German television reports that the German Finance Minister instituted a short-selling ban on pretty much anything you can short sell in German starting this morning at 12:01 local time. And when I first heard about that the blood just drained from my face. Seriously, WHITE AS A SHEET. I looked like a Red Cross drive gone horribly wrong.
This is a desperation move to top them all, folks, and basically means that, in overnight action tonight, everyone who's holding German assets--be they stocks, bonds, or anything else--long is probably going to dump them while it's still possible to dump them.
What this effectively does is signal to those investors who are watching that something is either very seriously wrong, or is ABOUT to be very seriously wrong, and they don't want people to profit from that particular disaster upcoming by selling short various German assets.
Looking at the situation, it's no wonder they'd want to make such a move. Germany may well be the only truly solvent superpower left in the entire European Union, and considering they're surrounded by a whole metric ton of nations with death on their books (you'll note that all the SUKPIG nations are European), the possibility of Germany being pulled into a death spiral by a whole bunch of catastrophies is unsettlingly high. Most of Germany's market partners are debilitated in some way to boot, so that's another mark against them.
Some are saying, however, that it's only NAKED shorting that's being banned here, and if so, that's a slightly different matter. In naked short selling you're not required to borrow the security first. But the announcement itself suggests that it may (at some point) be a lot more than that, and if that is the case, then German issues of any type are going to be in a bad, bad way soon.
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