The “whatever it takes” economy is progressing nicely around the world, with governments and central banks doing things that no 20th century economist would have viewed as possible, let alone wise.

Now the question becomes, where does this process hit the wall first? Based on recent events, Europe is looking like the best bet. Consider the European Central Bank’s use of taxpayer money to buy not just junk bonds, but Italian junk bonds:

(Bloomberg) – Since a surprise interest-rate cut at his first meeting as European Central Bank President, Mario Draghi has shown a penchant for pushing the envelope.

While the ECB is subsidizing badly-run companies, the peripheral eurozone countries that can’t function in a strong currency regime are lobbying for a massive welfare program of their own:

France Leads Call for Spending in South to Remake EU Post-Brexit

(Bloomberg) – The fight is on for what shape the European Union will take in light of Brexit, with economies great and small jockeying for a say. After Germany’s Angela Merkel made a diplomatic push to solicit ideas last month, the seven southern nations are trying to increase their leverage at next week’s key summit in Bratislava that will chart a roadmap for the 27-nation alliance minus its second-biggest economy.

Their common demand is for a doubling of an investment plan that at the moment stands at 315 billion euros ($353 billion) over a space of three years and “more ambitious initiatives” for jobs for young people.

In an allusion to the EU’s tight budgetary corset, Renzi stressed that “we are in a phase in which Europe cannot keep being just rules, technicalities, finance and austerity.”

Central banks buying even high-grade bonds was, not so long ago, seen as a risky and experimental departure from commonly understood practice, something to do temporarily in an emergency. But a central bank buying junk bonds (and equities, as the Japanese and Swiss banks have been doing) is something altogether different because it changes the nature of the marketplace. In a functioning capitalist system, badly run companies aren’t just expected to fail, they must fail in order to show everyone else what not to do. But give the worst-run firms effectively-unlimited funds and they’ll continue to limp along, expanding their dysfunctional business models and generally making it impossible for their competitors to know what does and does not work. The result: even more misallocated capital and – soon — an epic bust.

It’s not as obvious why the second development – the end of austerity and beginning of a massive transfer of wealth from Germany to Greece, Italy, et al – is such a bad idea. It might not have been a decade or two ago. But today most European governments carry record levels of debt and the ECB’s balance sheet is multiples of what it was at the dawn of the euro.

Ramping up borrowing and spending now is just adding to an already crushing burden, guaranteeing that interest rates can never be normalized (because everyone’s debt would have to be rolled over at higher rates, causing interest costs to skyrocket). Here again, the credit market’s price signaling mechanism is paralyzed, with eventually-catastrophic results.

Last weeks’ bond market turmoil may or may not be a sign that we’ve hit the inevitable wall. But that’s what it will feel like when we do.