What\’s important is not what\’s being done in the open, with the hand you can see, what\’s the other one doing?
A \”reprofiling\” or \”soft restructuring\” of bonds held by private investors, defined as a voluntary loan \”extension\”, was floated by Jean-Claude Juncker, Luxembourg\’s prime minister and president of the eurozone finance ministers, after a Brussels meeting.
Yes, obvious, everyone else worked this out 6 months ago. But that\’s the news they\’re headlining.
What\’s the other hand doing?
Separately, European ministers unveiled plans for new laws to curb the short-selling of state debt and company shares.
That\’s the important bit. They\’re going to cock up financial markets just because they don\’t like the prices that financial markets put on things.
There\’s nothing wrong, eveil, even slightly dodgy, about short selling. But they\’ll try to ban some of it just the same, make the markets less efficient.
Depending upon how they do it they might even make it impossible for there to be options or futures markets. For shorting the underlying asset is an essential part of being able to write certain futures and options. And crippling the futures markets will indeed make government borrowing more expensive. But they don\’t understand this and so they\’ll, again, shoot themselves in the feet. Both barrels.