Posted on 04/18/2009 2:32:04 PM PDT by bruinbirdman
The fog of opacity grows greater still.
The spin machine about the banks' stress test is already in full motion. Some banking regulators have already served up--to The New York Times--their spin that all 19 banks that are subject to the stress test will pass it. In other words, not one will fail.
But let's look at the actual data. The macro data for the first quarter on the three variables used in the stress tests--growth rate, unemployment rate and home-price depreciation--are already worse than those in the U.S. government baseline scenario for 2009. They are, in fact, even worse than those for the stressed scenario for 2009.
The government used assumptions for the macro variables in 2009 and 2010 that are so optimistic that the actual data for 2009 are already worse than the adverse scenario. As for some crucial variables, such as the unemployment rate--key to proper estimates of default and recovery rates for residential mortgages, commercial mortgages, credit cards, auto loans, student loans and other banks loans--the current trend shows that by the end of 2009 the unemployment rate will be higher than the average unemployment rate assumed in the more adverse scenario for 2010, not for 2009. Put plainly, the results of the stress test--even before they are published--are not worth the paper on which they are written.
Let us look at how the stress tests are done. According to the U.S. government, there are two scenarios: a more optimistic "baseline scenario" for 2009 and 2010 for the three macro variables (gross domestic product, unemployment and home prices); and a more pessimistic "alternative adverse scenario."
The baseline scenario assumes--based on the average of the forecasts by the consensus of macro forecasters at the time when the stress tests were announced--that GDP growth will be -2.1%
(Excerpt) Read more at forbes.com ...
Just another coat of paint on gangrenous flesh.
Am I imagining things, or did the media, including CNBC, start hyping the bottom or signs of turn around all together?
Are there still more trillion dollar problems out there?
Increased foreclosurers, commercial realestate, credit cards and finally state and local defaults.
Isn’t the unemployment rate still increasing?
Am I wearing a tinfoil hat or are we just in a pause while still more bad news tanks the market?
Wish I knew.
That’s why it’s called a “Sucker’s Rally”...the big boys/politicians/msm claim an end to economic hard times...joe shmoe gets back in the market and BAM the big boys take their winnings and the suckas get creamed.
"Don't worry..., be happy"
If you tell a lie enough, widely and blatantly..., perhaps, enough sheeple will believe you!
After all, reality be damned..., we just need to have the voting populace happy by November, 2010!
Doesn't matter which party.., the playbook's pages read the same!
But at the same time, people are shopping like crazy. The malls appear full. Airlines have fewer flights---but they are all full now. Restaurants still seem pretty busy. So I don't know what to think.
All I know is that "Obama ben bery bery good to me." Not that he wants to, but I'm having a record year.
“Based on the latest March figures, the consensus is now projecting that 2009 GDP growth will be -3.2%, rather than the -2% in the original government baseline.”
But at the same time, people are shopping like crazy. The malls appear full. Airlines have fewer flights-—but they are all full now. Restaurants still seem pretty busy. So I don’t know what to think.
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I’m referring to it as “Indian Summer” although that term became “un-PC” years ago ,, I’m seeing the same here , O is spending money like crazy and although everyone knows it can’t last people are a bit tired of being frugal and holding back and are grasping at the good MSM news and such ,,, reality will come back to bite us however ,, here in FL unemployment (officially) is 9.5% with the actual much higher when you count underemployed and those that give up...
Home values in my neighborhood are at 1998 levels which means that as the average American moves every 7 years ,, unless you’re free and clear you’re underwater at least a little bit,, and in my case an amount equal to 2 years salary.
Ya think the Obamaloons know about banking?
The next thing, those idiots will claim to know about energy and “climate change”.
Oh, never mind.
Don't forget bankruptsies (GM).
yitbos
Yea we have glimmers of hope ... all is well
Yeah, you would think at SOME point the credit cards stop, and people have to actually cut back.
The scariest part is the state/local BKs. Pensions are enormous and often set at the average of last three years to 80%+. When that scandal breaks any smiling Hitler/Mao/Stalin/Pol Pot who promises relief...
I agree that results of stress tests performed by the government would be subject to politics. But wouldn’t the government have a vested interest in making viable banks look bad so that they could force banks to take their money “in the public interest”?
A well run, heathy bank wouldn’t want bailout or TARP money because recent experience shows that the government would want to use their equity in the bank as an excuse to control their business.
Won’t we see an artificial bump due to the flood of funny money in the system? I believe that in the short term the economy will appear to be recovering but in the not to distant future, when the money runs out and taxation and inflation take hold, we will be in for a rough time..!!??
My parents each received their SS refund of $250 each.
Think of all those teeny boppers or anyone who earned less that $10K who have never submitted a 1040 before but did it this year to claim The Obammunist's vote payment.
yitbos
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