Pakistan, Oct. 2 -- For more than a decade, the world developed an unusual tolerance for bad decisions.

A company could overpay for an acquisition and wait for growth to rescue the valuation. A property developer could buy land without immediate cash flows and refinance while prices caught up. Governments could approve projects with questionable economics, roll over debt and leave the real cost to another budget. Investors could fund businesses that promised profitability somewhere in the future.

Cheap money did not make these decisions good.

It simply gave them more time to avoid looking bad.

That era is giving way to something less forgiving. Short-term interest rates have begun easing in several economies, but the cost of long-term...