Wall Street Whispers: Major Financial House Set To Implode, Morgan Stanley?
There is an unusually high amount of chatter on Wall Street surrounding the possibility of another major financial collapse in the making.
Before the collapse of mega behemoth Bear Stearns there were rumors that a major Wall Street firm had bitten off more than it could chew. Mainstream media, for the most part, completely ignored the rumors, with some financial experts like CNBC’s premier Wall Street insider Jim Cramer literally screaming at viewers on the March 11, 2008 airing of Mad Money in which he vehemently denied any problems saying that the company was “fine.”
Just a few days later Bear Stearns collapsed into heap of rubble and was offered up for sale at just $2 a share to JP Morgan Chase. This incident is widely believed to have been the catalyst that kicked off what we now refer to as the sub prime mortgage collapse.
In the last few months we’ve started receiving signals similar to what contrarian observers were seeing prior to the Bear Stearns collapse.
Big money flows out of financial stocks by key financiers like George Soros and John Paulson were reported just last week and tens of billions of dollars have been withdrawn from the European banking system since Spring. The government for its part, has taken steps to lock down the banking system so that not only can customers no longer withdraw funds from money market accounts in the middle of a panic, but a recent federal court case set a new precedent that has essentially given the go ahead for banks and investment firms to use segregated customer deposit accounts to engage in highly risky trading strategies without the threat of ever being prosecuted.
Now, a report from analysis firm Beacon Equity Research suggests that there is an unusually high amount of chatter on Wall Street surrounding the possibility of another major financial collapse in the making. When the Department of Homeland Security or other intelligence services hear chatter they often raise the terror alert level, deploy federal SWAT teams and go on complete lock-down.
We can make predictions or forecasts based on rumors and news, and often times we’ll be berated for acting to protect ourselves based on this information. Often, even rumors and chatter have been responsible for driving a particular stock or market up or down, so the very news itself, whether true or not, may set the ball in motion.
But, the fact of the matter is that neither the SEC nor Ben Bernanke nor Tim Geithner nor the White House nor mainstream financial pundits nor Wall Street insiders will ever tell us ahead of time that billions of dollars of our wealth is about to be wiped out.
We will only find out after the fact.
You’ve now heard the rumor. You’ve been following the news. The decision is in your hands.
For anyone wondering why Morgan Stanley could be set to fail, this little infograph explains their derivatives exposure.