The Associated Press reported this morning on rumors of the Italian government shutting down their markets:

Italian Premier Silvio Berlusconi said Friday that world leaders might consider suspending stock markets in response to the financial meltdown.

Berlusconi told a press conference in Naples that EU leaders may hold a summit on the crisis Sunday in Paris. He also said leaders from the Group of Eight also were considering a summit in the coming days.

The solutions to the crisis will have to be “global and innovative,” Berlusconi said. “There is talk of suspending the markets” while international financial rules are “rewritten.”

Rumors like these, especially when substantiated by a direct quote from one of the G-7 officials, is just adding more fuel to the drastic sell off.  In this environment, it has been proven that what starts as a rumor often ends in fact.  As of noon eastern time, all three major indexes in the United States are off 4-5% or more.  The 2008 financial crisis is a very serious matter caused by reckless credit markets of the last decade.  World financial leaders need to understand that continually changing rules - prohibiting short selling and shutting down markets - only serve to incite additional panic and more selling.  If the G-7 leaders want to work together to solve this crisis, they should start by working together to keep their mouths shut until they have something of value to say, and preferably something final.

Marketwatch also reported on the market closing rumors:

The White House denied Friday that it had any intention of closing financial markets. “There are absolutely no plans or discussions to interfere with the functioning of markets in the United States,” White House spokesman Tony Fratto said in an email message.

Hmmm…Didn’t the U.S. government also deny that it would rescue failed inurance giant AIG, just days before it swooped in with an $85 billion rescue package?

Thoughts?