'Counter-productive policy-making on the hoof is what Europeans seem to do best right now, so it should come as little surprise to see the Germans shoot themselves in the foot by attempting to ban short selling and credit default swap trades on sovereign bonds. 'Whilst this one explains that:
'A year ago, Germany's financial regulator BaFin warned that the toxic debts of the country's banks would blow up "like a grenade" once hidden losses from the credit crisis caught up with them.
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"The market is left asking what skeletons are lurking in the cupboard," said Marc Ostwald from Monument Securities. The short ban follows a report by RBC Capital Markets that circulated widely in the City accusing German banks of failing to come clean on 75pc of their €45bn exposure to Greek debt.
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Tim Congdon from International Monetary Research said deposit data from the ECB shows that there was a "major run" on Club Med banks in the second week of May. Some €56bn of interbank lending facilities were withdrawn, probably as citizens in the South switched funds to banks in the eurozone core. Bank reliance on the ECB lending window jumped by €103bn – or 22pc – in a week.
"It was extreme and very sudden, probably on Friday afternoon. The eurozone was undoubtedly in peril," he said.'
Meanwhile if you want to worry about something, worry about this:
'The question raised by BaFin is whether underlying damage to the eurozone banking system runs even deeper than feared.'
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