We’re not alone in our skepticism of the stress tests. The Journal, Bloomberg, The Telegraph, The FT… All come to the same conclusion: the tests were not nearly tough enough.
In the end, they’ll probably cause more harm than good.
9 Responses to “Press unipressed by stress tests”
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AUTOREFRESH 
Market was already expecting a washout was it not? even though friday was volitile, the euro held 1.2900, i would have thought there would have been very little short covering and possibly the opposite, perhaps the fact the market was expecting a fudge is already priced in.
To me it does look like the banks have hidden the real problem and published what they wanted. Dosnt help them in the long run as it keeps the market gussing, and if anything does go wrong now, its going to cause a bigger problem and more questions.
A more stringent test explicitly designed for failure would have provided the most thorough examination of bank’s vulnerabilities, and indeed more useful results.
No point deceiving ourselves. we all know that the eur is sick! and yet find a phisician
Yes, Blackday I agree, however a more stringent test would have risked a panic by irrational euro-phobes. And there are quite a few out there dressed as investement bank and hedge fund CEOs with good educations, ostensibly. It is possible, after all, that things aren’t as bad as they seem. And the ECB, for all its faults, has done a better job I believe than the BoE, the BoJ, and the Fed. And I believe that keeping the market guessing is a good thing to some extent — since smart people tend to select data to confirm what they believe anyway.
I’m curious what “in the end” means. I realize it is just an expression, but we’re playing with fire here. Are we talking about an apocalypse? Some people really do think that is a good thing. I do not.
The ECB had no choice but to game the tests. I’m speculating here, but I think they already have the information they need. And I think the banks that are vulnerable will correct themselves, provided the ECB, other central banks and multinat’l lending institutions like the IMF and BIS make the right mix of policies and tools available. At least, most of them will.
I’m not saying those institutions can engineer our way out of this mess by taking over the world, by the way. Just that we’ve got ourselves into a bit of a strategic deprivation trap — no many other choices that make sense.
Or am I just as insane as Bernanke, Trichet and Co.?
jay. insanity is the new sanity. instability is the new stability.
Perhaps the question now is, has the bank stress test provided enough of an answer to assuage market fears or was it conducted purely to suit a goal*? I get the distinct impression that the feeling is that the stress test was merely cough and drop examination.
Excel goal seek
@Fluffy: I like that. @Blackday: When I cough, my left one does a hallelujah and my right one just hangs there. Does that mean I’m in favor of more monetary and fiscal expansion? And emergency loans to shady banks? Or do I just have a hernia?
It means you should audition for the X-Factor
Subtle.