Authoritarian responses to financial crisis will fail

Wow. Germany is considering suicidal legislation to defend the euro and sovereign debt. See the Financial Times article, Merkel says eurozone must act fast.
Speaking on the fringes of a start-of-year retreat of her Christian Union lawmakers in the city of Kiel, Ms Merkel said she would consider calls from her party colleagues for legislation to bar institutional investors such as insurance companies from selling bonds when ratings were downgraded, or fell below investment grade.
Imagine you are an insurance company holding sovereign debt and you read that you will not be able to sell these bonds if there's trouble. You can drink the hopium and hope the government bails the firm out, and chase it with the Kool-aid and hope that the bailout is not in a severely depreciated currency. Or, you can look at the risks, consider your fiduciary responsibility to customers, and dump the bonds ahead of a legal change.
H/T ZeroHedge.

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