The Banking and Strategy Initiative

Chillin' out till it needs to be funded

Der Zu Kurz Verkauf Ordnung | Advantage Research

Germany orders a ban on short selling

Euro is now spiralling down to probably 1.06 probably even breach parity like the days when it was launched as Germany tries more proactive measures to control the panic against German and European assets. There are a couple of problems with that:

a. The ban on short selling in Germany, makes global investors as a class, fidgety and nervous without hope of hedging their bets during an uncertain market. The problem however is also that such restrictions do promote a level of confidence among holding passive investors and domestic investors as a class worried about the assymetric flow of information may defend their pet assets and thus their economy.

b. Europe’s plans to create a monument for the Euro with the DNA structure inside a 1920s Trade buillding under preservation, is the kinfd of shock the may set a domestic agenda that thrives on saving other lost causes if carried out during this weak period of the Euro and lays bare the German investor to a Global investor class in  turn scared and isolated by the assymetric flow f information around such convoluted signals to the market makers.

c. Following the ban on short selling other smaller nations in the Euro are likely to follow suit and the same panic is going around 14-15 different markets which can choose actions at thier own times instead of doing it together, prolonging uncertainity and lending shallow any hopes of a Euro surviving, if such a question ever arises

d. Market wide circuit breakers and other global regulations should have been in place earlier. Now they will be open to more misuse during a learning curve for the domestic participants and the hot money managers that have an extra parameter to use for constructing arbitrage shallows

e. The Euro zone and UK have also banned naked shorting earlier and withdrawn at behest of participants. Additionally, even if German markets do not allow naked shorting or shorting per se, the volumes will shift to markets in London and Paris, creating bigger whirls for the ‘perfect storm’

[Tag Germany, Financial Markets, Europe, Euro, Stuck, Kauf, Verkauf, Ordnung]

[Topics Financial Markets, Deutsche Borse, Europe, Euro]

One comment on “Der Zu Kurz Verkauf Ordnung | Advantage Research

  1. home mortgage loan VJ
    May 25, 2010

    Hi,
    I enjoyed visiting your blog site and reading your interesting posts. I look forward to reading your future articles.
    thanks,
    Vincent James – VJ Global

    Like

Comments are closed.

Information

This entry was posted on May 19, 2010 by in Banking, Financial Markets, GDOW, Global and tagged , , , , .

Archives

%d bloggers like this: