Fed will not go into minus – Kommersant newspaper No. 83 (6804) from 05/14/2020

The head of the Federal Reserve System (FRS), Jerome Powell, warned of the long-term risks of a deep recession and a fall in US employment, urging Congress and the White House to take new steps to support the US economy. At the same time, he said that the Fed does not consider the possibility of removing the key rate from the current near-zero level to the negative zone, on the eve of the desirability of such actions, US President Donald Trump said.

The US economy may face the long-term negative effects of the coronavirus outbreak, as liquidity problems eventually lead to bankruptcies, Fed Chairman Jerome Powell warned Wednesday. He invited the US Congress and the White House to take additional measures to help the economy. According to him, fiscal support, although it will entail an increase in the budget deficit (now it is about 20% of GDP, a level of 10% was considered acceptable in recent years), but it will allow the economy to recover faster.

Mr. Powell described the role of the Fed as “covering temporary liquidity problems,” recalling that the regulator can “lend, but not spend.”

The Fed has already made three decisions on additional measures to support the economy in a pandemic. At first, the discount rate was reduced, then short-term liquidity was announced, and at the end of March the regulator promised for the first time to use the “whole set of measures”, thereby effectively removing the limit on the volume of asset repurchases. In addition, large-scale concessional lending programs for the business were initiated with a total volume of $ 2.3 trillion (this is approximately 10% of the country’s GDP, see Kommersant on April 10). For its part, Congress approved three aid programs worth $ 2.9 trillion, equivalent to 14% of GDP.

In the United States, more than 20 million people have already lost their jobs. Among those who were busy in February and whose income does not exceed $ 40 thousand per year, now 40% do not work. Given such a sharp fall in employment, consumption is likely to wait for a slow recovery, according to ING Bank. This, in turn, will put additional pressure on inflation – in April, prices have already fallen by 0.8% month-on-month (including excluding food and energy – by 0.4%).

Donald trump on the eve again called on the Fed to further reduce rates, bringing them into the negative zone. He noted that other countries are already benefiting from this (the ECB, the central banks of Japan, Sweden and Switzerland used this measure at different times). However, Jerome Powell said Wednesday after the speech that members of the Federal Open Market Committee of the Fed did not, in principle, consider such a measure. In his speech, he also pointed out that low inflation has been accompanied in recent decades by the accumulation of imbalances in asset prices. The experience of countries where negative rates operate is not considered by experts as unambiguously successful, they add to ING, noting that the Fed is unlikely to shift them in the opposite direction in the next year and a half.

One of the problems of the controversy surrounding negative rates is the perceptible gap between the conclusions regarding the effects of the transition to the “economy of negative rates” that politicians make from standard economic models and the more complex constructions that the Fed uses.

The main problem of negative rates is that this step can be discussed along with others only in the concept of “least evil” and in the absence of other alternative monetary policy options. For example, a short-term negative rate, all other things being equal, may be an acceptable solution to problems with a sharp temporary reduction in bank capital. In the general simplified case, the provision of money at a negative percentage with high risks in the economy provokes banks to the only rational behavior: to fix the profit generated by the Fed for free, without essentially getting involved in any substantial projects. In this sense, the program of conditionally addressless distribution of funds by the government, up to “helicopter money”, looks in most cases a more reasonable alternative to a negative rate.

Tatyana Edovina, Dmitry Butrin


Volkswagen Tiguan vs GAC GS8 – what to buy for 2 million rubles?

As part of a detailed test, you can determine the strengths and weaknesses of two mid-size crossovers.

Volkswagen Tiguan entered the Russian market more than 5 years ago, while the GAC GS8 is, in fact, only an ambitious debutant who will either find his audience or fail in sales, becoming the next Chinese crossover that he couldn’t. Assessing the prospects of the GS8 against the backdrop of Tiguan is not only a big advance for an SUV from the Middle Kingdom, but also the opportunity for a well-deserved “German” to test his own strengths.

For starters, you need to compare both cars “on paper”. In terms of overall dimensions, that Volkswagen Tiguan, that the GAC GS8 belong to the segment of mid-size crossovers, but the Chinese SUV is longer by an impressive 40 cm, and also slightly wider and higher, which already implies a larger supply of free space for passengers. However, because of this, the GAC GS8 has a mass of more than 500 kg, and this will affect the consumption and off-road capabilities.

The trunk volume of the Volkswagen Tiguan is 615 liters, for the GAC GS8 this figure is lower by 20-25 liters, but at the same time, the loading area is higher in the crossover from the Celestial Empire. In terms of fuel consumption, both cars can not be called “voracious”, but the “Tigi” average consumption is 6.8 liters per 100 km against 8.7 liters per “hundred” in the GS8. However, the “Chinese” can be refueled with 92nd gasoline, while the “German” is recommended to “feed” exclusively AI-95.

At a price of up to 2 million rubles, Volkswagen Tiguan will be equipped with a 2-liter 180-horsepower engine with a DSG robotic gearbox and all-wheel drive, which the GAC GS8 lacks in any design. At the same time, the Chinese “novelty” in any configuration gets a 2.0-liter engine producing 190 horsepower, as well as an “honest” automatic transmission, which looks like an advantage over the DSG, because Russian motorists treat it very ambiguously.

The speed characteristics of the GAC GS8 are worse than the Volkswagen Tiguan due to the larger mass, but interestingly, both crossovers accelerate to “hundreds” in less than 10 seconds – 7.7 seconds for “Tigi” and 9.8 for “Chinese” “. As for prices, the basic configuration of the GAC GS8 starts in Russia from 1.8 million rubles, while the Tiguan – from 1.6 million, but if we talk about versions for 2 million, both cars are similar in equipment: there are enough “luxury” ones options, and high-quality finishing materials, and original solutions for ergonomics.

In this comparison, the German “braid” found a Chinese “stone”: if you evaluate the numbers, then the GAC GS8 is more suitable for family people who are primarily interested in a roomy cabin and the ability to carry bulky loads in the trunk, and Volkswagen Tiguan, as before, more focused on youth audiences.


In Ferrara shops open from 11 May – Ultima Ora

(ANSA) – FERRARA, MAY 5 – Non-food stores in Ferrara
they can be opened from 11 May, in advance of one
week compared to the rest of Italy. An ordinance provides for this
who will sign the mayor Alan Fabbri (Lega). “We want to give
trust the Ferrarese – he said – and breathe in the many realities
commercials that are likely to come out on their knees from this
lockdown. We are sure that the people of Ferrara will know how to manage in
best way this opportunity. “The ordinance will allow
all stores to resume selling, respecting the rules of
health security provided for commercial establishments already
open. Only one member of the family can enter,
you can stay in the shop for the time strictly
necessary to purchase and measures must be taken that
ensure the quota of the entrances, with the strict
compliance with the distance of one meter and the prohibition of each
gathering inside and outside. Immediately, the shopkeepers
they will have access to the premises for cleaning and sanitization.