Latest Rumour On The Stressless Eu Stress Tests

[Deckard]

What a surprise this is

July 21 (Bloomberg) -- European regulators plan to detail three scenarios when they publish the results of their stress tests on the region’s banks this week, according to a document by the Committee of European Banking Supervisors.

Banks will publish their estimated Tier 1 capital ratios under a benchmark for 2011, an adverse scenario and a third test that includes “sovereign shock,” according to a template prepared by CEBS for the banks and obtained by Bloomberg News.

In the last scenario, banks will publish their estimated losses on sovereign debt they hold in their trading book as well as “additional impairment losses on the banking book” that they may suffer after a sovereign debt crisis, according to the document that was dated July 15.

Under accounting rules, banks have to adjust the value of sovereign bonds held in the trading book according to changes in market prices, said Konrad Becker, a financial analyst at Merck Finck & Co. in Munich. For government debt held in the banking book, lenders must write down their value only if there is serious doubt about a state’s ability to repay its debt in full or make interest payments, he said.

The sovereign-shock scenario doesn’t assume a European nation will default, said a person with knowledge of the matter, who spoke on the condition of anonymity because the information is private. Instead, it will assume that rising government-bond yields will push up borrowing costs, spurring defaults in the private sector that would lead to losses in lenders’ banking books, said the person.

So three scenarios are covered, but not sovereign default, the only one that really matters.

Well done guys, another huge credibility boost for the stressless stress tests.

Keep buying the Euro, it can only go up

[interestrateripoff]

They can't stress for a European default because the European rescue fund has been created to prevent that scenario. Therefore to include the default scenario might be seen as an admission that the bailout fund is inadequate.

Plus they want everyone to believe it's contained so that's what they are doing.

Edited July 21, 2010 by interestrateripoff

[Pent Up]

The can't stress for a European default because the European rescue fund has been created to prevent that scenario. Therefore to include the default scenario might be seen as an admission that the bailout fund is inadequate.

Plus they want everyone to believe it's contained so that's what they are doing.

It's the stressless recovery!

[wonderpup]

So- apparently they didn't want to include a soverign default option in case anyone got the idea that they thought a soverign default was possible- and so cause a panic.

So by not even considering the possibility they hope to send the subliminal message that it can't possibley happen- since-if it could happen- they would have tested for it- right?

So- to sum up- The fact that they did not test for a worst case scenrio is De Facto proof that it can't happen.

[fluffy666]

What a surprise this is

So three scenarios are covered, but not sovereign default, the only one that really matters.

Well done guys, another huge credibility boost for the stressless stress tests.

Keep buying the Euro, it can only go up

Stress test - 'Mrs Cockerfield(78) of dartford withdraws £20 bingo money from her savings one week instead of £10'

Result - ' Only 23% of european banks require more than 10 billion euros support..'

[Deckard]

So- to sum up- The fact that they did not test for a worst case scenrio is De Facto proof that it can't happen.

Exactly.

Here is a good summary from the NYT

“It’s important to have a Plan B,” said Mr. Iscaro of IHS Global Insight. “That sounds obvious, but in the euro zone, sometimes Plan B’s are difficult to find.”

classic

Edited July 21, 2010 by VoteWithYourFeet

[interestrateripoff]

“It’s important to have a Plan B,” said Mr. Iscaro of IHS Global Insight. “That sounds obvious, but in the euro zone, sometimes Plan B’s are difficult to find.”

What's plan A hope and prayer?

[piece of paper]

So- apparently they didn't want to include a soverign default option in case anyone got the idea that they thought a soverign default was possible- and so cause a panic.

So by not even considering the possibility they hope to send the subliminal message that it can't possibley happen- since-if it could happen- they would have tested for it- right?

So- to sum up- The fact that they did not test for a worst case scenrio is De Facto proof that it can't happen.

Freudian?

p-o-p

[Bloo Loo]

What's plan A hope and prayer?

Rule A...THERE IS NO RULE A.

[lowrentyieldmakessense(honest!)]

[Laura]

Stretch-test failure?

Fear not, an automatic credulity rewrite has been instigated; & will continue to be every week until the problem is 'fixed'.

[lowrentyieldmakessense(honest!)]

Stretch-test failure?

Fear not, an automatic credulity rewrite has been instigated; & will continue to be every week until the problem is 'fixed'.

sometimes i just think ive had enough of this shite

[Realistbear]

91 banks are apparently being tested. Apart from a few token failures for credibility's sake there really is no way the vast majority will fail. It has to be pre-agreed otherwise their will be a SDC of mammoth proportions and the ECB will not allow that.

Keep a lid on it says the bank. Cover up may last until winter sets in and the stress starts to crack the thin coat of lacquer they applied when bailing our Greece and plugged the gaps in Spain and Portugal.

Euro is headed back down to the 1.27's vs. the $ which suggests the FOREX isn't buying it:

1.28075

[Laura]

sometimes i just think ive had enough of this shite

Mine or theirs?

Humble apologies if the former

EU bank stress tests looks at 'sovereign debt shock' scenario

My fav. snippet

Yesterday, the International Monetary Fund (IMF) called on the EU to make its stress testing more transparent. The powerful fund also said that the tests should be extended and applied to a wider range of financial institutions.

In its annual assessment of the economic policies of the eurozone, the IMF said that governments needed to commit to fiscal sustainability through structural reforms as well as strengthening the banking system.

The IMF said that while the markets seemed to have taken a positive view of the process so far, “some uncertainty regarding the stringency of the tests is likely to remain”.

The fund said that some European authorities were resistant to the idea of more transparency. “Supervisors felt that disclosure of individual bank results could prove too market sensitive and some national authorities noted legal impediments to publication.”

However, the IMF argued that more probing tests were necessary to “reduce aggregate uncertainty and induce a greater willingness to tackle troubled banks”.

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/7903236/EU-bank-stress-tests-looks-at-sovereign-debt-shock-scenario.html

[DisQ]

What a surprise this is

So three scenarios are covered, but not sovereign default, the only one that really matters.

Well done guys, another huge credibility boost for the stressless stress tests.

Keep buying the Euro, it can only go up

just like house prices,

we can always trust the government they never lie, would they!

[keef319]

So the Stress Test results aren't coming out until 17:00 BST on Friday?

Why so late?

All the markets are closed then, apart from USA...so will market reaction be seen there?

[Snugglybear]

What's plan A hope and prayer?

That would appear to be the zeitgeist.

[Deckard]

EU Bank Stress Tests Apply Only to Traded Bond Portfolios, Document Shows

Confirmation That Only Sovereign Bond Losses On "Trading Books" Will Be Considered Validates Stress Test Irrelevancy

[deflation]

7 banks of the 91 tested have failed the stress test according to Radio 5 live.

[R K]

7 banks of the 91 tested have failed the stress test according to Radio 5 live.

Hypo of Germany

Atebank of Greece

and 5 sh1te Spanish offerings.

That was painless then wasn't it?

[shedfish]

World Collapse Explained in 3 Minutes

http://www.youtube.com:80/watch?v=H0a_FA_J6Sw

Edited July 24, 2010 by shedfish