Desperate times call for desperate measures and in our view this is a desperate reaction to a structural problem.
More importantly though, we question whether a partial ban on naked short-selling might have the opposite effect in the markets to that hoped for.
Yes, speculative flows will be reduced among German hedge-fund players, but the fact that the ban does not seem to apply to jurisdictions outside Germany suggests that shorting interest may simply become more intense in other financial centres.
That Bafin is acting unilaterally smacks of a panic move and political point scoring by Angela Merkel, now desperate to find German electorate support for her government's contribution to the EU/IMF 750 billion bailout.
That this is not a co-ordinated EU response will raise questions about the cohesion of the eurozone.
The Bafin ruling does little more than put a fresh layer of mascara on the swine. It is not the financial markets that created the structural problems of the eurozone. It is the politicians who set the parameters of the single currency regime.
Banning short-selling may win some votes, but this is not the solution. It will not hide the fact that austerity is the only way out of the economic malaise. Although that, of course, is not a vote winner.
