It is hard to believe how bad markets/investors twist information to their liking. Worse yet is the media showing off information without full disclosure. That is what this afternoon’s rally off of the bottom is all about.
At about 1:30pm, major market indices were making a test of support when word of a letter from Bernanke was reported. It seems that while he is very concerned about the potential effects on the U.S. financial system should a EuroZone bank fail, he stated that he believed that the situation is manageable.
But, that was in JULY!!!!!! Most news sources are reporting as if this is a new story. Here is some of the information from Marketwatch:
WASHINGTON (MarketWatch) — The exposure of U.S. banks to Greece, Ireland and Portugal is manageable and quite small, Federal Reserve Chairman Ben Bernanke told U.S. Senator Bob Corker in a letter written in July that was released Tuesday. The nearly $200 billion exposure the Bank for International Settlements has reported capture only one side of banks’ credit-default swap exposure, Bernanke said. Confidential supervisory information and CDS data from the Depository Trust & Clearing Corp.’s trade information warehouse indicate that the exposures are “quite small.” Bernanke does note a sovereign credit event could affect a broad range of markets and financial institutions.
Notice that Spain and France are not included? What about Italy?
Things have gotten alot worse since July and the recent uprising against Merkel is not going to do much to instill confidence in future bailouts.
(Looks like there may be a SHORT set-up into the close for banks today)