Has Germany Gone Postal?

The news that Germany will ban certain types of short-selling is causing confusion across the globe and one has to  wonder if German leaders have cracked under the pressure of the current crisis.

The moves announced by Germany make so little sense that one has to think that German leaders have gone postal by carrying weapons into the financial markets and that they will shoot everything up in sight, until they can be stopped.

Aside from the fact that the short-selling and naked short-selling banned by Germany does nothing but make markets less liquid, it is bizarre at most other levels in that it does not appear to be a co-ordinated move with other EU members, which means much of the activities banned in Germany can simply be conducted through other EU locations.  If this move does anything, it hurts German money center banks as it puts them at a distinct competitive disadvantage.

Merkel's attempt to appease the banksters by agreeing to bailout Greece and beyond has had the expected negative impact on her popularity in Germany, as evidenced by the recent defeat by Merkel's party in the elections just held in North Rhine-Westphalia. This coupled with the news that Merkel was intimidated into the PIIGS  bailout by the fist pounding friend of the banksters, French President Nicolas Sarkozy (His half-brother, Olivier, heads the banking division at Carlyle Group), has clearly caused Merkel to go into an unthinking emotional action mode, the ultimate ramifications of which are not yet clear.

At this moment, rumors are circulating that the EU will announce later today that they will join the German Chancellor, and make the ban Eurowide, while at the same time FT reports:

The French government on Wednesday led European reaction against the German government’s move to ban the naked short selling of eurozone sovereign debt instruments.

Christine Lagarde, French finance minister, ruled out a similar move by France and called for an urgent meeting of European securities regulators to discuss the implications of Germany’s unilateral ban.

Sweden and Holland also dismissed the move by Germany as European equity markets tumbled and the euro hit a fresh four-year low against the dollar following the German announcement.

Thus, the picture remains very unclear, outside of the fact that German leaders rampaging through the financial sector have made an unstable situation even more unstable.