It appears that yesterday's unilateral declaration of war by Germany on "naked" short selling, which predictably sent the Euro tumbling, was rather more of a cock up than first thought.
Stephanie Flanders reports that Bafin, the German regulator, allowed news of the ban to leak on Tuesday, before the Germans had been able to brief other governments.
Suffice to say, such cock ups will not inspire confidence and the Euro will doubtless take another battering.
Indeed the whole exercise, as the Telegraph notes, has been somewhat pointless:
"The practical effect of the German ban is virtually zero, as these markets are largely based not in the eurozone, but in London, New York and Hong Kong. What's more, the new BaFin rules are so riddled with exemptions as to make the whole exercise meaningless."
I would emphasise that markets are not rational, but operate on three fundamental principles:
- Greed
- Fear
- Momentum
All that Germany has achieved is to scare people, and enhance the momentum towards selling off the Euro.
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