jefftheshark

Okay, the title is somewhat of a bold statement, but the unilateral actions Germany took today are sending some serious shockwaves around the globe tonight.

We are certainly living in interesting times.

This is from Jesse's site:

Link

Merkel to The Banks and Hedge Funds: Sprechen Sie Deutsche? Then Droppen Sie Dead

There is much surprise that the German government has declared a ban on naked short selling, including CDS, as of midnight tonight, with no prior notice and the courtly deference demanded by the Banks when government chooses to regulate them. This action seems to have perturbed some and confused many.

The reason for this may be quite simple.

After tonight, when hedge funds and The Banks call upon German financial firms and European governments to make payments on Credit Default Swaps or other financial instruments that are subject to the ban, the Germans will have a rather large hammer in hand to help them to negotiate the terms, and respond to any threats and coercion.

Since the CDS will be deemed to be no longer legal, the opportunity to default on them with the backing of the government may be an option. This seems quite similar to the stance that the Chinese government took on behalf of some Chinese firms that were caught on the wrong side of energy derivatives.

I have heard from several sources that there was a general disappointment in Europe and in some parts of Asia at the lack of progress being made in the US Congress towards creating meaningful reforms in their financial system. In fact, there is a widespread belief that Washington is being dictated to by the Banks, and that their lobbyists are directing the conversation, and in many cases writing the actual legislation. The final straw was when the Obama Administration itself sought to water down and block key provisions of the legislation to limit the power and size of the Banks.

It's ugly in Asia tonight (at least so far) and we already saw the Street's initial reaction today.

Keep an eye on your stops, gentlemen.

JTS

RugbyMuffin

In fact, there is a widespread belief that Washington is being dictated to by the Banks, and that their lobbyists are directing the conversation, and in many cases writing the actual legislation. The final straw was when the Obama Administration itself sought to water down and block key provisions of the legislation to limit the power and size of the Banks.

I agree with that belief, but beyond that I have no comment. I have read a bit about this, this morning, and I am still trying to swim to the surface. My GOODNESS, there is a lot of mumbo jumbo wording in the finacial world.

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CaptTurbo

Germany declares war every 50 years and they are way overdue so it makes sense.

conraddobler

That's EXACTLY what Denniger advocated governments do, void the contracts.

Good to see someone, somewhere has a spine, the ultimate hammer belongs in the hand of the people, WE are suppossed to run society for us, not for governments, not for bankers.

The mumbo jumbo boils down to this.

Think of governments as Darth Vader, the people are Luke, the financial masters of the universe are the ugly scary old guy who shoots lightning bolts at you.

Luke is taking it hard from the old guy, up until now our Darth is just standing there, no, really has enabled the situation, Germany's Darth just went judo on the old guy and is in the process of looking like he might enter the fight on Luke's side, we'll see.

We're waiting on ours.

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82CardsGrad

Don't hold your breath...

Cardinals.Ken

You mean this guy?

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Russ Smith

What I don't get is they keep saying Germany banned NAKED shorting of the banks and other things, but I keep seeing articles saying shorts a key part of the market Germany's actions are terrible. They didn't ban shorting, they banned naked shorting which is a whole different animal?

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conraddobler

I think in essence they are saying the writing of new swaps on CDS contracts amounts to naked shorting or can.

The only problem with naked shorting is that you have to cover if a short covering rally starts you could be trying to buy back shares that don't exist.

Well in this case these are synthetic contracts, these are based on the item being targeted but they are not the item itself and their creation is unlimited, and thus the mechanics begin to mimic almost exactly naked short selling.

Germany I think basically said if you want to enforce one of these newly minted things you have to go through it first and if it deems it to be illegal, it's void.

Without government enforcing the contract the scheme breaks down.

Our government being captured means it's still enforcing these shams, through it's enforcement of binding contracts, if you take that away, then it's useless again.

It really does go to the heart of who's in charge, the people through government as an extension of itself or the financial sector using the same government legality shield to enforce it's contracts.

These are not contracts that have any real social utility, they are in essence printing powers reserved to specific instruments.

These IB's are not allowed to print actual bank notes but by doing this they are in essence printing value of some kind IMO.

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When written in Chinese, the word "crisis" is composed of two characters. One represents danger and the other represents opportunity. John F. Kennedy

jefftheshark

This guy was worried until he realized - What the hell, I'm not German.

JTS

conraddobler

Eye bleach!

I just think if we can figure out how to make certain peoples face be his "chair" we can solve a lot of problems

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When written in Chinese, the word "crisis" is composed of two characters. One represents danger and the other represents opportunity. John F. Kennedy