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Old 01-16-2012, 03:37 AM
MinnesotaSmith MinnesotaSmith is offline
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Default Germany considering banning investors ever selling off their Eurobonds?!?

Prediction: the whole EU will be under this eventually as well.

http://www.zerohedge.com/news/der-ve...ign-bond-sales

Germany Considers Ban On Sovereign Bond Sales


Submitted by Tyler Durden on 01/14/2012


"When back in August, Europe declared a short selling ban of any financials (here we are willing to channel Romney, and make a $10,000 bet with anyone that said ban will never be lifted), and which as we predicted has had no favorable impact on bank stocks which have since tumbled, we suggested that the next step will also be the final one: the passage of laws prohibiting sales of any kind. As usual we were partially joking. And as so often happens, we are about to be proven right again.

As the FT reports in its headline article today, whose gist is simple enough, that Europe is on the verge, it is the tactically-placed final paragraph that is of particular curiosity. It says the following: "Speaking on the fringes of a start-of-year retreat of her Christian Union lawmakers in the city of Kiel, Ms Merkel said she would consider calls from her party colleagues for legislation to bar institutional investors such as insurance companies from selling bonds when ratings were downgraded, or fell below investment grade." Allow us to recopy and repaste the key part: "legislation to bar institutional investors such as insurance companies from selling bonds."

And there you have it: after everything else has failed, the state, not the politically independent, if at least on paper central bank, is about to formally enter the capital markets. And yes, first it will be a ban of selling on downgrades, then it will be a ban of selling on any downtick, and finally it will be a ban of selling anything and everything.

Naturally, since whatever is left of the market is still oddly rational, and somewhat forward looking, those who are still foolishly long the bonds will dump them asap, before this idiotic law is passed and finally crashes the European market. Correction: the market will be there, but it will consist entirely of the ECB only buying bonds, and never selling to comply with German capital control laws. Because after all Frau Merkel has elections to consider, and it will hardly be beneficial if the Dax were to be cut in half in an election year.

We do find it odd that insurance companies are being targeted - as these, just like AIG, are being completely ignored for the time being. Perhaps not much longer, and goes back to our thesis that Allianz & Generali, aka "A&G", are about to be the European equivalent of AIG, whose demise also began with that one particular rating agency downgrade.

And for anyone who thinks this form of lunacy is limited to Germany, we have news: it isn't. With Obama facing a daunting reelection task, one can be 100% certain that this and other potential laws are being contemplated (not least of which is the one-time financial asset tax as explained here back in September), and will likely take place just as soon as QE3, which SocGen believes will begin in March, fails completely to do much if anything about the market collapse, let alone the economy, the unemployment rate, and inflation."
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Old 01-16-2012, 08:36 AM
Indigo Indigo is offline
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A bad translation has been making it's way around the net.

She wasn't saying they would ban selling ... it was that they might not require selling. Pension funds, for example, are only allowed to invest in bonds of a certain quality. It the bond rating drops, they are required to sell their holdings. She was saying she might be in favor of changing that requirement.
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Old 01-16-2012, 03:29 PM
Tristan Tristan is offline
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Old 01-16-2012, 06:28 PM
TimeTraveler TimeTraveler is offline
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That should help sales of new bonds, NOT. They will probably put in the fine print that when you die the bonds revert back to the Government. TT
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Old 01-16-2012, 07:29 PM
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night driver night driver is offline
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Quote:
Originally Posted by Indigo View Post
A bad translation has been making it's way around the net.

She wasn't saying they would ban selling ... it was that they might not require selling. Pension funds, for example, are only allowed to invest in bonds of a certain quality. It the bond rating drops, they are required to sell their holdings. She was saying she might be in favor of changing that requirement.


THANKYOU!!!!!

That makes a LOT more sense than the interpretation I had been trying to grok.
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bankruptcy, bonds, debt, european union, germany

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