The problem with ECB corporate bond buying

Yes, it is on the agenda, and those bond prices are up sharply, but there are more eligible bonds in some places than others:

Still  BofAML sees €554 billion of debt ultimately eligible for ECB buying out of a European investment-grade universe that they put at €1.6 trillion. Of that €554 billion the vast majority has been issued by French and German credits, a fact which may disappoint some who were hoping for targeted stimulus of the eurozone’s weaker nations.

Deutsche Bank AG Credit Analysts led by Nick Burns see similar figures, estimating around €418 billion of eurozone corporate debt could be eligible for ECB purchases, with the bulk of that coming from German and French issuers.


The more economically integrated United States would not have this problem to the same degree.


I will, but I can't seem to manage to get enough clicks, probably due to my inability to leverage social media effectively. I get about 100 views per day, on average. What do you suggest I do to improve my position?

what is it you dont like about marginal revolution ?

Check your analytics which should be a free part of the web hosting package. a) At 100 hits a day, probably about half are search engine bots, and the analystics should give you precise numbers on this. b) Also, check the time duration of visits. 0-30s visits are very low impact (all bots should be in this category, so it's an easy subtraction to find out how many visits are real people but just a very quick look), visits of a few minutes are probably more legitimate visits, and those of greater than one hour are probably just people who opened a tab and didn't get around to checking it until later on. c) You can also check the country of origin of the hits - this will give you some idea of where the impact is coming from. d) Now, down to 10-20 legitimate hits per day, i) consider how often you're clicking on your own page and how this might skew the data (check how many hits are from your own "admin", which tells you how many hits are basically just you updating things - at 100 hits a day, this should be in the top few -, and how many hits are on "login", which might tell you that someone's trying to hack your account), and ii) differentiate between number of unique visitors and number of page views, the second of which might just be people clicking around to see if there's something specifically of interest but does not necessarily mean that they're actually reading anything. e) Check for high volumes of hits from the same ISP address and things like "document not found" and other HTTP status codes, which might be suggestive of a hacker looking for vulnerabilities.

Not at all to be discouraging, but once you account for all of the above, 100 views a day might represent just a handful of legitimate visits. If there are links coming from social media or other websites., your analytics should give you precise numbers on this. One of the more surprising pieces of information I've come across from this sort of thing is that someone landed on my website after a Google search of "How to make someone think they are going crazy". Personally, I find the most interesting stat to be that 95% of hits are from a direct address, suggesting that most readers are coming back to the blog on their own rather than following links or search results.

I'm not actually all that stressed about attracting readership, but if you're curious to have some general picture, thinking through these sorts of things is probably worth a few minutes glance at the analytics on a monthly basis or so. I used to have about 500 unique visitors per day, but didn't write for a few months and seem to have permanently lost about 80% of that total ... I also have the same blog hosted on under an old name, which receives a stable number of visits at almost precisely 20 unique visitors per day with a similar number of page views, which are probably a handful of family and friends who I shared it with before rebranding under a different name.

The main growth came after writing letters to editors and politicians, and linking the outline of posts to the full content on my blog (possibly more effective than social media). After any given letter writing campaign, I tend to take a quick look at daily hits to see if there was an impact. One month, I had 40,000 hits from an IP address located very near to a new spy facility in Gatineau in Ottawa ... presumably some sort of effort to seek for vulnerabilities in the programming of the website after writing some thousands of letters highly critical of new policies which expand their abilities to operate in a warrantless environment (slogan: "never trust a security agency that thinks it should not have to get a warrant").

Probably not worth considering the time and effort for hosting ads unless you're getting somewhere in the range of 100,000 unique visits per day. And you're never going to get that if you're just peddling in ideology or conspiracy theories - you need to add some thought provoking analysis.

E.g. - I've got 350 hits on "login" in the first 12 days of March, but I haven't actually had to login so far this month, compared to 19 hits on "post new", which is precisely the number of posts this month. However, my analytics program does not enable me to find which IP addresses are responsible for these hits on "login". This is a roughly constant number over time, suggesting that someone has a bot making a dozen or so guesses at my password daily, trying to stay under the radar by not making the numbers too high. This kind of information is interesting, although you can only guess at what it means...

Also, my website seems to perform very poorly for a day or two in terms of loadup time whenever I post a sequence of posts highly critical of the inability to openly discuss both sides of the Israel/Palestine conflict. Strangely, I experience this through my US-routed VPN, but not when I access directly from China ...

