Another misguided short ban, this time on the Euro
Germany tries to ban short selling of the Euro. This is the perfect time to bet against the Euro. Just because they try to ban healthy speculation and risk management, doesn't mean that it will work.
The verdict on the usefullness and effectiveness of this kind of ban is out. See what happened when the US banned short selling of financials. You would have been wise to put your bets out on the day that the ban went in place. Greek bond yields did drop, but that was due to the German support for the debt, not the short sell. There is no Bailout that can help the Euro. See yields of 10 year Greek bonds which had a big spike but are resuming their trend upward.
Now Merkel want to ban short selling of the Euro. Naked short selling is not the only way to play the Euro demise. When the ban on short selling was in place and the financials were dropping, you could have profited by simply buying puts. You can buy puts on currencies as well, or you can short term in the money puts when they expire you own the short.
As Mrs Merkel tried to gather support for Germany's contribution to the European bail-out fund earlier this week, German regulators announced a unilateral ban on some types of short-selling.
The ban covers "naked" short-selling, which occurs when a trader sells a financial instrument that has not yet been borrowed.
The restrictions also cover the use of credit derivatives to bet on a fall in the value of the debt of a eurozone government.
Germany angered other EU nations by acting alone on the ban, which triggered a fall in stock markets and the euro.