Thread: EU Rescue Fund Insufficient To Rescue Italy, May Be Doubled

European Rescue Fund Insufficient To Rescue Italy, May Be Doubled To Over $2 Trillion

Submitted by Tyler Durden
07/10/2011 13:11 -0400
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The latest Italy contingency stunner comes from Die Welt which has just reported that the European rescue fund will be insufficient to bail out the latest biggest loser in the game of musical ponzi chairs, Italy. As Reuters translates: "The existing rescue fund in Europe is not sufficient to provide a credible defensive wall for Italy," the central bank source was quoted telling the newspaper in an advance text of an article to appear on Monday. "It was never designed for that," the source added." The newspaper said that the rescue fund might have to be doubled to up to 1.5 trillion euros. But it was not clear if it was the central bank source calling for the increase." Doubling the bailout fund is not a new idea and was previously proposed by Nout Wellink of the Dutch Central Bank, although as Die Welt explains, the decision will ultimately be not that of the ECB but of the separate governments. Germany, as a reminder, is already the biggest backstopper of Europe, and is on the hook for €211 billion euros as the primary funder of the EFSF: which just happens to be the CDO at the heart of the eurozone. Should Germany have to add another 200 billion euros to its rescue commitment, Merkel can forget any and all reelection chances, which is funny since just today it was announced that "Chancellor Angela Merkel has stated publicly that she wishes to run again in 2013. This comes as polls show she would face strong challengers from the opposition Social Democrats." Her chances would be roughly zero if German taxpayers learn that the fate of a failed monetary experiment is increasingly more reliant on their direct labor even as the populations of "austere" countries refuse to work and merely subsist on existing entitlements.

More from Die Welt on what tomorrow will be an unpleasant day for UniCredit longs, and why the Eurozone is imploding: even central bankers now admit the bureaucrats in charge are full of (sh)it:

It is the money politicians not only to increase, but also to a more flexible design of the rescue. "The European central banks are no longer willing to buy bonds of other states," it said in central bank circles. "This should enable the Treasury rescue package." Moreover, one must be able to intervene quickly, without waiting for long program negotiations. In addition, be a better crisis communications required: Euro Group President Jean-Claude Juncker "While talking constantly, but nobody listens to him more," said a central banker.

Especially important was immediately take to the participation of private sector involvement in crisis plans on the table: The damage is already enormous, without giving it a benefit. Above all, the German Federal Government is therefore strongly criticized in ECB circles.

But fear not: the Dow Transportations index is at an all time high.

http://www.zerohedge.com/article/europe ... 2-trillion

Regulatory Panic Spreads As Italy Orders Short Sellers To Disclose Positions

Submitted by Tyler Durden
07/10/2011 17:15 -0400
77 comments
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The earlier news that Italy's regulator may forbid naked short selling in a desperate attempt to preempt the bond vigilantes from taking down the country's financial system (how shorting stocks prevent evil speculators from selling bonds is somewhat confusing) has been confirmed. But that's just the beginning. The latest twist is that the Consob has also requiring shorts to immediately disclose their short positions "in an effort to increase market transparency." Odd how shorts are never required to be exposed when the markets are surging (or how silver margins have yet to be reduced despite the near 40% price drop in the metal from recent peaks). It gets worse. From Bloomberg: "The European Securities and Markets Authority, which co- ordinates the work of national regulators in the 27-nation EU, should be given emergency powers to temporarily ban short selling or trades in CDS on sovereign debt in the EU, the Parliament said. The Italian regulator said short sellers must disclose their net positions when they reach 0.2 percent or more of a company’s capital and then make additional filings for each additional 0.1 percent."

Full Google translated announcement from the Consob is below (source).

Short sales: shoot from tomorrow the obligation to inform Consob bearish positions

Consob has approved a new regime of transparency regarding short selling.

From tomorrow, investors who hold important positions on bearish equities traded on Italian regulated markets are required to give notice to Consob.

