- CNBC – Market turmoil sparked by coronavirus fears is worse than financial crisis, James Bianco says
“What the Fed did was they restarted QE [quantitative easing], and they essentially announced that in the next two days they’re going to do more QE than they did in the last five years combined,” added Bianco. “The reason they’re doing it is because the financial markets have stopped functioning properly. There’s no liquidity. There’s hardly any trading.”
- Bloomberg,com – Conor Sen: Financial Markets Need a Temporary 9/11-Style Shutdown
A close followed by a fresh start could do a lot to contain the panic.
But while we do that, we also should close financial markets. Credit conditions and liquidity have deteriorated rapidly in the past few weeks, and investors are trying to operate with even less near-term clarity than they had during the depths of the 2008 financial crisis. How should stocks and bonds trade if everyone’s going to be hunkered down for a few weeks except for going to the grocery store or hospital? Additionally, with volatility this high, speculation about possible government stimulus and rescue efforts raise the risk of significant amounts of insider trading and market manipulation. Better to bring things to a halt for a brief period so we can focus on the policy response, making sure families and individuals are healthy and safe. That seems like the only realistic way of preventing the panic from spiraling out of control.