Winners, Losers of the Low-Rate Era
When Andy Franko started Fluid-Quip Inc. in 1987, interest rates on its bank loans were around 13% a year. Today, the Springfield, Ohio, company, which manufactures equipment for the corn industry, pays 4% or so to its lender, a unit of Huntington Bancshares Inc.</br></br>No wonder Mr. Franko, Fluid-Quip's president, is a big fan of the low interest-rate policies pursued by the Federal Reserve since the financial crisis.</br></br>"My biggest headache is having the cash-flow to fund the work in progress and our inventory," he told me last week. Without low interest rates, he says, his company would have lost 25% to 30% of its projects for lack of financing.</br></br>Loose monetary policy has delivered substantial benefits to borrowers of all kinds, from corporations and households to the most indebted entity of them all, the U.S. government.</br></br>With the Fed taking the first steps to end quantitative easing--its huge stimulus program--it is worth taking a deeper look at the winners and losers in the real economy.