The ‘whatever it takes’ economy is progressing nicely around the world, with governments and central banks doing things that no 20th century economist would have viewed as possible, let alone wise.
Now the question becomes, where does this process hit the wall first? Based on recent events, Europe is looking like the best bet. Consider the European Central Bank’s use of taxpayer money to buy not just junk bonds, but Italian junk bonds:
Draghi Buying Junk Bonds Shows ECB Will Do Whatever It Takes (Bloomberg) – Since a surprise interest-rate cut at his first meeting as European Central Bank President, Mario Draghi has shown a penchant for pushing the envelope. The bank’s entry into the corporate bond market on Wednesday was no exception: buying bonds with junk ratings. The second day didn’t disappoint either, with purchases of notes from troubled German carmaker Volkswagen AG.
By casting his net as wide as the program allows, Draghi ensured that the first day of corporate bond purchases made an impact. While the ECB has said it would buy bonds from companies with a single investment-grade rating, investors expected the central bank to start with the region’s highest-rated securities.
This post was published at DollarCollapse on SEPTEMBER 11, 2016.