Super-low interest rates. What are they good for? I think the answer is now clear. Nothing. They are bad for big companies. They encourage them to issue far more debt than they need. That's been nice for them in the short term they can use cheap money to buy back their shares, pushing up share prices and paving the way for executives to get nice bonuses. But it won't be nice in the long run.
As Societe Generale's Andrew Lapthorne notes, big US companies are now horribly "overleveraged". So much so that he reckons it is reasonable to ask: "are central bank policies going to bankrupt corporate America?" Secondly, they push up pension deficits and cripple company cash flows (the lower rates go, the higher deficits go). A nasty pension deficit has been one of the problems dogging Tata Steel's UK operations, and CEOs across the country will tell you that they can't invest in their corporate future because all the cash goes to the pension scheme.
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