Especially in Ohio and rural Missouri and Illinois!

this doesn't seem like a big deal. corp bond demand may invite supply. or liquidity supply may create its own demand. the preponderance of French and German representation makes the policy seem more politically sustainable, to me, because the returns will b better and because it doesn't look as much like a transfer from the responsible to the irresponsible

"with the bulk of that coming from German and French issuers": golly gosh! Stone the crows! Who could have seen that coming?

More than that, who would imagine that eurozone's two largest economies would issue a significant amount of high grade coporate bonds.

Certainly not this web site.

Question. How can you know the value of something when there is a well funded price fixing operation?

Answer. You can't.

Except there's no well funded price fixing operation.

Let's say France is at full employment but Portugal is not. Where should increased demand in a free market go? Well since France is at full employment, any attempt to increase output would increase prices only but since Portugal is not output there could go up without higher prices.

It shouldn't matter that the method of adding demand is buying bonds issued by French companies.

This may be a feature rather than a bug. The deal that has been on the monetary table for years is euro stimulus that focus on Germany. The PIGS get their competitiveness back and German gets a little of the benefit as its companies are the first in line.

Are German companies really 'first in line'? When the Central Bank buys bonds, it is no different than anyone else who buys bonds. For one thing, the company that issues bonds isn't getting some type of free gift. They are borrowing money, money that they have to pay back with interest. If the company appears strong and it appears like they will use the money to make profitable investments then the market will deem those bonds very low risk and charge a low interest rate. That again is not a 'free gift' to the company, like a person with a good credit score, the company has to work to maintain that good standing by always paying their bills and showing they can maintain their profits.

Yes, there is only a benefit as long as the central bank ends up lowering its interest. This effect is often overestimated, so politically it works out even better.

Are you sure?

The Central Bank is simply buying the bond, just like anyone else in the market. It buys but someone else is selling. Why is that someone else selling? That's what really matters because he is the one who gets the money the Central Bank has created.

So he has sold a bond of a German or French company he owns, he might turn around and buy another bond of a German or French company. Or he might go on a vacation to Portugal. Or invest in something totally different. All things being equal the demand hasn't been given to the company who issued the bond but to the guy who just sold the bond and that person has the entire market of possible investments and the entire market of possible consumption to choose from. The Market is fluid so the decrease in interest rates is market-wide, not simply isolated to the company whose bonds happened to be purchased by the Central Bank.

Consider 'traditional monetary policy' when the Central Bank decides to cut the short term rate from something like 2% to 1.5%. It does this traditionally by buying short term government bonds. That isn't simply a 'gift' to owners of gov't debt but impacts the entire economy. Why? Because people who are selling the bonds are generally taking their money out of that bond market. Their demand, therefore, is likely being spread over a huge array of alternative investments and consumption options.

The sellers have shareholders to answer to. Not perfect, but definitely not going to be thrown away on holidays to Portugal - executive retreats perhaps?

The seller is not the company that issued the bonds but the investor who owns the bonds that just happens to want to sell on the day the Central Bank does its buying.

Obviously bond issuers don't benefit directly from the bonds they have already issued. But they benefit from lower interest rates for new bonds. I don't know why you (Boonton) choose to ignore that. It is not a free gift in the sense that the borrowers are still paying the principal and interests (obviously), but it is free money in the sense that the interest rates are lower. The post even mentions that the bond prices are already sharply up, i.e. the interest rates are already down, even before actual purchases by the ECB.

Again that's hardly a given. If the market thinks the CB is creating inflation, for example, bond prices can fall despite the limited purchases. In that case the company would receive a higher rate if it decided it wanted to borrow money by issuing more bonds.


Yes, sorry, I see now that you had already responded to this point below, I won't add much more here. But after I unpack all your assumption, it looks to me that you think more supply doesn't lead to lower prices.

No different except they offer the highest price.

It is a feature because it will force other countries to create a transparent corporate bond market instead of the current private loan system.

This is good news. Corporates all over the Eurozone will want to be eligible to the program and will issue more bonds instead of relying on private loans from local banks. It will add more transparency and liquidity to the debt market. It will break the incestuous relationships between banks, corporates and local governments in Spain or Italy.

