed a state of alert, a move that gives his government powers to take control of factories and restrict people’s movements. At the same time French finance minister Bruno Le Maire said Paris would spend “tens of billions of euros” to soften the impact of the coronavirus. The French government has already announced measures, including loan guarantees, a solidarity fund and financial aid for businesses cutting back hours without lay-offs. But the moves announced by the German government on Friday go much further than any other European country. Officials said they were designed to provide companies with a “protective shield” by vastly increasing access to loans provided by the state bank KfW. The German budget currently guarantees KfW a financial framework of €460bn, but officials said this could now be raised by €93bn, giving the bank more than €550bn in available firepower. “And that is just the start,” Mr Altmaier said. The terms of KfW loans would be changed so that the federal government assumes more risk, he said, while loan application procedures would be simplified and speeded up. Access to credit guarantees would also be expanded. “We are making an unlimited pledge, to the smallest businesses, from taxi-drivers, to the creative industries, to really big firms with tens of thousands of workers,” said Mr Altmaier. Business groups welcomed the measures. “The whole package is an important signal that German companies need right now,” said Eric Schweitzer, head of the German chambers of commerce and industry. On Friday the Bundestag also rushed through a law expanding the Kurzarbeit or short-time work scheme, under which companies that put their workers on reduced hours can receive state support. How coronavirus is hitting global business The moves announced by Messrs Scholz and Altmaier represent an abrupt volte-face for a government that for years has been wedded to the ideology of balanced budgets and no new borrowing, and has long resisted calls from international organisations like the IMF to loosen the purse strings. Asked if this marked the end of the government’s so-called “black zero” policy, Mr Scholz said: “It is not completely implausible that we will need additional money.” Germany’s dramatic move came as the European Commission offered a bleak assessment of the economic damage from the coronavirus crisis. Unveiling a package of support measures on Friday, it warned that output in the EU and eurozone could be driven into negative territory this year, adding that the virus could have a “very large detrimental economic impact”. The direct impact of the crisis could lead to a 1 per cent contraction in gross domestic product in 2020, with a “substantial but not complete” rebound in 2021. That compares with a prior prediction of 1.4 per cent EU growth this year. At the same time, the commission said member states should be given more scope to provide support to companies affected by the coronavirus. Commission executive vice-president Valdis Dombrovskis said the EU would now deploy the “full flexibility” in its fiscal rules to allow countries to boost expenditure. The commission “stands ready” to trigger a special general escape clause from its budget rules if the regional downturn became severe enough, he added, although this step was not yet being taken. The commission will additionally mobilise €37bn under its regional funding programmes to combat the impact of the virus — a larger number than previously announced by Ms Von der Leyen. Additional reporting by Colby Smith, Brendan Greeley, Daniel Dombey, David Keohane, Philip Stafford and Adam Samson Sign up to the three times a week Coronavirus Business Update email Copyright The Financial Times Limited 2020. All rights reserved. https://www.ft.com/content/1b0f0324-6530-11ea-b3f3-fe4680ea68b5 Most impressive piece of news I read in the last 30 years or so...Germany opening its purse "unlimited"! Wow, wow, wow! RockNRolla, ladies and gentleman!
Ohhh unlimited...sounds like they will do the same thing here as well...unlimited free money toooo everyone...this should catapult all stocks to fresh highs next week..just keep printing unlimited money because that's the ultimate fix everytime there is a crisis.
Also on Friday, the Federal Reserve sped up its purchase of US Treasuries, a day after it said it would supply trillions of dollars of short-term loans in an effort to ease serious disruptions in the largest and most liquid government debt market. The New York arm of the central bank said it would buy Treasuries of all maturities on a rolling schedule throughout the day. It said the purchases were intended to “address highly unusual disruptions in the market for Treasury securities associated with the coronavirus outbreak”. Meanwhile European authorities intervened in the region’s stock and bond markets with a series of measures intended to bring stability to prices. Italian and Spanish market regulators banned investors from betting against the prices of a combined 154 stocks, in a bid to calm the worst of the tumult in equities. At the same time, the London Stock Exchange eased requirements for market makers who trade fixed-income exchange traded funds. In Spain, which is dealing with one of Europe’s biggest surges in coronavirus cases, Prime Minister Pedro Sánchez decreed a state of alert, a move that gives his government powers to take control of factories and restrict people’s movements. At the same time French finance minister Bruno Le Maire said Paris would spend “tens of billions of euros” to soften the impact of the coronavirus. The French government has already announced measures, including loan guarantees, a solidarity fund and financial aid for businesses cutting back hours without lay-offs.
If printing becomes the new fashion (already is?) , then the ones that aren't printing, will be risking that their local business will go out of the game and will be taken by those who are printing in situations like this ? Whats the point of selling bonds, if you can pull the lever and print more ?
Am I the f’cking visionary master or not. Been saying after the 2008 experiment there is a guaranteed solution to any asset crisis.
Telling people every single day last month to "take a second mortgage on their houses and buy as much QQQ as possible. Please for the love of God call your bank today." Yeah, you're the visionary master all right.
Can i have some monies too pleeeze? Well, if we go up shit ton ill be ok. Then i dont need no handouts!