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It just gets weirder and weirder
A blogger claims he was leaked the results of the bank stress tests. He backs it up with a bunch of numbers, including that 16 out of the top 19 banks are technically insolvent. The Financial Times links to his post. The Treasury issues a statement in response. The stock markets trade on it. Oh, did I mention the blog is run by a white supremacist?
The Turner Radio Network is a blog attached to the Hal Turner Show, nothing to do with Ted Turner. Here's some of what was written in the original post:
If any two of the 16 insolvent banks go under, they will totally wipe out all remaining FDIC insurance funding.
Of the top 19 banks in the nation, the top five (5) largest banks are under capitalized so dangerously, there is serious doubt about their ability to continue as ongoing businesses.
Five large U.S. banks have credit exposure related to their derivatives trading that exceeds their capital, with four in particular - JPMorgan Chase, Goldman Sachs, HSBC Bank America and Citibank - taking especially large risks.
Not only are there serious questions about whether or not JPMorgan Chase, Goldman Sachs,Citibank, Wells Fargo, Sun Trust Bank, HSBC Bank USA, can continue in business, more than 1,800 regional and smaller institutions are at risk of failure despite government bailouts!
The Financial Times blog, Alphaville, had this post about it, which linked to the Turner Radio Network and said this was "something of a scoop," albeit "odd."
Apparently, the FT and perhaps other sites giving the report quasi-legitimacy was enough to move the markets and prompt a response from the Treasury. From Reuters this morning:
"There is no basis for that report, we do not even have results yet," (a Treasury spokesman said)...
"It certainly did (move the market) for a while. It raised people's eyebrows. People had associated it with (Ted) Turner's broadcast network," said Lou Brien, market strategist with DRW Trading in Chicago.
I guess this is what can happen when you try to keep secrets in an age where it's extremely difficult to keep them. People want to know so badly, they'll believe just about anything. And this is what can happen when a respected newspaper blog doesn't practice due diligence. Ben says correctly in the comments section below that Turner's stress test "results" come directly from a press release dated April 6th by a Dr. Martin Weiss to promote his book.
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In fact just today, Geitner said and I quote "Most of the banks are well capitalized." How can he say that if he hasn't seen the results? In fact, it is insulting to our intelligence to say Geitner or others after ORDERING the banks to stay quiet about the RESULTS are now saying there are no results.
They are planning on releasing a MASSIVE LIE on May 4th. The banks are leveraged to the hilt some as high as 1000% they are, in fact, insolvent based on leverage alone bcuz the only way that kind of leverage pays is if the market goes up FOREVER. They are lying to us.
I am confused about Treasury saying they do not have the results of the stress tests yet for the following reasons:
-Obama at an outdoor press conference in Spain several days ago said he had seen the results of the stress tests but would not comment yet
-Google news stress tests and the Treasury claims most banks have passed, how can they say that if they don't have the results?
-The SEC contacted Hal Turner asking to see the documents & threatened a subpoena, why do that if there are no results yet?
Something very fishy is going on. Forget whether Hal Turner actually has the results. Weiss did their own study that also indicates most of the banks are insolvent. I think we all know most of the banks are insolvent, especially if credit cards and commercial real estate explodes.
Methinks the Treasury doth protest to much. They know the results but they want to hide them and now they are worried someone has the REAL results and not the lies and spin the Treasury plans to release...
The Treasury claims that even THEY don't have the results yet from the "tests".
However, the Fed' told the banks on April 9th to not disclose the information.
Why? They thought it could harm the bottom line of all the banks reporting for the quarter.
This would indicate that the Fed' knows the results AND the banks already know the results. I mean, how could the banks withhold something they don't have?
Someone is not telling the truth... that or everyone knows the results EXCEPT the Treasury :)
Heathmun, you're right to question this. I thought about that while I was writing this post, so I went back and looked at what was said April 9th. All of the comments seemed to indicate that the banks had undergone the stress tests but that the framework for analyzing them wasn't complete.
My guess would be is that it's like any test. When you take it, you have a pretty good idea of how you did, but you don't know the final grade until the teacher grades it and gives it back. The Fed didn't want anyone jumping the gun.
I'm certain about one thing. And that's that the Turner blog didn't get the results ahead of time. As pointed out above, his "results" were taken word for word from a book author's press release a few weeks ago.
If you look closely, you'll notice that Turner's "salient points from the stress test" are mostly lifted _word for word_ from an April 6th press release put out by Dr. Martin Weiss to promote his new book.
http://www.reuters.com/article/pressRelease/idUS180066+06-Apr-2009+BW200...
Does any media outlet have the integrity to report this guy as a plagiarist?
After being found out, he then cited the story he plagiarized from as 'confirming his report'.
Story of the week, "markets tumble because white supremacist fools the media"....
Thanks for the link, Ben. It is just about word for word from that press release. Hal Turner seems to be a lot of "ists" including plagiarist. I'm not sure what prompted traders to believe his column, whether it was the FT linking to it or what.
As one of the reporters on FT Alphaville, I want to point out that we linked to that post (which was being actively emailed around dealing
rooms) *after* the markets had already moved in response to it.
Moreover, if you read the post we did on the subject (and our comments subsequently), you will note the tone of our piece was highly skeptical.
I looked the blog over, and I didn't find any obvious information that said anything I would deem white supremacist. They did have a picture of people in white pointy hats and white robs, but that was for a ceremony in Europe. In fact, the blog gives credit to Obama for handling the pirate situation well. Is this a case of quick judgment? Or maybe, did the press do what this blog did, and just run with something they didn't know a lot about?
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