12th Aug EARLY – Ban on shorts, Soros’ 81st Birthday

Summary: Short-selling bans in several European countries. Lots of homework required, as apparently Spanish version includes all forms of financial shorting, while the French version does not even mention e.g. synthetic shorts. I believe there will be adjustments to the national bans as the loopholes become apparent. Also, blocking one channel will funnel players to others: I expect increased interest in CDS’s on European banks. As if the markets were not stressed enough already, now the eurocrats are adding to the uncertainty. I believe it is a fundamental right to express one’s opinions in the markets. 

Oh yes, bad macro from France and everybody is now waiting for the Tuesday’s heads-up of Sarkozy and Merkel. The trillion-dollar question is, of course: Eurobonds (moral hazard continues), fiscal union (transfer payment paradise) or breakup. And all the EU-countries should agree on the grand plan and all the details, holiday season is on and there is always an election somewhere and there really is not much time.

Views: Still short Brazil, no other views. Happy birthday, George Soros! Here is a box of Cuban cigars, very hard to get, only five minutes please. Explosive earnings.

Quote of the day: “The discussion about euro bonds has to end, markets are speculating about it futilely. Germany can't assume responsibility for the debt of crisis countries. That would make Germany's financing more expensive and take away incentives for reform in countries such as Greece.”

– Christian Lindner, general secretary of Germany's Free Democratic Party, in coalition with Chancellor Merkel’s Christian Democrats

EURO CRISIS

EU Heads for Eurobond Clash Over Fiscal Union – BB

Italy turns on the 'parasites on society' in tax clampdown – The Telegraph

BANS ON SHORT SELLING

“The following countries have today announced or will shortly announce new bans on short-selling or on short positions: Belgium, France, Italy and Spain. “

Will the short-selling ban come up short? – alphaville FT

Short Selling of Stocks Banned in France, Spain, Italy, Belgium – BB

Belgium, France, Italy, Spain Overrule European Regulator, To Impose Standalone Short-Selling Bans – Zero Hedge

“Even if you disagree with my interpretation, there is no evidence in history that suggests short-selling bans ever work. Indeed, there is evidence they don't, and there are solid theoretical reasons why they shouldn't work.”

France Selectively Bans Short-Selling of 11 Banks; Spain Bans Shorting and Derivatives Based Shorting; Why the Bans Will Fail – Mish’s

FINANCIAL CRISIS

or the case against counter-cyclical fiscal policy

Sovereign risk, macroeconomic instability – Corsetti, Müller via voxeu.org

http://www.voxeu.org/index.php?q=node/6857

Superimposing 10 year bonds from Japan 1990-, US 1929-49 and US 2000-. Is there a decade of japanification ahead?  

Certificates of Confiscation; Japanese Bonds vs. U.S. Treasuries – Mish’s

Global crises and equity market contagion – Bekaert, Ehrman, Fratzscher & Mehl via voxeu.org

6 Facts about the secular bear market – Pragmatic Capitalism

From Oct 2009: “When the next crisis hits, and it will, the frustrated public is likely to turn, not just on politicians who have been negligently lavish with public funds, or on bankers, but on the market system. What is at stake now may not just be the future of finance, but the future of capitalism.

‘Too big to fail’ is too dumb an idea to keep – John Kay

Swiss franc: safe haven no more? – beyondbrics alphaville

Swiss ‘capital preservation’ – alphaville FT

CHINA

Official government debt/GDP 17%, but thanks special-purpose financing vehicles that allow local and regional governments to get around laws requiring balanced budgets, the true value is probably 50-80%. Of course, private sector debt is not included.

Behind Its Lectures, China Is a Sinner Too – FT via CNBC

Thousands Riot in Southwest China Town - CNBC