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Opinion
Jim Bianco

The ECB Proves Central Bankers Are Bad Capitalists

The Corporate Securities Purchase Program has distorted the cost of money, allowing companies to make questionable decisions.

The European Central Bank is fostering some questionable corporate decisions.

The European Central Bank is fostering some questionable corporate decisions.

Photographer: Daniel Roland/AFP

The global synchronized economy recovery has turned into a global synchronized economic downturn. The outlook seems to be getting bleaker by the day, and major central banks are hinting that they may need to keep monetary policies loose. The European Central Bank has even suggested that it could start buying corporate bonds again. Let’s hope it doesn’t come to that because it’s becoming evident that central bankers make for bad capitalists.

Consider Germany’s AG Bayer, which agreed to buy Monsanto in May 2016 for $66 billion in what was then the largest all cash merger ever announced. The deal was controversial from the start as Bayer was going to need to raise billions of dollars. Traditionally, this means a company must go on a road show and explain its plan in great detail. Without evidence of a credible plan, capitalists will not part with their money.