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
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
