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To: Smiling Bob who wrote (264053)	7/26/2010 11:16:37 AM
From: DebtBomb	Respond to of 306849

Roubini and JPMorgan Agree: Euro Stress Tests Were a Joke Posted Jul 26, 2010 09:47am EDT by Joe Weisenthal in Banking Related: DB, RBS, UBS, XLF, FAZ, FXE, CS Share retweet EmailPrint.From The Business Insider Heads up to fans of Dr. Doom. Nouriel Roubini was on Squawk Box this morning, talking Europe, the U.S. economy, and the rest of the news. A few points: * Of course the stress tests weren't stressful enough. * El-Erian's "new normal" is right, and U.S. growth will be sluggish for years. * Nominal unemployment will be around 9% in about 6-9 months. Meanwhile, count JPMorgan analyst Pavan Wadhwa among those who think the stress tests were a joke and that only bad can come now. "We believe that the stress test results will fail to restore financial confidence," he writes. Here are the key bullet-points: The European bank 'stress' tests were anything but; just 7 banks failed with a paltry €3.5 billion ($4.55 billion) total capital shortfall... • ...due to a lack of rigour in macroeconomic stresses, leading to low portfolio loss rates... • ...and the fact that sovereign haircuts were applied only to trading books and not to accrual books • Our estimates show that the lack of rigour in CEBS stress scenarios resulted in a 1.7% upward bias to Tier I capital ratios... • ...and the focus on Tier I (not core Tier I) resulted in a 1.2% lower capital hurdle... • ...for a total bias of 2.9% in Tier I capital ratio estimates • Eliminating this bias suggests that 54 banks would have failed a more stringent stress test, generating a capital shortfall of €60-75 billion (or ~ $78 billion to $97.5 billion) finance.yahoo.com

To: Smiling Bob who wrote (264053)	7/26/2010 12:43:54 PM
From: patron_anejo_por_favor	Read Replies (1) \| Respond to of 306849

China's got their own bubble to deal with. May take a while, but it will be dealt with one way or another.

To: Smiling Bob who wrote (264053)	7/26/2010 2:16:50 PM
From: tejek	Read Replies (1) \| Respond to of 306849

Do you see the problem and common theme? It's all about growth in Asia ie. China, and that growth in a repressive Communist country is not something that can be relied upon to pull the US away from its death march. Calling China a communist nation is a contradiction in terms. Chinese econ. reforms in the 1980s led to China developing its own form of capitalism and therein lies the contradiction. A nation can't be both communist and capitalism. In truth, China is a repressive dictatorship that has become less so over the last 20 years. Its economy is now second largest in the world soon to be the largest and the largest exporter. China's economy is large enough so that it can pull the world out of a slump just as the US has in the past. American companies are playing games as can be seen in this article here: Message 26710655