It seems to me that the effect of this program on "insestuous relationships" between governments and business will be precisely the opposite of your expectations. This is much more likely to bring Italian-like levels of public corruption to Germany than to bring German business methods to Spain and Italy.

The German corporate bond market is not particularly as developed and transparent as the UK or US market. Regional banks are quite opaque. It goes to the right direction.

Respectfully, that is not much of an argument or explanation. Presumably, some private corporations in Europe will receive access to a new and unlimited source of financing and some companies won't. Membership in that club Is already valuable and will only become more so as ECB bond buying (and market expectations for future buying) produces an ever greater differential in interest rates between favored and dis-favored companies. In the long run, companies outside the favored group will be unable to compete.

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"This problem"?

What problem?

The fact that the ECB is now going into the business of directly financing private companies demonstrates a comprehensive policy failure and will inevitably lead to even more disgraceful levels of public corruption. As a policy artifact, however, the "nationality" of the firms receiving public financing seem fairly meaningless to me.

Buying bonds on the open market is not 'directly financing private companies'.

Buying corporate bonds on the open market or otherwise is exactly "directly financing private companies."

Buying bonds on the open market or otherwise is precisely direct financing of private companies.

Actually directly financing would entail making direct loans to the companies themselves. Buying bonds on the open market does not directly finance the company since the company already received the funds when they issued the bonds and sold them in the initial offering. The secondary markets are not financing companies but represent investors buying and selling bonds between themselves.

Your argument appears to be that if the bank buys up the bonds of a particular corporation, then that corporation will see that the prices of their bonds have increased therefore they may issue more bonds and enjoy a lower interest rate than previously. But this story isn't as clear as it first seems:

1. You don't buy a bond on the open market unless someone else is selling one. The money goes into the seller's pocket. Why was the seller selling? To get cash. Why? Because they want to buy something with that cash that they couldn't with the bond they used to own. It is very unlikely that they want to buy the same bonds they just sold, it is more likely that they want to buy something else and that means the demand created by QE is probably *not* going to the companies whose bonds are being brought.

2. The Central Bank isn't going to say something like "Amazon is cool so we will buy their bonds". They will most likely buy based on some type of index. For example, they may take the top 100 highest rated corporate bonds and buy them in proportion to their market share (i.e. if Amazon is 5% of that market, Amazon bonds are 5% of the QE purchase). The companies whose bonds are purchased therefore have no easy out. If their credit rating falls or they loose share to other companies then the number of bonds purchased by the central bank will fall. The market dynamic remains at play. If Ebay starts to falter, their share of the highly rated debt will start to fall which means fewer Ebay bonds being brought.

#2 is the same dynamic you get if you have lots of people putting their 401K's into an index fund, say the S&P 500. Does that mean companies will be managed less well since more of the shareholders that own them will not be taking an active interest in their management? No since active traders determine the prices day to day and a company's weighting in the S&P 500 is determined by those trades. You could argue that the an advantage is to be had for a company that gets to be in the S&P 500 (which means at least a few shares will be automatically purchased 'blindly' by index funds) versus a company that is just outside the S&P 500. I think this is a tough case to make, though, since presumably those 'blind' index fund purchases would knock some investors out of the higher priced market and into the 'lower' one just outside.

Heh. Your faith is touching.

Is that an argument?

By any rational definition, the purchase of a company's bonds on the secondary market is direct financing of that company. Typically, Corporate bonds are sold initially through investment banking houses which price the bonds based on the perceived demand. If the investment banker believes that the ECB is likely (or certain) to buy particular bonds the price of those bond will go up. If other investors believe the ECB will provide liquidity to some portions of the secondary bond market but not others they will pay more for bonds which qualify for purchase by the ECB. If the market knows that a certain group of bonds is eligible for purchase by the ECB and a different group is not, an interest rate differential will appear or expand. Companies within the club will benefit and those outside the club will be placed at a disadvantage.

In fact, stock prices do rise and fall based on whether companies enter or leave important indexes like the S&P. Buying by index funds is thought to be the main reason for this effect.

You give the game away in your last line:

"In fact, stock prices do rise and fall based on whether companies enter or leave important indexes like the S&P. Buying by index funds is thought to be the main reason for this effect."

