21.05.2010Germany proposes its next big ideas on financial regulatory reform: after the short sale ban comes the Tobin tax and the European rating agency; idea is rejected by Canada, the US, and the UK as unworkable; global investors conclude that regulatory reform motivated by domestic politics is crazy, and dump stocks – S&P was down 4%; euro rises on speculation of ECB intervention; Schauble is to present a nine-point plan of cruelties to the Ecofin today; Asian exporters complain about the impact of the fall of the euro; Michael Pettis argues against the prevailing view in China that the euro’s fall has obviated the need for a renminbi revaluation; Menzie Chinn finds that euro’s fall could have significant long-term implications for growth, and could lead to much higher European interest rates; Nicolas Veron says the next meltdown will be in Europe’s still unresolved banking sector; Fred Mishkin says the Europeans should have let Greece go bankrupt, and the ringfence the rest; France introduces its own version of a constitutional balanced budget rule; Nicolas Sarkozy, meanwhile, says France and Germany would present a joint proposals for a new stability pact in June.
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