Economic Stimulus or Corporate Welfare? You tell me.
Courtesy of Joshua M Brown, The Reformed Broker
The Wall Street Journal:
The European Central Bank’s corporate-bond-buying program has stirred so much action in credit markets that some investment banks and companies are creating new debt especially for the central bank to buy.
In two instances, the ECB has bought bonds directly from European companies through so-called private placements, in which debt is sold to a tight circle of buyers without the formality of a wider auction.
What?
If anyone can explain to me on what planet we should look at this latest development and say that it, in any way, resembles an attempt at economic stimulus, I’m all ears.
I cannot even imagine the discussions that must take place wherein the participants of this sham convince themselves that there is a transmission mechanism for this to become stimulative for real people in the real economy.
The Europeans were a few years late to QE, but they’re now making up for it with a vengeance.
Source:
Seller’s Paradise: Companies Build Bonds for European Central Bank to Buy (Wall Street Journal)
