Morgan Panic in Part Due to CEO Misquote

Bad stenographers, bad!

As if this were not bad enough, it gets worse. Though the Times fixed its mistake, the mistake's larger contribution to the discourse and to the tailspin at Morgan -- and, by extension, Goldman -- is not being factored in. Early this morning, Reuters ran a story about the carnage at Morgan, giving reasons for the spreading of the fire of fear that did not mention the false nature of this prominent all-is-lost quote:

"Morgan's Mack insists the firm can remain independent, and with its capital and cash balances both solid. Still, the bankruptcy filing of Lehman Brothers Holdings Inc and bailout of American International Group Inc(AIG Quote) this week added fuel to the fires spreading across the marketplace.

Morgan Stanley shares have plunged 55 percent in just the past four days amid the same kind of speculation that brought down Bear Stearns Cos Inc and Lehman and convinced Merrill Lynch & Co Inc(MER Quote) it should merge with Bank of America Corp(BAC Quote)."

Well, uh, it's not quite "the same kind of speculation that brought down" the others, is it? After all, Lehman was saying things were great when they were not. Here, Mack was saying things were lost when they -- uh, wait. He wasn't saying things were lost.

While it does seem apparent that Mack might be searching for some sort of big investment in his firm or perhaps a merger partner, the search was still being called "frantic" in today's Financial Times. But if the alarmist quote was fiction, maybe he is less than "frantic." Also, Morgan's stock went from awful to up as Thursday progressed yesterday and as traders realized the quote was fake -- which was not mentioned in the FT article as a motivating factor in the turnaround: