Merkel: The Euro Is At Risk, Could Have Global Consequences

German Chancellor Angela Merkel keeps on spooking investors. Speaking in the Bundestag Wednesday she says the euro is in danger, urging speedy action to stop market “extortion” and says the E.U. need a process for “orderly” insolvency of members.

“In those areas where unilateral action by Germany won’t cause any harm, we will also act on our own.”

Angela Merkel

The German leader told the parliament in Berlin that she will recommend tough moves against “notorious deficit sinners” in the euro zone, such as withdrawing voting rights. “Above all, what’s necessary is to develop a process for an orderly state insolvency,” she says.

“With that we would create an important incentive for euro zone member states to keep their budgets in order,” Merkel says.

Germany shocked financial markets on Tuesday by taking an apparently unilateral initiative involving an immediate ban on naked short-selling of euro government bonds and on related transactions in credit default swaps (CDS).

The country’s financial regulator also banned naked short sales of shares in Germany’s 10 leading financial institutions.

European shares fell in response and German bunds soared as rattled investors sought refuge in safe-haven assets.

Short selling is a trade that bets the price of an asset will fall, while the naked variant of the practice involves a trader selling a financial instrument without first borrowing the asset or ensuring that it can be borrowed, as would be done in a conventional short sale.

“In those areas where unilateral action by Germany won’t cause any harm, we will also act on our own,” the German leader says.

This video report was released by Bloomberg Television about 45 minutes ago.

Jay Bryson, global economist at Wells Fargo Securities LLC, talks with Bloomberg’s Francine Lacqua about the outlook for the euro zone economies, saying both the German and French economies are on a “knifes edge”:

Fighting Back

The euro is fighting back at the moment, and have rebound from its four-year low earlier today.

If the move is caused by investors (speculators) or by central banks is anybody’s guess…


Europe: The War Is On

E.U. Ministers Fail To Agree On Bailout Details; Run On Euro?

Euro: $1,22 – Panic In Brussels

The Euro Is Going Down; Now Trading Below $ 1,24 (Update)

Killing My CDS Softly

Breeding New Watchdogs

Banks Protesters Storm Irish Parliament

ECB Announces Bailout Program

Europe Is Cracking Up

Bailout Euphoria Is Evaporating

Scandinavian Reactions To E.U. Measures: “We Are Not Safe”

Bank Funding Crunch Deepens as Swap Rates Soar

E.U. Prepared To Set Up Own Rating Agency

Europe To Fight Speculators With “Secret Plan”

Fitch Warns Of New Speculative Oil Spike

European Banks Loaded With Greek Debt

Gerald Celente: “The Great Crash Has Occurred”


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Filed under International Econnomic Politics, National Economic Politics

3 responses to “Merkel: The Euro Is At Risk, Could Have Global Consequences

  1. Merkel and Sarkozy Declared War on Euro Speculators 2 weeks ago when they unleashed a massive $1 trillion bailout for the debt ridden “Club Med’ countries of the European Union.However that War seems to have been decisively won by the “speculators” with the Euro almost 5% lower than when the “War” was declared.The Market is almost at the same level where it was before the Trillion Dollar Bailout was announced

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