False Rumors

I just read a report from Marketwatch via FoxNews that kinda ticked me off.  The report says that Market self-regulatory organizations late Monday warned traders against circulating any “sensational rumors that might reasonably be expected to affect market conditions” as well as trading on material, non-public information.

Sounds good, except the article goes on to say Although the organizations did not mention any specific companies, Bear Stearns Cos. executives had complained unfounded rumors of liquidity problems triggered actual flights of capital, leading to the firm’s near collapse.

Let me get this straight – they’re saying that “unfounded rumors of liquidity problems” were the problem with Bear Stearns?  Get real people – they might have been rumors, but they were NOT unfounded! 

Bear Stearns DID have a liquidity problem, they were leveraged 37 to 1 in illiquid investments, so they couldn’t pay up when people wanted their money.  And yet they had the gall (what is gall anyway?) to say they had plenty of liquidity ($18 billion if my memory serves) just 2 days before going under.

If you tell the truth you wont have “unfounded rumors” circulating about your company.

gk

Wall Street Chaos

Just had to pass this on.  Excellent write up of the financial issues facing Wall Street and (though I disagree with some of it) Allan Sloan does a good job of breaking down a complex subject.  Highly readable and highly recommended.

gk