Local view for "http://purl.org/linkedpolitics/eu/plenary/2011-11-15-Speech-2-434-183"
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"en.20111115.27.2-434-183"2
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"I was keen to support this legislative resolution, which extends the financial regulation process launched by my political family in 2007. This text prohibits malicious financial operators from hastening the default of euro area Member States by banning naked credit default swaps (CDS). These financial instruments, originally designed for investors to take out insurance when purchasing a State bond, constituted an autonomous market. In other words, it was possible to hold the insurance on a house (the CDS) without being the owner of the house (the State bond). Therefore, it was in the interest of the holder of the insurance that the house burned down so that he could collect the payout. This grotesque situation in particular led hedge funds to create a climate of panic around Greece by acquiring CDS in huge volumes. These CDS then became increasingly lucrative as concern spread. Faced with this excessive speculation, Greece had to borrow at exorbitant rates of interest, thereby accumulating even more debt. In order to prevent other States from falling foul of such speculative madness, we are now demanding that the holder of the CDS must also hold the State bond."@en1
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