BanFin Announces Details of Its Naked Short Sale Ban

Blow is a translation of the full announcemnet made by the German finance regulator BanFin.

BaFin banned naked short sales and unsecured CDS on government bonds in the euro zone

The Federal Financial Supervisory Authority (BaFin) on Tuesday naked short sales of debt securities by euro zone countries, which are admitted to trading on a domestic exchange in the regulated market, temporarily prohibited. it has also temporarily banned so-called credit default swaps (CDS), where the reference obligation is a liability, at least one country of the euro area and they do not serve to hedge risks (unsecured CDS).

In addition, the BaFin naked short sales of shares of the following companies in the financial sector has not:

    * AAREAL BANK AG
    * ALLIANZ SE
    * COMMERZBANK AG
    * GERMAN BANK AG
    * GERMAN EXCHANGE AG
    * GERMAN Postbank AG
    * GENERALI HOLDING AG Germany
    * HANNOVER REINSURANCE AG
    * MLP AG
    * Munich Reinsurance Company AG

These prohibitions apply from 19 May 2010, 00:00 clock, 31 March 2011, 24:00 Clock, and will be reviewed.

Market Tanking on News...

Germany will ban naked short-selling from midnight in shares of the country's 10 most important financial institutions, the  Finance Ministry said. The ban will also apply to credit default swaps on euro government bonds.

The world is spooked.

Ban on short-selling in financial institutions suggets someone is in trouble.

Also confusing news on extent of ban, causing fears.

Sarkozy Threat to Leave Euro Was a Bluff

Drudge is blasting with this headline:

PAPER: SARKOZY THREAT TO PULL FRANCE OUT OF EURO

Here's what really went down:

Spanish Prime Minister Jose Luis Rodriguez Zapatero told his party members that France, Italy and Spain had formed a united front against Germany at the Brussels meetings and that Sarkozy had threatened to break up a traditional France-Germany "hold" on the rest of Europe, according to El Pais...Another source present at the meeting between Zapatero and his party members and cited by the paper said: "Sarkozy ended up banging his fist on the table and threatening to leave the euro...This forced Angela Merkel to give in and reach an agreement.

If anybody ditches the euro, it's going to be Germany moving first, not France.

Rumor: Germany to Ditch Euro and Return to Mark

From The Prudent Investor(ViaZH)

A web page of precious metals prices provider Kitco.com has sparked rumors that Germany will leave the Eurozone and reintroduce German Marks, sending gold to a new record of $1,244 and silver to a multi-year high of $19.64.

It is this half-ready page shown below that has created excitement as it lists precious metals in Deutschmark units.

German website Silber.de had another market-sparkling comment from a forum participant who said goldprice.org has reintroduced a DEM option since about a week. Check it out here.

And there is still more material feeding the rumour. German leftist politician Gregor Gysi announced on TV that there may be an important announcement  to be made on Friday.

That this rumor has added more fuel to the gold run just shows how confused markets  are right now.

Folks, Germany returning to the mark is bearish for gold. The German mark would be viewed as an island of stability. The flight from the euro and gold into the mark would be spectacular. German bunds remain a short-term play on this scenario.

I Think the Play Is In German Bunds

Germany is not going under and if the euro is buried. A new German mark will quickly become a world currency in great demand.

Bunds with a hedge short on the euro locks in the Germany survives play. If you have balls and don't think the ECB will go nuclear and hit the euro money printing machine, then skip the hedge short.

Huge Bets on Euro Core Zone Meltdown

There was a stunning $630 million, $558 million and $370 million in net notional derisking last week. Huge negative bets were made on France, UK and Germany, not just in sovereigns but in all names, reports ZH.

The greatest non-sovereign derisker in the last week? Goldman Sachs, with $175 million.

This is extreme panic, worse than September 2008, when the money market Reserve Fund broke the buck.

It is quite possible the PIIGS don't survive without default, but the UK isn't going that route. The UK is in a completely different situation. It controls its own money so it can print its own way out of their debt hole. This is very inflationary, but it is likely what they will do, rather than default.