With this, the Italian legislation is in line with that in force in major European countries, primarily Germany The measure strengthens the supervisory powers of Consob in the current market, characterized by a high level of volatility in the fortunes of quotations.

In particular, must be disclosed to Consob on its net short positions in equity securities of listed companies in Italy, when they exceed certain thresholds. The first obligation of communication triggered the achievement of a net short position greater than or equal to 0.2% of the capital of the issuer. Subsequently, the obligation is triggered for any variation equal to or greater than 0.1% of the capital.

The measure takes effect from tomorrow and will remain in force until September 9, 2011. The text of the resolution (number 17862) is available on the Consob website www.consob.it.

Pricing obligation to purchase the shares Socotherm (press release dated 1 June 2011)

Consob has set at 0.0683 euro per share consideration for the compulsory purchase, pursuant to art. 108, paragraph 2 of the FCA, the ordinary shares by Socotherm Fineglade Limited.

On the occasion of the capital increase resolved by the issuer's board of directors on June 25, 2010 Fineglade Limited has signed, at a price of 0.0683 euros, 732.45 million new ordinary shares of Socotherm, 95% of the share capital by which has achieved the obligation to purchase the remaining shares Socotherm.

The title The Group is indefinitely suspended from trading since August 4, 2009 in view of the uncertainties on the economic, financial and property of the company, at the time, was found in the situation envisaged by art. 2447 Civil Code (Reduction of share capital below the legal limit).

The pricing was carried out in accordance with the guidelines prior to Resolution No. 17 731 of 5 April 2011 and, in particular, with Article 50 of the Issuers Regulation. In line with previous determinations, such as additional parameter to those expressly mentioned by art. 50, paragraph 3, of the Issuers' Regulations - not usable in the case of the test - was used for the price of the subscription of the capital from which comes the tender offer exceed the threshold, as illustrated in the evaluation document. .

Resolution No. 17807 of 1 June 2011 to determine the amount of the obligation to purchase is published in conjunction with Annex assessment document, the site www.consob.it.

http://www.zerohedge.com/article/regula ... -positions

Italy May Enforce Naked Short Selling Ban As Early As Tonight To Prevent Market Rout

Submitted by Tyler Durden
07/10/2011 15:17 -0400
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Once again the great diversionary scapegoating of speculators begins, after as Il Sole 24 Ora reported that the Consob, or Italy's regulator, may enact a naked short selling ban as early as tonight. The premise is that it is the shorters who are responsible for the ruinous state of the global ponzi. Not the fact that it is a, well, global ponzi. Distraction 101. And yes, it did not work back in 2010 when banning naked shorting was implemented in other European countries, it will not work this time either. But it won't stop bankrupt governments from trying. To wit: "Commissioners will assess the situation before markets open Monday, said a Consob spokesman, who declined to be named in line with the regulator's policy. Commissioners may decide to restrict "naked" short-selling in line with similar decisions taken in other European countries, he said.... The Consob meeting occurs after shares of Italy’s biggest banks fell to the lowest in more than two years on July 8, and government bonds dropped, driving 10-year yields to a nine-year high." 24 Ore adds: "Consob intervened several times in the past on short selling after the collapse of Lehman Brothers to protect stock markets."

More from 24 Ore:

Meanwhile on Sunday afternoon, Lamberto Cardia, Consob, who led Consob from 2003 to 2010, had more to say. For Cardia short selling "in the presence of a serious crisis should be totally prohibited for the period required." For the former chairman of Consob, the day after the crash of Lehman Brothers Bank restricts short-selling within three days, "it is preferable to a reduction in short-term market movements rather than attend to the serious damage that will result in load of listed companies, also strategic for the country. "

And to think there was a time when the stock market could drop without resulting in strategic consequences for the host country...

As noted, this is not the first time this approach has been taken:

On July 5, European lawmakers voted in favor of a ban on short selling of government bonds in the EU unless traders have at least “located and reservedâ€