Reply #14: Merkel Seeks More Curbs on `Destructive' Markets [View All]

[ozymandius]

German Chancellor Angela Merkel laid out proposals to gain control over “destructive” financial markets, as her government seeks to extend a ban on naked short- selling across Europe.

Merkel, opening a parliamentary debate on Germany’s contribution to a $1 trillion bailout to backstop the euro, said faster budget cuts, tougher penalties for countries that flout the rules and the orderly insolvency of euro-region states are among the measures Germany will put to European Union partners on May 21.

Merkel’s coalition is seeking to build momentum on market regulation amid public opposition to Germany’s share of the Greek and euro-region bailouts. Germany banned naked short- selling and speculation on European government bonds with credit-default swaps today in an effort to calm financial markets, sparking investor anxiety about increasing regulation.

Merkel said Germany will lobby governments to introduce a tax on financial markets, and for ratings companies to come under European supervision so governments regain “primacy” over markets.

http://preview.bloomberg.com/news/2010-05-19/merkel-pushes-extra-eu-rules-seeks-to-widen-short-selling-ban.html

---

This is progress. Speculators may place a bet on the roulette wheel that they do not own - but their loss should not mean that civil servants should get thrown out of a job and that tax rates on the middle class should increase. So I am glad, as said above, that one government (no less the economic goliath of Germany) gets it. A tax on markets is another way to curb cannibalistic activity. If a loophole exists, and there is a 99% chance that it will, then a tax on anything like that activity is a good way to curb destructive speculative behavior.