Further,  there is also no reason to bet against private triple A German debt. The German economy will survive.

Crisis breeds opportunity. Stay alert.

Will Germany Ratify the Greek Bailout?

There is no question that international banksters are in high gear. They are pushing Greek legislators to ratify the agreed to Greek bailout. Will they buckle to the pressure? The bailout is hugely unpopular in Germany, but legislators of late appear to buckle when pushed by global banksters, even if it ultimately means the legislator losing office.

European Central Bank council member from Germany Axel Weber, who from time to time has displayed some ability to understand basic economics is clearly all in with the banksters, when it comes to the bailout. He said Greece’s fiscal crisis is threatening “grave contagion effects” in the euro area, justifying Germany’s contribution to a 110 billion-euro ($142 billion) aid package.

“There is a threat of grave contagion effects for other member states in the monetary union and increasing negative feedback loop effects on capital markets,” Weber said in a statement today as German lawmakers in Berlin debate the proposed rescue of Greece. “All in all, Germany’s contribution to the aid package for Greece is justifiable.”

The warnings of contagion are true enough, but why is it Germany's duty to bailout the PIIGS out? Defaults by these governments simply mean the banksters take the hit instead of the German people.

Another tool of the banksters, German Chancellor Angela Merkel appealed to parliament to approve Germany’s 22.4 billion-euro portion of the joint European Union- International Monetary Fund bailout amid public opposition.

“Weber is worried,” said Juergen Michels, chief European economist at Citigroup Inc. in London. “He knows that if Germany doesn’t ratify the Greek aid plan rapidly we’re facing more turbulence in the weeks ahead.”

Pritchard: ECB May Have to Turn to 'Nuclear Option'

Ambrose Evans-Pritchard is reporting that "the ECB may no longer have any choice [other than to print money and buy up the bonds of the PIIGS ]. There is a growing view that nothing short of a monetary blitz — or 'shock and awe' on the bonds markets — can halt the spiral under way."

For me, it is hard to see this happening. Germany, a key player, would most assuredly be against it, for the obvious inflationary repercussions. Any such move would send the euro into a nosedive that it quite possibly would never recover from. There are likely players in the EU that would like to see the nuke money printing button pushed, but Germany most likely has a strong enough influence to stop this.

Our view of Germany's posture right now is that they will continue to nod in favor of a Greek direct bailout--as long as the bail out continues to be "a few weeks down the road," rather than today.

(ViaMike)

Mohamed El-Erian: Greece Is a Serious Problem

Joe Weisenthal is watching TV and reports on what he sees and hears:

PIMCO co-chief Mohammad El-Erian is on CNBC this afternoon talking to Maria Bartiromo.

His first point: unlike US equity investors, he is concerned about Greece, and says that if Greece isn't solved very fast, then this is a problem that will become a [big] problem soon.

He says there's nothing to feel good about until you see creditors step up to make concessions, and until some body step up to manage the bailout.

As for where he is investing client money, he's looking for quality -- so Germany and high-grade corporates.

He reiterated a point he's been making recently that Greece is Europe's subprime -- tiny, but with the potential to metastasize.

If the EU cracks, remember this is about the PIIGS, not just Greece, then a flight to German debt could occur. If there is a complete crack-up (a 20% possibility), where it becomes every EU country for itself, currency-wise, then a new German mark becomes the European gold standard of currencies. If you  own the German debt, you will own the new German currency.

The United States Could Use an Angela Merkel and Swabian Housewives

Last week, I referenced a passage in a speech by German Chancellor Angela Merkel that makes her sound as though she is an Austrian when it comes to economics.

Leonard Liggio takes the story deeper and writes:

Last week at the Christian Democratic Union convention in Stuttgart, German Federal Republic Chancellor Angela Merkel said that German financial policy would be based on the habits of the traditional Swabian House-Wife: Not to spend money one did not have. As Merkel’s sound speech seemed to echo Wilhelm Roepke, one of the founders of the Mont Pelerin Society, it is worth noting that Ludwig von Mises, F. A. Hayek, Roepke and the others agreed on this as well as on most other issues.

