ECB – If You Buy It, They Will Build It

ECB - If You Buy It, They Will Build It by Cook & Bynum

The European Central Bank seems eager to buy debt almost without discretion – or at least without the discipline to stick to its self-created safeguards. This lack of caveat emptor is likely to create a selection bias where the ECB lends money to precisely the wrong companies, reminiscent of liar loans during the housing crisis. How will the ECB handle the inevitable corporate defaults? Will it take ownership? Will it extend and pretend?

ECB

The European Central Bank’s corporate-bond-buying program has stirred so much action in credit markets that some investment banks...