How To Trade the EU's New Enforcement Rules (VGK, EPV)

Finance ministers of the European Union agreed on Tuesday to new rules that are meant to increase budget discipline, penalize governments that don't follow the budget rules and to improve market confidence in the eurozone's fiscal management.

Under the proposed laws, the 17 eurozone members will face financial penalties if they do not follow the rules. The penalties would first take the form of deposits that would be returned if corrective action is taken.

A key attribute of the new rules is that they will make any sanctions against EU members more automatic and less open to political interference. In the past, governments have often used political maneuvering to avoid unwanted actions being taken against them.

However, Jean Claude Trichet, the head of the European Central Bank, didn't think that the reforms went far enough to address existing problems and said that the reforms were "insufficient to draw the lessons from the crisis we had to cope with".

If the new rules proposed by the European Union finance ministers prove successful, the Vanguard MSCI European ETF VGK, which seeks to track the performance of a benchmark index that measures the investment return of stocks issued by companies located in the major markets of Europe, could be a long term winner.

However, if the head of the European Central Bank is right and the new rules don't go far enough to improve investor confidence and fix the European Union's fiscal enforcement flaws, the ProShares UltraShort MSCI Europe ETF EPV may turn out to be the better investment.