Europe to Markets: We can't hear you!

Europe decided to continue its policy of covering its ears and telling the market that they can't hear them. Today, the Bank of Italy unveiled rules which allows Italy's banks to ignore changes in market value of their European government bond holdings in their available for sale portfolios.

Not to be outdone, Germany decided to prohibit naked short selling and credit default swap speculation on European debt.

In response to this news, the Euro sold off 1.5%. So if they are trying to create a weak currency in order to help Greece out, they are at least succeeding in that. However, instead of seeing the markets as their adversaries, they should consider them as advisers that are telling them that something is really wrong and drastic austerity measures still need to be taken.

About

I studied Bioengineering at the University of California at San Diego. While there I served as a trustee on the investment committee of the UCSD Student Foundation, a group that manages an endowment to fund scholarships. While in college I applied my interest in finance and economics by working as a summer associate at Clarium Capital Management, working part time my senior year, and joining full time when I graduated in 2006, staying there through August 2010. I am currently working as a portfolio manager at another global macro hedge-fund in the Presidio (And blogging about more directly market related ideas at their restricted blog). I’ve been focusing on quantitative finance, currencies, commodities, the interplay between finance and politics, demography and other long term trends.

Disclaimer: You shouldn’t consider anything on this site to be a recommendation or solicitation to buy, sell, or hold any securities or commodities. I’m not offering you investment advice. I or the company I work for may hold positions in securities that I mention.