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Europe
Germany's 'desperate' short ban triggers capital flight to Switzerland
2010-05-21
A year ago, Germany's financial regulator BaFin warned that the toxic debts of the country's banks would blow up "like a grenade" once hidden losses from the credit crisis caught up with them.
€9.5bn flowed into Swiss franc deposits in a matter of hours on Wednesday morning
An internal memo at the time showed that BaFin feared write-offs might top €800bn (£688bn), twice the reserves of Germany's financial institutions. Nobody paid much attention. But the regulator's shock move on Tuesday night to stop short trading on banks, insurers, eurozone bonds -- as well as a ban credit default swaps (CDS) on sovereign debt -- has left markets wondering whether the slow fuse on Germany's banking system has finally detonated.

BaFin spoke of "extraordinary volatility" and said CDS moves were jeopardising "the stability of the financial system as a whole". It is unsettling that the BaFin should opt for such drastic measures a week after EU leaders thought they had overawed markets with a €750bn rescue package and direct purchases of Greek, Portuguese and Spanish debt by the European Central Bank. BaFin's heavy-handed move seems to proclaim that the rescue has failed.
Posted by:lotp

#9  "But the regulator's shock move on Tuesday night to stop short trading on banks, insurers, eurozone bonds -- as well as a ban credit default swaps (CDS) on sovereign debt"

Both is untrue or at least uncorrect. Only naked shorting was banned, and only CDS on sovereign debt by people who don't hold any debt titles.
Posted by: European Conservative   2010-05-21 18:59  

#8  Let's form a circle and whine, buy gold it's divine.
Rube a little behind your ear and soon you'll find a gal!
History teaches us that gold is all you need for a fine fertile life. Listen and read your history. GOLD! GOLD! GOLD!

Documentary feds don't want you to see:


Posted by: Shipman   2010-05-21 17:40  

#7  Well Switzerland it is then, but watch out for the plum trees.
Posted by: tipper   2010-05-21 17:01  

#6  Know it well. If I didn't have a family I'd be there, but the air is so terrible that it's not a good place for small children to grow up. All the Russians with significant cash send their kids abroad to school.

It's kind of like a slow-motion nightmare in which up is down, black is white etc: the US has a shrinking middle class and declining financial security; Russia's middle class is growing and security's increasing. The US has deep and seemingly irreversible structural fiscal deficits, which are growing; Russia's fiscal health now is good and getting better, with rising surpluses. US demographics are steadily tilting toward Mexico's, with a massive and growing illiterate underclass of imported campesinos; Russia's demographic catastrophe has been halted and now shows signs of reversing, with a population that has a literacy rate far above America's and a tough no -BS attitude toward immigration of unskilled, uneducated workers from third world nations.

But Russia is completely dominated by oligarchic criminals and has a criminalized state with no rule of law. Our government is merely clueless, incompetent, and only mildly corrupt. Hooray!
Posted by: lex   2010-05-21 14:30  

#5  I've been considering Switzerland, too. I don't think we're particularly safe here,
Lex, maybe you should consider Russia instead.
Posted by: tipper   2010-05-21 14:19  

#4  Never thought I'd say it but living in the US these past few years has made me into a pessimist. Lex

Watching the goings on in Washington will make anyone a pessimist.
Posted by: Besoeker   2010-05-21 06:31  

#3  Â€9.5bn flowed into Swiss franc deposits in a matter of hours on Wednesday morning

I've been considering Switzerland, too. I don't think we're particularly safe here, either.... Wouldn't be all bad to live in a prosperous, northern, no-BS, hard-currency nation surrounded by a barrier of towering mountains.

Never thought I'd say it but living in the US these past few years has made me into a pessimist. It feels wrong. Un-American. But if America's abandoned me, maybe it's time to abandon America.

Posted by: lex   2010-05-21 01:41  

#2  He said the CDS ban deprives reserve managers of a crucial hedging tool for non-securitised loans

Yeah. Naked short-selling.

It's nice how this whole thing is Germany's fault now. Nobody breathes a word about how an EU socialist government spent like a drunken sailor and now expects others to pay.
Posted by: gromky   2010-05-21 01:00  

#1  Let's get a chant started:

Deutsche Mark! Deutsche Mark! Deutsche Mark!
Posted by: Barbara Skolaut   2010-05-21 00:18  

00:00