The results of the bank "Stress tests" are supposed to be released today. We've only been hearing about these tests since what . . . January.
I doubt that the stress tests will tell is much that we don't want to hear. That would be deadly for the fragile markets. The bad news is that there is still too much debt sloshing around and many of the measures that have been taken thus far are band aids. Here is a pretty good article The Market Ticker, a blog I found through Patrick.net.
In addition to comments on why banks are not foreclosing on houses, he points out in his article that rising interest rates by credit card companies are an attempt to milk the paying customers in order to make up for losses on everyone else. Be, it won't work because paying customers will pay off balances and close the cards. And the ones who can't pay will default. "36% interest charged against someone who is paying zero because they defaulted is still zero."
Thursday, May 07, 2009
Stress Tests my Ass
Posted by USWest at 7:21 AM
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5 comments:
We are all learning what we expected, I think, that banks are in trouble, but not as much trouble as they could be. And the efforts of consumers to pay off debt when they can are probably being overmatched by the needs of the unemployed and underemployed who take out credit cards for rent and baby's milk.
Actually, I think the banks are in a lot more trouble than they or the government are willing to admit.
I dunno. The feeling that the sky was falling appears to have abated for most people. The rising stock market reflects -rather than drives- this view. I think the Obama team cleverly sounded claxons and alarums in order to make sure that we would be calmer when it all turned out to be not quite so bad.
I'm with USWest - this is the banks doing the whole "ignore the man behind the curtain" bit.
USwest. Ditto. But the real bugger is going to be when the insurance companies are audited.
I don't think that there are 2 of the big 20 insurance companies who could meet a stress test of "Do you have the cash/near cash to pay average claims for 2 months?"
There is debate about whether arson home and business fires go up as the cash runs out or when the cash runs out.
Can checking cash assets be a sure indication of arson.
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