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Friday, March 21, 2008

Rumours and innuendo

Last week the word was put out about the state of a major bank with the intention of impacting its share price. Yet one week on there has been no announcement of any investigation into improper conduct by those spreading the rumours.

The bank I'm referring to isn't HBOS or Anglo-Irish Bank, it is Bear Stearns. Bear Stearns was telling everyone who would listen that it was fine, just dandy, nothing at all to see here and there was no reason for anyone to worry their silly little heads about when it came to its ability to continue to do business in the future. Yet in the matter of a few days, it has been subsumed in JP Morgan Chase. So I guess the lesson is when the institution itself tells fibs that's ok, if someone else does it that is wrong.

10 comments:

John Browne said...

Yes but when those rumours caused all the investors to pull their money out of the bank (a good old fashioned run) the bank was forced to go to the money markets to borrow money to keep itself liquid. Of course all the lenders in the money markets said "I've heard the runours about you, I'm not lending you any money". "Of course the rumours must be true because here you are looking for money!"
This is one of the big dangers we're in. We're in danger of all these runours becoming self fulfilling propheicies.

Dan Sullivan said...

Rumours are just a macho word for gossip anyway.

Francis said...

Actually it was reported yesterday on BBC five live that the UK regulatory authority were investigating this incident.

There is another investigation in to something similar being done in Ireland to the Anglo Irish Bank, which was reported in the examiner.

The funny thing is, I was in the Halifax call centre on Shannon on Tuesday and they were bigging up how employees get a gain share, at the same time their share price was falling like a stone.

Dan Sullivan said...

francis, my point wasn't about HBOS rather it was about the talking up of Bear Stearns. I've had a quick goo at the beeb site and there is no mention of any investigation into what Bear Stearns were doing in talking up their position. If you have a link I'd appreciate it.

Anonymous said...

http://www.forbes.com/markets/feeds/afx/2008/03/23/afx4804258.html

The bbc did mention it, however he is the only internet link i could find in relation to what was said on the station.

Francis said...

for the record the above comment was by me. just fubarred the form is all.

Dan Sullivan said...

That piece from Forbes is talking about the talking down of HBOS though, my point was that no one is mention that Bear Stearns were talking up their position. Did the BBC talk about that?

mgb said...

During the various currency crisesesesssssss , ahem, events, of the 1990s the speculators would effectively go after one currency at a time and see which country or central bank had the balls or the pockets to protect their currency. So the Hong Kong Dollar made it while the Punt, Sterling and a host for other currencies had to devalue.

I wouldn't be surprised if we see something happen to banks in the coming months and even beyond. One by one each bank will be targeted by gossip and rumours and then subjected to share price crashes, runs and whatnot. Those who are willing to go for full disclosure about the state of their affairs AND are fully solvent and covered SHOULD be fine, albeit battered. Those who can't or won't better have deep pockets.

Caoimhin said...

Great post Dan, and I really like the "...Taxes..." video too! Keep asking the pertinent questions! :)

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