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Germany and France look to rein in speculative trading

The Local · 9 Mar 2010, 10:21

Published: 09 Mar 2010 10:21 GMT+01:00

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Government representatives in Berlin and Paris said that Chancellor Angela Merkel and French President Nicolas Sarkozy planned to write a letter to José Manuel Barroso calling for limits to speculative trading such as credit default swaps.

Jean-Claude Juncker, the head of the Eurogroup and Luxembourg Prime Minister, and the Greek Prime Minister Giorgos Papandreou, were also backing the call for common international rules on the issue, the paper reported.

The goal was to have a common line on financial instruments such as naked short selling, in which stock market traders sell products which they neither own or have borrowed security to cover.

Such instruments have been widely blamed for financial turmoil in recent years. Recently, traders were making speculations on Greece going bankrupt.

According to the paper, Merkel, Sarkozy, Juncker und Papandreou were prepared to pursue the issue alone even if important G-20 partners such as the United States and China were not willing to join them.

Story continues below…

“We cannot keep waiting until the last ones are on board,” the paper quoted a source as saying.

The Local (news@thelocal.de)

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Your comments about this article

18:37 March 9, 2010 by Prufrock2010
Goldman Sachs might object to this proposal.
02:49 March 10, 2010 by 1FCK_1FCK
Large financial companies rule the world now. The US has essentially bankrupted itself as they privatize profits & socialize losses. Unless these companies are very tightly regulated, which is unlikely to say the least, we can all look forward to a modern-day version of peonage. Welcome to serfhood. Any time they lose money they raid the public coffers and our taxes make them whole. Combine this with obscene spending on "defense" and we're going to hell in a handbasket.
18:40 March 14, 2010 by wood artist
This whole thing is really simple to fix. Yes, it requires a higher degree of regulation, but it's become clear, if it wasn't already, that the industry needs that.

The solution is this: Change all accounting to the most basic form. If you received it, it's income. If you spent it (legally) it's expense. What's left is profit.

If you read this article carefully, you'll find a spot where it discusses changing the rules on "naked short selling." The article describes this as selling something you don't own. Okay, does anyone with half a brain think doing that is a good idea? If you don't own it, how can you possibly expect someone to pay you for it when you sell it?

Sure it's all about greed and finding "creative" ways to make more money. But, at it's heart, it's all about greed. So...what we need are rules that penalize greed. If you can make a Euro honestly, I'm all for you. Make as much as you can. But...do it honestly. The financial markets are worse than Monte Carlo or Las Vegas. At least there the house admits you'll lose in the long term.

00:17 March 17, 2010 by peschvogel
Lets blame all the poor nominal GDP numbers of Greece, the social welafre spending problems of Germany and the high unemployment numbers of Spain on "Locusts" or speculative traders. Ridiculous...
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