This all sounds so familiar.... change the country, change the instrument, all the world wishes reality would not be what it is.Decades of overspending & over leverage are coming to 1 shore after another. While I don't see much use for naked CDS myself (other than as pure speculation) vs a very legit use of CDS against long positions one might own, the time to 'regulate' them was a long while ago - not in the middle of crisis. As for naked short selling of stocks; that should have been fixed ages ago - but I guess the investment banks and their clients (hedgies) were too busy making money on it for years. [
Sep 15, 2008: SEC Finally Gets Around to Addressing Naked Short Selling?] I am surprised the Europeans had not followed the U.S. lead when it finally got around to 'fixing' it a year and a half ago domestically. Of course our financial oligarchs said it would be too hard to fix naked short selling on stocks for years on end - until they themselves were attacked by naked short selling ... another lie by our "financial innovators"... anything that makes a buck is "good" in Cramerica after all [
Apr 7, 2009: WSJ - Short Sellers Squeezed All Around]
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Tonight at midnight, Germany
attacks ...
- The German government plans to ban naked short-selling from midnight at the country's 10 most important financial institutions, a spokesman for the Finance Ministry said on Tuesday.
- The spokesman said the ban on naked short-selling will also apply to credit default swaps (CDS) on euro government bonds as well as euro government bonds.
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I am boggled why the ban is only against the 10 most important financial institution - naked shorting should be gone period.
- In a proper short sale, the investor is supposed to borrow the stock, sell it and then repay the borrowed stock that's bought (hopefully) cheaper. When it's naked, the short-seller never borrows the stock in the first place, and so it is never delivered.
