Before Zee Germans Get Here, Part 2

At this point, Germany's short-selling ban is being greeted with terror in some circles, and laughter in others.

Germany has failed to persuade other nations to follow its prohibition on naked short-selling and speculation on European government bonds, limiting the effect of the rules.

A Europe-wide ban on the practices is “doubtful,” Eddy Wymeersch, Europe’s top market regulator, said in a telephone interview today. European Union Financial Services Commissioner Michel Barnier said the rules would have been “more efficient” if they were coordinated with the EU.

In an effort to calm the region’s financial markets German regulator BaFin issued a ban that took effect at midnight and lasts until March 31, 2011. The move caused stocks around the world to drop and the euro traded near a four-year low against the dollar.

“Unless you have the U.K., United States and rest of Europe on board, then it’s a waste of time,” David Buik, a market analyst at inter-dealer broker BGC Partners in London, said in a telephone interview today. “You’re asking people to look for trouble. It’s so ham fisted it’s laughable.” 

And that's true, people will just cash out their chips and go to other casinos if they can't play "So You Think The Euro Will Epic Fail".  In this case, the other casinos are the UK and US.  Germany picked up its ball and went home, so anyone still left with German debt on their hands is in real, real trouble.

The euro meanwhile is at $1.22 and falling.  If it hits $1.16, things are going to get real ugly.