Direct financing is you write a check made payable to the company that you are financing. Writing a check to anyone else is indirect financing at best. If you loan your brother-in-law $100, that is direct financing. If you put $100 in a savings account at a bank where your brother-in-law happens to have a credit card with a $100 balance, that is indirect financing. In your example, the investment house is directly financing the company by buying their bond offering. The investment house plans to profit not by holding the bonds and collecting interest but by selling them in the secondary market. What they will get for them is hardly clear at all. Even when the CB happens to be buying bonds, it isn't clear that will increase the price for new bonds. If the market thinks the Central Bank is driving inflation by printing so much money, the price of bonds could go down dramatically which means the investment house will get less money than it hoped when it sells.

This brings us to your statement. How could a company leave the S&P? Once a company is in the S&P it should have a lock since things like index funds are automatically buying shares of all the companies in the club. Companies do fall in and out all the time, though, and inside the S&P companies rise and fall in their weights because active traders are constantly seeking and causing price changes. So even inside the S&P the 'automatic purchases' don't change the fact that any given company remains in competition with all the others and failures will mean their stock price will fall and any benefit their price gets from automatic purchases will fall too.

Yes, indirect financing would be, for example, if I made a deposit in a bank and the bank then used the money to make a loan or buy a security. In that situation the risk of loss on the loan or security is with the bank initially and I am only indirectly at risk. When the ECB buys a bond to hold on its own balance sheet (whether in the secondary market or otherwise) it is directly financing the issuer because it is directly at risk. If the bond issuer fails, that is the investor that takes the loss. This is really not a fit subject for dispute. In the finance context, the words you are attempting to use just don't have the meaning you think they have. You literally don't know what you are saying.

Except in rare cases, investment banks require issuers to enter into some form of indemnity or "put" arrangement so that they are not "stuck" with bonds or other securities which the cannot pass on to investors. Frequently, another corporate entity is created by the issuer as a middleman between the investment bank and underlying issuer. I hope this will allow you to see why the identity of the person writing the initial check is meaningless for any purpose of analysis. Some how I doubt it, however.

Companies leave or enter the S&P 500 as the become or cease to be one of the 500 largest companies in the US. As that happens, the stock prices of those companies rise and fall according to whether they are in or out of the club because of buying by index funds. Because of this, While they are in the club, member can sell their stock on better terms than they otherwise would. None of this is disputed by intelligent people.

No one claims that the sole determinant of business success is membership in an important stock index and, probably, it will be possible to succeed or fail regardless of whether your company's bond are eligible for purchase by the ECB (at least for a time). But debt is different than equity and it seems to me that unlimited debt financing will have a more powerful effect. If you are outside the club and competing with a firm within the club, your competitor will always have lower costs of capital and that difference goes directly to the bottom line.

Moreover, it is an advantage which is "scalable" and unlimited. Indeed, the more scalable it is the more successful the policy from the ECB's stand point. It will be easy to star this program, will it be easy to stop?

The problem I have with your first paragraph is that financing is done when the bond is issued. Nestle issues $100M worth of bonds. After working with its investment bank, it issues, say, bonds with a face value of $110M and receives $100M in funds. At that point financing is done. As the bonds are eventually sold to the general public, all that happens is the owner of the IOU changes hands.

For example, suppose the IRS freezes the assets of someone for tax fraud. They discover he happens to have $1M of Nestle bonds in his account. Because he owes so much, the US Treasury takes ownership of those bonds. If those bonds are due, Nestle owes the US government $1M in cash. But while the US gov't owns $1M of Nestle bonds, it's deceptive to describe this as the US gov't 'directly financing' Nestle. The US gov't didn't decide to give anything to Nestle and Nestle has no advantage just because some of the bonds ended up in the hands of the US gov't.

Now several times you made the claim of 'unlimited financing' but that simply is not how QE works. Unlike interest rate setting, QE works by making asset purchases from the market. For example, the CB may say they will buy $50B every month. That is not at all that different than 401K funds buying $50B each month via index funds. In both cases the companies are not going to directly benefit from the purchases but instead those selling (or actually those who receive the demand from the proceeds of the sales).

What would happen if a company like Apple decided to take advantage of 'unlimited financing' from either QE or just regular 'automatic' 401K style buys? Well as Apple starts issuing more and more bonds (or stocks), the quality of those bonds (or stocks) will be questioned more and more by the market...esp. the question of whether Apple could put that cash to good use generating high returns to pay back bonds or dividends on stocks. As those questions mount, Apples stock price or bond prices will start to fall. As they do, the 'benefit' of the automatic purchases will also fall since Apple's weight in the index will fall. This wouldn't be a free money machine for Apple anymore than the automatic deposits people do in their 401K's is free money for publically traded firms.

