Germany Bans Short Selling In Bonds

Discussion in 'Index Futures' started by THE-BEAKER, May 19, 2010.



    Germany banned risky bets on bonds, stocks and credit protection, stunning investors and setting euro zone markets up for a rough ride on Wednesday amid fears Berlin's attack on speculation will backfire.

    Germany banned some trades in a strategy known as short selling to fight financial speculation, which it blames for much of Europe debt crisis. Analysts said, however, the move could do more harm than good, draining funds away from the euro zone and deepening risk aversion.

    Some called it an act of desperation.

    "Germany just switched off the financial lights in Europe," said a senior forex trader at a European bank in Singapore.

    Germany's lack of coordination with any other countries, including euro zone members, underscored how the measures may backfire and so unsettle, rather than calm, markets already nervous about the debt crisis, analysts said.

    "Germany's announcement ... dented risk appetite as it raises the question as to whether the German regulator knows something the market doesn't," Rabobank said in a note. "If there is a secret here, it can't possibly be a positive one."
  2. On the one hand, they want to reflate.

    On the other hand, they don't want to allow bets on rising interest rates.

  3. good thing Anthony Boeckh's new book arrived from Amazon today "the great reflation"
  4. bone

    bone ET Sponsor

    Doesn't really matter - the pussies wouldn't let us Yanks have access to EuroMTS anyhow. Besides, easier just to pound the snot out of the Bund anyway.
  5. Merkel = noob