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ReplayRandall
10-23-2014, 11:01 PM
So you think the FED has our economic future under control?

Maybe this article will help everyone sleep better....


http://www.marketwatch.com/story/fed-stress-tests-to-put-banks-through-60-stock-slide-110-oil-2014-10-23

badcompany
10-24-2014, 08:10 AM
There's the expression that Generals are always fighting the last war. The Fed is always fighting the last crisis.

Of course, when the next one comes, it will be an entirely different set of circumstances.

At the end of the day, the Fed has one tool: the printing press, or more accurately, the keyboard.

_______
10-24-2014, 11:21 AM
I don't get it.

I should worry that large financial institutions are required to undergo annual tests? What in the article was supposed to be a sign the Fed had lost control?

Robert Goren
10-24-2014, 01:47 PM
It should be pointed out that while we had very high oil price prior to the 2008 crash, oil prices fell sharply after it began. I believe at one point in 2009 they were below $40. The stress tests are a good start, but do not go far enough. The large banks pay a lot money to some very smart people to figure out a way around them. The government can match those wages, so are a step behind. That being said, those test and the banks honesty is the only thing keeping us from another crash. For those who do not keep score, the banks have caused every recession in my lifetime. There is no reason to believe they won't cause the next one too.

whodoyoulike
10-24-2014, 04:30 PM
Is the author trying to say these large banks shouldn't be required to submit to a "stress test" of their financials here or in Europe? Or, is he saying to not present such a severe scenario because it won't likely occur (because it has)?

_______
10-24-2014, 04:56 PM
The author of the article linked provides information readily available about the assumptions to be used in this years stress test. I don't think he means much else beyond..."here's the news about this years stress tests"

I remain perplexed about what the author of the post means.

Robert Goren
10-24-2014, 10:15 PM
There's the expression that Generals are always fighting the last war. The Fed is always fighting the last crisis.

Of course, when the next one comes, it will be an entirely different set of circumstances.

At the end of the day, the Fed has one tool: the printing press, or more accurately, the keyboard.They have all been caused by same bunch. The bankers. The bankers will keep pulling the same stuff if they let them. If they don't they will do something new, but it takes a little longer to come up something new than if we just let them do the same stunts over and over again. It was the getting rid of rules and laws put in the 1930s to prevent another depression and that nearly caused another one in 2008. Somebody once said something about not learning from history..... The bankers are always attracted to someone or something that offers to make them a quick buck. They never think they might be on the losing side of a bet. They are too smart and they have the degrees and the IQ tests scores to back that feeling.

whodoyoulike
10-25-2014, 04:40 PM
The author of the article linked provides information readily available about the assumptions to be used in this years stress test. I don't think he means much else beyond..."here's the news about this years stress tests"

I remain perplexed about what the author of the post means.

I still don't understand the purpose of the article author's essay. Just ran across this timely other article today. IMO, banks only care about making money for themselves (as Robert said).

http://economictimes.indiatimes.com/news/international/business/fifth-of-eurozone-banks-fail-ecb-health-check-report/articleshow/44934677.cms

_______
10-25-2014, 05:30 PM
I still don't understand the purpose of the article author's essay. Just ran across this timely other article today. IMO, banks only care about making money for themselves (as Robert said).

http://economictimes.indiatimes.com/news/international/business/fifth-of-eurozone-banks-fail-ecb-health-check-report/articleshow/44934677.cms

It isn't an essay. It's a news story.

Asking the authors purpose is like asking what someone meant by saying Kansas City beat San Francisco 3-2 last night. Sometimes a cigar is just a cigar.

I have seen the rumors about 25% of euro area banks failing the ECB's stress test. The official results will be out Sunday. If true, the banks that failed will need to raise reserves.

Banks do want to make money. I don't think any of us should want it otherwise. Banks that fail in that mission end up hurting more than just their shareholders. I think the issue is more that the risks they take are socialized when they fail while the profits are private when they don't.

The stress tests are an effort to be sure the largest financial institutions are not at risk of failure again during an economic dislocation.