And that is the point, the goal is to lower overall interest rates in the hopes that will spur lending for investment and consumption loans...not to simply let a few large firms borrow a bit more cheaply (which they probably wouldn't do since they probably already have sufficient cash on hand). That doesn't happen if all the impact of the QE purchases are isolated in just the market for a few company's bonds. And again that is the point, financial markets are very liquid, the people selling their bond holdings are doing so because they want to move the money elsewhere and that means a lot of diverse places which means the impact is on overall interest rates, not particular.

Now you would have a point if QE was done as price setting for an individual firm's interest rate. Suppose the CB said that it wanted Apple to enjoy 0% interest. In that case it would not be doing $50B a month of QE, it would be doing however much QE it needed to force the price of Apple bonds to 0% (or it might have to turn around and sell Apple since in a world of negative interest rates a well run company like Apple might 'naturally' have a negative rate). That would indeed favor Apple over other companies.

Look, in the finance and accounting industry a person has made a "direct investment" when the person is the owner of a security regardless of whether the security was purchased directly from the issuer (which never actually happens) or not. Sorry, but that's just what that term means. We don't have a term which refers to the the person that initially purchased the security after issuance (other than "investment bank") because nobody cares. If the government takes securities to satisfy a tax debt the government has made a direct investment until it can sell the securities.

It is probably true that if ECB's bond purchases were small enough in terms of volume, or the program ended quickly enough, or bonds available for purchase were plentiful enough, if the market were deep enough, none of this would matter much. But none of those things is remotely true. Previous programs have failed despite driving high quality Euro sovereigns into negative rates. Some high quality European corporates have already traded in negative territory. How can anyone think the Euro bond market is deep enough to handle "bazooka" level QE when they are already at negative rates before the program starts?

In part, I say the financing is unlimited because the program won't work at all otherwise. If the big euro area companies don't get an interest rate differential they won't have any reason to borrow more than they are right now. Demand in the euro area is not strong enough to justify more. But as long as the ECB stays in place there is no limit to their ability to borrow.

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Isn't it more a question of who owns the bonds now? Granted, these companies get cheaper financing (although with European rates, the financing is pretty damn cheap), but the current holders get the price bump and the liquidity.

Then again, the liquidity is a double-edged sword when your bank charges you for deposits. They are likely to recycle into the $US market.

Wheels within wheels....

Yes, current bond holders should receive a nice payday but they can only collect by selling and they can only do that once (for each bond the hold).

It seems to me that there is very little reason to believe that this will be a temporary, short term, emergency measure. Japan is now working on its second "lost decade" and the rest are only two years away from completing their first. The ECB's interventions in the market are only becoming more extreme which, to me, implies the situation is becoming worse, not better. It seems to me that it would be prudent to ask about the long term effects of this policy. It seems likely that the policy will be in place for a long time.

Errr no bondholders don't get a 'nice payday'. If you are a bondholder who happens to want to sell the day the CB is buying you are no different than a bondholder who happens to be selling the day before or the day after.

You obviously don't know what you are talking about. The issue under discussion is not the day to day timing of ECB purchases (although their is some evidence that traders have been successful "gaming" the timing of ECB purchases of sovereign bonds). All holders of the favored bonds will benefit regardless of the particular day they sell.

Why, exactly, do you think the ECB is instituting the policy in the first place? What is the purpose of doing so if not to lower interest rates and raise bond prices? The entire point of the QE to this point has been to raise the bond prices of eligible paper. It is no accident that bunds almost out to 10 years now trade at negative rates. There are only two reasons to buy a negative yielding bond- you either are required to by law, or you hope to book a capital gain at some point to compensate you for the negative rate. So, yes, the policy is a payday to the people who hold the newly eligible paper today.

The purpose is to increase demand. The idea is to increase demand by creating money. Short term you can just toss it out of a helicopter and let random people have it but that creates a long term problem because if you ever need to destroy some of that money, how do you get it back?

Solution: Buy something with value instead of just handing it out, then if you ever need to take money out of the economy you can do so by simply selling it.

In theory you can buy anything but financial securities are good because they are easy to quickly sell in large amounts while other things like real estate, classic comic books, cars etc. can be tricky to sell.

