Wednesday, May 19, 2010

Reasserting "The Primacy of Politics"

Angela Merkel is losing it. Her ban on naked short sales, announced yesterday, is one more sign that the Merkel government is losing its bearings. Merkel appears to be in a state of panic that financial markets will not bend to her will. Strange.

Merkel expects people to eagerly buy bonds in the Eurozone after she has announced a plan that is certain to bankrupt the Eurozone. Yesterday, her ban on naked short selling had the effect of further terrifying world financial markets.

You would have to look far and wide to find anyone who thinks the future of the Eurozone is anything but disastrous at this point. Politics will not achieve "primacy" in the financial markets. Investors are voting with their feet, as rightly they should.

Meanwhile, public employee benefits and guaranteed retirement and health care plans continued unabated while governments pledge bailout money that they no longer have. Europe is in big trouble.

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