Central banks, which are owned by the state, are going to end up controlling huge swathes of private industry.
by Matthew Lynn
Would you feel comfortable lending money to the mining conglomerate Glencore, a company which only last year came perilous close to imploding? Or Telecom Italia, with its massive exposure to the weakest major economy in the world? Or to Lufthansa, a lumbering beat of an airline just waiting to be eaten alive by new and aggressive low-cost carriers?
Well, perhaps you would, and perhaps you wouldn’t. If you are part of the eurozone however, you don’t have any choice.
This week we learned that the European Central Bank (ECB) has been buying bonds in all those companies as part of its latest round of quantitative easing. It is far from alone in pumping money directly into corporations.