The thing you buy, however, shouldn't really matter since you are simply taking over the position of someone who is selling. That someone is selling because he wants to do something else with the money so the actual demand created is almost certainly going elsewhere.

"here are only two reasons to buy a negative yielding bond- you either are required to by law, or you hope to book a capital gain at some point to compensate you for the negative rate -"

Well another reason is you have a lot of money and you are very scared of losing it so you'll take a small negative return in exchange for the security of knowing you will not see any loss larger than that.

They are already throwing money out by deficit spending. The QE schemes have simply been a mechanism to keep borrowing costs of government low enough to not jeopardize the policy preferences. That mechanism now only buys more bureaucrats and pension payments and rent seekers so they are extending their magic touch to the rest of the market.

This is desperation expressed in central bank policy.


Yes, in very broad terms you have correctly identified the nominal purpose of the policy. Please note, however, that the (unintended?) consequence of the policy will be to make the owners of certain large European companies very, very much richer than they were before. Doesn't that seem like a significant fact?

No way to really prove that is there Bmcburney?

Consider suppose the policy causes increased demand resulting in lower unemployment, higher GDP without increased inflation. That would mean people would have more income and buy more stuff. Who makes stuff? Companies and very large companies make a very large portion of the stuff people in an economy buy (that is presumably how they managed to get so large, no?!).

I'll make a prediction, you're not going to find much of a correlation between the prospects of large companies with and without lots of debt before and after QE. If your theory is correct, companies that get most of their capital from debt markets will have an advantage over those that use equity markets from QE. In fact if you're sophisticated and have access to capital you could do a hedge fund that buys shares of debt companies and shorts shares of equity ones and make a nice profit on the increasing spread if I'm wrong.

My prediction is that either the program will fail altogether or it will make the owners of large European companies much richer than they are. Of course, both failure of the program and an increase in inequality are possible. However, the "success" of the the program requires that the Euro-rich get much richer.

The prediction will be proven or disproven by events over the next six months to one year.

Don't worry. They will soon move on the lower rated debt, and then equities (which probably starts now as companies will respond by issuing debt to buy back stock in Europe, too).

Yes, it is total fucking insanity, but it now passes as thoughtful policy.

I can't even imagine the end point of this stupidity. The determined and consistent message is that capital is not worth anything. If you rent it out it costs you, and if you insist on getting a return we will underprice you with freshly printed cash.

If the market goes along, it means one of two things; that these financial assets are actually worth far less and a slight negative rate is better than a haircut, or the Chinese gambit where 'stimulus' of 'quantitative easing' or whatever magic phrase du jour simply means that someone is buying my trash, I cash out and surreptitiously move my cash somewhere else.

I suspect the current war on cash has something to do with the second. Revenue collecting bureaucracies have a very distinct finger on the pulse of the economy seeing the flows of revenues surge and egg and I suspect they are seeing something like the second scenario already.

Price fixing schemes collapse when a secondary underground market emerges that better represents reality. Some smart young economist will define his/her career by documenting the stages of collapse and coming up with a better description than 'fucking insanity'.

Ebb. The stagnation in comment editing continues.

Egg is probably more appropriate in certain interpretations.

It is interesting that Draghi seemed to indicate that one had seen the "last" rate cut. I suspect the ECB has already had some indication from the banks themselves that they were nearing the limit of what could be done in a system where normal physical cash in a vault was still an option. The trial balloons of the last couple of months about removing large denomination bills are almost certainly being floated as a way to move that tipping point even further into negative territory.

It isn't hard to look out into the future and see the funding gaps the governments of the developed world have. The rational response might well be to decide that productive investment in the future beyond a year or two is pointless since one won't benefit from it anyway- those promises must be funded somehow. A large part of the world has always operated, and still, under that principle. The last couple of centuries in the developed world may well be the exception.

Money, not capital. The goal is to incentivize turning financial assets into real capital assets.

So another one of these 'lets make everyone poorer so we can all get rich' schemes. Should work as well as every other one.

Your comment that the US should not have this problem is interesting.
Especially as the quality spread between treasuries and corporate yields have been soaring recently Of course, historically, quality spreads move in lock step with capacity utilization and that has also fallen in recent months.

Nestle's bonds have already traded at negative rates (I don't know if they still are). If the ECB buys bonds at negative rates how is the "interest" on these bonds not a direct subsidy to a private company?

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