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I Thought Germany Banned Naked Shorts?

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If so, what's this?

Deutsche Bank said today that it has a net £900m short position on Spanish government debt and a £660m short on the Portuguese sovereign, as the German government attempts to ban all short sales in European sovereign debt.

The position will be doubly embarrassing for the German government, as Deutsche Bank's own shares are currently the subject of a short trading ban imposed by the country’s authorities at the same time as sovereign ban.

So a bank organized and operated under the laws of Germany, which has banned naked short sales, is in fact naked short sovereign debt?

Hmmmm... so let's see.... the flagship bank of a given nation circumvents the laws of that very same nation and nobody in the government does anything about it?

Why does that sound like The United States and all the banks that packaged up and sold "securities" that had a prospectus claiming various things that turned out not be true, as just one small example, or who back-dated deposits (a clear act of violating the law) and went unpunished, or..... well, you get the idea.

Laws mean nothing unless they are enforced, and this is just another case of "laws are only for the little people."

The little people just don't understand high finance you shouldn't be able to short the bank but national debt is just fair game.

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Gemany banned naked shorts of their own govt debt (Schatz, Bobl, Bunds and Buxl) not the debt of other Euro-area countries. This ban of course forced up the price of their debt, reducing the yield on their debt. Spreads of Greek, Spanish and Portugese govt debt thus widened to German debt thus causing many pension funds to panic and sell these countries to buy more German debt, pushing yields even lower.

The German govt has since then proceeded to auction a boat load of German debt at all time low yields, saving the German govt zillions and making their fiscal position much stronger at the expense of everyone else in the Euro area. The panic also caused the Euro to dump making German exports even cheaper so their booming economy could boom even more

Nice trading Mrs Merkel!

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