Was the European bank stress tests a farce? A new financial meltdown?

Learn the Secret

Get  our 2 Free Books

Get these now which land directly to their inbox.
Invalid email address
(Last Updated On: July 30, 2010)

Was the European bank stress tests a farce? A new financial meltdown?
An interesting topic came up in my Linked In Group. It was asked if the European bank stress tests was generally a farce.
First let’s do a little history. In the peak of the last financial meltdown in 2008-2009, Iceland was given a financial lifeline to avoid default. Two years later, their bond rating have hit a junk status. The government of Iceland say they won’t default but here we are two years later. So what does that mean for governments like Greece or Spain?
Let’s talk about these stress tests the European Central Bank put some of their banks through.
On my Linked In group, Jonathan Bauer said:
What is very strange is that events which have almost occured have been evacutaed of the test:
– No real liquidity crisis as if Central Bank can ever replace money market in case of trust crisis or dysfunction of the interbanking trades
– No defect of sovereign as if the solidest countries of Euro Zone, UE and FMI can mobilize resources and garantees to save such or such country
Konrad Banachewicz said:
1. the number of loopholes (e.g. reporting traded vs held bonds)

and

2. the fact that all but one Greek banks passed?

No, not really. They just used the American blueprint for a farce like this – and the results will be similar.

Eric Fales
this is the greatest questions i’ve seen on this blog so far! no! no i do not. i don’t believe that you can be at the apocalypse 3 months ago watching countries run from the euro like it is a currency on the brink of disaster and now everything is back to ‘ as usual’ -euro at expectation of 1.30+ now?. it actually makes me cringe a little to think where all this bad paper is sitting since apparently no one globally is capable of claiming it and the feds aren’t capable of finding it. it’s still out there. the real tarp never happened and there’s not enough hedge fund cash or balls to take this paper down for the long hall.
deposit duration will become the most important subject for commercial banks for years to come.
Interesting facts if you are into that doom and gloom.

NOTE I now post my TRADING ALERTS into my personal FACEBOOK ACCOUNT and TWITTER. Don't worry as I don't post stupid cat videos or what I eat!
This entry was posted in Quant Opinion and tagged , , , , on by .

About caustic

Hi i there My name is Bryan Downing. I am part of a company called QuantLabs.Net This is specifically a company with a high profile blog about technology, trading, financial, investment, quant, etc. It posts things on how to do job interviews with large companies like Morgan Stanley, Bloomberg, Citibank, and IBM. It also posts different unique tips and tricks on Java, C++, or C programming. It posts about different techniques in learning about Matlab and building models or strategies. There is a lot here if you are into venturing into the financial world like quant or technical analysis. It also discusses the future generation of trading and programming Specialties: C++, Java, C#, Matlab, quant, models, strategies, technical analysis, linux, windows P.S. I have been known to be the worst typist. Do not be offended by it as I like to bang stuff out and put priorty of what I do over typing. Maybe one day I can get a full time copy editor to help out. Do note I prefer videos as they are much easier to produce so check out my many video at youtube.com/quantlabs