German government announces ban on short-selling
In a move which has angered many in the marketplace, the German government has announced a ban on short-selling of euro denominated government bonds. The move is aimed at reducing the influence of short sellers who have been benefiting from extreme volatility in the European debt market over the last few weeks. So will this ploy work?
Even though the move by the German authorities would appear to be a short-term measure it has not gone down well with investors who are concerned about the ethics of a "free market". It also gives the wrong signal to investors around the world with the German government obviously concerned about short-selling of German Euro denominated bonds. This would prompt the question as to why the German authorities are so concerned and could in due course inject more skepticism and concern into the marketplace.
The truth is that market investors will find other ways to "short" the European bond markets and eventually market sentiment will win the day although it may take a little longer to balance out. Each day seems to bring a new challenge and a new concern regarding the European Union and its immediate future and we are also hearing of significant fallout behind the scenes between some of the major partners in the EU.
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