Yesterday Europe could have solved the speculative turmoil that has put its peripheral countries on the edge of collapse: Greece, Ireland, Portugal, Spain and Italy. If not for the EU, as anywhere, the wheels of bureaucracy would turn slowly. And a recent accord confirmed the EU's intention to stymie speculative shorting and unveil financial derivatives used to speculate on European sovereign debt.
European Parliament negotiators and representatives from 27 European Union nations came together on Tuesday night to form the beginning of an agreement for prohibiting a suspect situation in which an investor who does not have public debt nor taken an employment loan (i.e., Spain) could buy a credit default swap (CDS) that insures against risk that they would default on payments.
If such an investor has nothing to lose should the Spanish banks collapse (because he does not own Spanish bonds), he does have a lot to gain because a bankruptcy would lead to an indemnification on the security. It is possible that markets are feeling negative tendencies about Spain, given all that has been unleashed since 2010.
The beginning of an agreement on regulations to introduce such restrictions in Europe (currently each national regulator is making war with its accounts) should still be adopted fully by the time that the European Parliament meets again from October 24-27.