Germany’s post-1945 Economic Miracle resulted from the thinking of the traditional Swabian House-Wife, as any one who visited West Germany then and noted the determination of the Germans to restore the honor of sound money can testify.

Since until recently, German descendants represented the largest ethnic group in America, one can find the inheritance of the Swabian thinking in America. One recalls that historically the majority German population of St. Louis were called the “Scrubby Dutch” because the house-wives cleaned the front walks and streets every morning. It would have been dishonorable not to do so. This was repeated in cities all over America by other European ethnic groups.

Liggio's full comment is worthwhile reading and is here.

German Economist Blames 'Fiat Money' for the Current Financial Crisis

Dr. Thorsten Polleit, Chief German Economist for Barclays Capital and Honorary Professor at the School of Finance & Management in Frankfurt gets it. In the online edition of the Handelsblatt, a major German business newspaper, he writes that government-created ’fiat money’ is responsible for the current financial crisis.

His solution for the crisis is 100% Austrian. He proposes a return to the gold standard, as a first step. And, ultimately, free banking.

Kristian Niemietz has more details of his analysis and recommendations, here.

Europe of the Future: Germany Shrinks, France Grows, but UK Population Booms

Britain will overtake Germany and France to become the biggest country in the EU in 50 years' time, according to population projections unveiled yesterday. A survey of demographic trends by the EU finds Britain's positive birth rate contrasting strongly with most other large countries in Europe.

The survey predicts that Britain's population by 2060 will increase by 25% from the current figure of just over 61 million to almost 77 million.

Germany is the biggest country in the EU, with more than 82 million people, but it is likely to shed almost 12 million by 2060, says the report.

The French population will rise to almost 72 million by 2060.

Of the biggest six EU countries (Germany, France, Britain, Italy, Spain and Poland) Britain has by far the greatest birth rates. Only Luxembourg, Cyprus, and Ireland are growing faster than the UK.

The average age of Europeans is now just over 40; this will be 48 by 2060. The average age for Britons is 39 and will be 42 in 2060 - the lowest age in Europe with the exception of Luxembourg.

The EU's population now stands at 495 million and is projected to rise to more than 520 million by 2035, before falling to 505 million by 2060.

The strongly Roman Catholic countries of Europe are having fewer babies. The Italian population will stay the same over the next 50 years, while Poland's and Lithuania's will shrink considerably. Spain's population is forecast to increase by 6 million. Life expectancy is also rising. In Ireland, women will live to 89 and men to 85. Almost one in three Europeans will be of pensionable age if 65 remains the threshold.

Eurozone Economy Contracts For The First Time

The eurozone economy has contracted for the first time since the launch of the euro a decade ago.

Gross domestic product in the 15-country region fell by 0.2% in the second quarter, reported Eurostat, the European Union’s statistical office. That marked a sharp turnaround from the first three months of the year, when GDP expanded by 0.7%.

Eurozone inflation hit a record 4 % in July, which is holding back the ECB from cutting nterest rates.

Germany’s economy – Europe’s largest – contracted by 0.5% in the three months ended June.

Michael Glos, Germany's economics minister, said a weaker second quarter had been expected but Germany had improved “by a good measure” its international competitiveness and resistance to global shocks. Berlin stood by its forecast for overall German growth of 1.7 % this year, down from 2.5% in 2007.

France reported a significantly worse-than-expected 0.3% cent fall in second quarter GDP, after a 0.4% rise in the first three months of the year.

Christine Lagarde, the French finance minister, down played the possibility of a recession. There is “no question of a recession” with the fundamentals of the country’s economy remaining healthy, she said..

Spain saw a sharp deceleration in economic activity – although GDP growth remained positive, at 0.1% in the first quarter.

As in the United States, housing has been at the forefront of economic problems in Europe.