Diamond Author
Not long ago, the European Union and the European Central Bank announced to the investment community that they were going to do a stress test on all their banks to see if they could perform, and remain solvent in the event of any further economic calamity. Wouldn't you know, that when the test results were completed only 7 of the 91 banks were said to be below the minimum standards.
Therefore, this stress test was overwhelming success, or at least we are led to believe this. Personally, I don't, and I have little faith in the banks in Europe, especially when our think tank had learned of all the off balance sheet accounting from Greece. Also, we know that all of the banks in Europe were told in advance that the stress tests were coming, and therefore they were able to shift their assets into different columns.
You see, off balance sheet loan defaults, are common in China and with the large US banks, and the same folks are also running and schooled, trained, and learn in the same environment, so we shouldn't expect anything much different. If you'll recall the SEC has fined Goldman Sachs, Bank of America, Citigroup, and came down hard on Countrywide as well. We also know of the problems with Freddie Mack and Fannie Mae. And the SEC has discovered fraud with Lehman Brothers which occurred prior to their implosion.
There was a great editorial letter to the editor in the Wall Street Journal recently; "What if Greece Doesn't Default?" Yah, well, what if it does? The author of that article points to the balancing of expenditures to tax receipts and then discusses the high interest on the debt, and bond insurance. Okay so, does this mean that Greece can move around their books and carry the game on long enough to pay off their debt - or have they really just kicked the can down the road, and the IMF will have a major economic crisis and disaster underhanded for five years?
The reality is that this whole idea of stress tests seem to calm investor fears and boost investor confidence, not only in the banks, but in the economy and the currency, and as well as the overall stock markets. The US did, and China has done it too, and along with the EU, they tell us that everything is great. Of course that's what everyone said before this giant global economic crisis, remember? It appears to me that we are merely building the bubble bigger.
And it seems the same games are being played that were played during the S&L crisis, and with the off balance sheet accounting of Enron, and nothing has changed the entire time. Why should we believe that anything will change the future based on his past history? I surely don't. And although I am not a doom and gloomer, and I am not one who likes to short markets, I am a reality based thinker, and so is our think tank. Please consider all this, and think on it.
About this Author
Lance Winslow is the Founder of the Online Think Tank, a diverse group of achievers, experts, innovators, entrepreneurs, thinkers, futurists, academics, dreamers, leaders, and general all around brilliant minds. Lance Winslow hopes you've enjoyed today's discussion and topic. http://www.WorldThinkTank.net - Have an important subject to discuss, contact Lance Winslow.
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