President Obama Gets Financial Reform While World Markets Fall on Worries about China, Greece, Thailand

President Obama is closer to signing Financial Industry Reform as four senate Republicans join the Democrats to allow the cloture vote which send the senate bill for a final vote on Friday:

In the US, financial regulatory reform cleared its last big hurdle in the Senate as four Republicans joined Democrats in voting to bring the protracted debate to a close, clearing the way for a final vote.

The Senate bill would have to be merged with House legislation before it can be signed by President Barack Obama. Large US banks warned that proposed changes in the Senate bill – including provisions forcing them to spin off swaps desks and banning them from proprietary trading – were contributing to the market turmoil. Some US regulators privately supported that analysis.

In Germany, The Angela Merkel Government  banned so-called short selling on Wednesday:

Angela Merkel, Germany’s chancellor, fanned fears of further political intervention in the markets after Berlin’s unilateral ban on naked short selling – the practice of selling securities such as shares and bonds that are not owned or borrowed.

“We need the financial industry to be honest with us,” she told a conference in Berlin. “If we don’t get honesty, then we might not do the right thing technically but we will do the right thing politically.”

Wolfgang Schäuble, her finance minister, defended Germany’s sudden move. “If you want to drain a swamp, you don’t ask the frogs for an objective assessment of the situation,” he told reporters.

David Cameron, the UK’s new prime minister, is expected to stress the need for international co-ordination when he meets Ms Merkel on Friday. The unilateral ban was described by one British official as “crackers”.

These actions along with fears of Greece upheaval due to reform in  order to receive their bailouts from IMF and European Union, the three weeks of violence including a government crack down on opposition Bangkok Thailand and uncertainty on China send the world markets reeling on Thursday:

The S&P 500 fell 3.9 per cent, bringing its losses since late April to 12 per cent and pushing it into “correction” territory.

Most Asian stocks, which this week slumped to their lowest levels in nearly nine months, continued to suffer on Friday. In Tokyo, the Nikkei 225 index dropped 2.45 per cent to 9,784.54, while Sydney’s S&P/ASX 200 index declined 0.26 per cent to 4,305.40. The Shanghai Composite, the worst-performing market in the region this year, rebounded 1.08 per cent to 2,583.52. The Hong Kong market was closed for a public holiday.

“The lack of clarity from the politicians has shattered confidence,” said David Owen, chief European financial economist at Jefferies.

At close in New York, the S&P 500 index was down 3.9 per cent to 1,071.59, the Dow Jones Industrial Average fell 3.6 per cent to 10,068.01 and the Nasdaq Composite index lost 4.1 per cent to 2,204.01.

Financial Times has the rest of the story.

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