Companies Borrow Lots Because Central Banks Want Them To

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The Observer has one of those woe is us, how dreadful capitalism is oh dearie me pieces. Well, what do you think the paper’s for if not that? The complaint today being that companies are borrowing a lot.

Well, yes, that was the point of quantitative easing, wasn’t it? So that people would go and borrow a lot? That’s why interest rates were driven down through QE:


They wonder why corporates have refused to follow ordinary consumers and rein in their borrowing. Consumer borrowing as a proportion of GDP remains well below pre-crisis levels across the OECD, the 34-member club of rich nations. That’s not the case for corporate borrowing, much of which is done through the bond market rather than directly from commercial banks. Earlier this year the OECD said companies from developed-world economies had seen their outstanding bond debts rise by 70%, from $6tn in 2008 to $10.2tn in 2018.

That companies do exactly what the authorities would like them to do, encouraged by the policies enacted by those authorities? This is an indictment of capitalism now?