Europe Delays Second Bank Stress Test Due To "Unrealistic Assumptions" And "Errors"

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Wed, 06/01/2011 - 11:20 | 1328766 Alienated Serf
Alienated Serf's picture

dominoes falling everywhere, this is gonna be a fun summer.

i'm sure a collapse of all their euro denominated tier one capital will help.

Wed, 06/01/2011 - 11:22 | 1328780 Cash_is_Trash
Cash_is_Trash's picture

You can't kick the can down the road forever.

AG to $39 before COMEX close.

Wed, 06/01/2011 - 11:40 | 1328911 writingsonthewall
writingsonthewall's picture

Oh they're going down like.....dominoes?


Check out the Glencore price today after this story broke.

Whoops - now it's below the IPO price.

Next up - Linkedin - and which morons said this wasn't a bubble?

Wed, 06/01/2011 - 11:19 | 1328770 LRC Fan
LRC Fan's picture

Meh...Dow doesn't give a fuck.  We still will close much higher. 

Wed, 06/01/2011 - 11:18 | 1328772 TruthInSunshine
TruthInSunshine's picture

To the rabbit hole.

There is no spoon.

Greenspan, all shroomed up in college, once doubted his own existence, until he changed his mind, and now, after watching Bernankstain in action, he is re-thinking his position yet again.

Right now, Greenspan is watching a lit candle slowly melt, and reading Kant & Hume, and thinking hard...

Wed, 06/01/2011 - 11:22 | 1328795 Cdad
Cdad's picture

Hey man,

What are you doing in my cosmic bunny hole?

Wed, 06/01/2011 - 11:29 | 1328860 TruthInSunshine
TruthInSunshine's picture

The bunny hole is the communal wading pool of last resort for the aware or seeking-awareness when the 'real' world becomes more surreal than alternate reality.



Wed, 06/01/2011 - 11:37 | 1328890 augie
augie's picture

Don't forget the first rule gentlemen.

Wed, 06/01/2011 - 11:38 | 1328925 TruthInSunshine
TruthInSunshine's picture

This is fight club or no peeing in the pool?

Wed, 06/01/2011 - 11:52 | 1329001 augie
augie's picture

semper ubi sub ubi

Wed, 06/01/2011 - 11:20 | 1328800 Cash_is_Trash
Cash_is_Trash's picture

Think the shit will fall on Greenspan instead of the Bernank?

I think so.

Wed, 06/01/2011 - 11:31 | 1328870 TruthInSunshine
TruthInSunshine's picture

I think it's a fair statement that Greenspan was the first to tamper with the limiter on the throttle body, but Bernanke & Crew have implemented fiber optic throttle.

Wed, 06/01/2011 - 11:18 | 1328782 oogs66
oogs66's picture

well its nice to have confirmation that the stress tests were as much of a sham as people here thought right from the start.  it will make me feel better when they ram my es short up my...

Wed, 06/01/2011 - 11:19 | 1328792 Josh Randall
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LIESMAN delays stepping on scale due to "Unrealistic Assumptions" And "Errors"

Wed, 06/01/2011 - 11:35 | 1328903 Jayda1850
Jayda1850's picture

+1 roflmao

Wed, 06/01/2011 - 11:47 | 1328982 francis_sawyer
francis_sawyer's picture

The next time I play golf, I'm not going to start keeping score until I've notched 3 consecutive birdies...

It's called "equitable stroke control"

Wed, 06/01/2011 - 11:53 | 1328989 francis_sawyer
francis_sawyer's picture

In USGA scorekeeping... "Equitable Stroke Control" is designed to keep a player from sandbagging...

In banking... It's used to facilitate sandbagging...

Wed, 06/01/2011 - 11:23 | 1328794 wandstrasse
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In Germany they think the word 'stress test' is sexy, thus we also use it for security observations of nuclear power plants (triggered by Fukushima). And the population, instead of laughing their heads off, thinks 'hey, if they do stress tests at the plants, everything is safe, fine!' Germany could be a good nation, but forget it, it is so sad.

Wed, 06/01/2011 - 11:36 | 1328887 Franken_Stein
Franken_Stein's picture


7 of the powerplants are to be decommissioned, effective immediately.

No stress-test, but off-line.


Wed, 06/01/2011 - 11:36 | 1328907 firstdivision
firstdivision's picture

In German, the word 'stress test' is pronounced 'shizen brust'.

Wed, 06/01/2011 - 11:47 | 1328980 wandstrasse
wandstrasse's picture

do I hearr undertones zat we Germans do nott prrronounce English werry well?

Wed, 06/01/2011 - 11:23 | 1328796 TooBearish
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EUR next strongest CCY on board today to CHF

Wed, 06/01/2011 - 11:24 | 1328806 lizzy36
lizzy36's picture

I assume the last sentence is rhetorical.

It is NEVER time for the Kleptocrats to save taxpayer money. Especially when banker bonuses are at stake.

The US should consider exporting Geithner to euroland to help them out with this matter. Nobody is better at turning a farce into a "hope and change" moment than Tiny Tim.

Btw tyler, totally stealing flying fornication. May or may not give credit where it is due ;)

Wed, 06/01/2011 - 11:25 | 1328813 augie
augie's picture

"unrealistic assumptions"? what are they getting their metrics from the BLS?

Wed, 06/01/2011 - 12:41 | 1329227 Urban Redneck
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This was still valid for the FORTHCOMING "stress testing" as of YESTERDAY May 31, 2011.


Example 1
Treatment of a long sovereign bond position

A bank holds for trading €100 of 10-year Spanish government debt which is not hedged at all. The fair
value of this position on 31 December 2010 is €95.

For the baseline scenario, the bank does not apply any haircuts. The bank must take into account an
increase in Spanish sovereign yields of 43 basis points. The bank loses approximately €3.14, equivalent to
a haircut of 3.3%, on the bond it holds and reports the loss as due to general interest rate risk.

For the adverse scenario, the bank applies a haircut of 14.6%, as given in the table of haircuts for 10-year
Spanish government debt. The loss of €13.88 (€95 times 14.6%) is split into two parts: €3.14 reported as
due to general interest rate risk and €10.74 reported as due to widening of the sovereign credit spread.
The latter loss is equivalent to the contribution of the credit spread to the haircut of 11.3% (see Table 3).

Refer to Annex 4 for detailed Sovereign Shock Parameters

Wed, 06/01/2011 - 20:00 | 1330867 Anonymouse
Anonymouse's picture

That's insane.  Markets NEVER go down 3.3%.  Much less 14.6%!

Correct me if I am wrong, but I believe in the history of all markets (except AU and AG of course), no asset has ever gone down.

Why should banks be held to such a rididculous standard.

A more realistic assumption to use would be a stress case of only +7% GDP growth.  (Well, perhaps +9%, but let me see the +7% results first before we determine if that is too pessimistic a case to be realistic in a stress scenario).


Thu, 06/02/2011 - 11:25 | 1332404 augie
augie's picture

God damn urban, thank you so much for that insight. Bonds is one area where my knowledge is severely limited. I really appreciate the post.

Wed, 06/01/2011 - 11:26 | 1328817 Archimedes
Archimedes's picture

And GM sales down 1.2%. Come on Tyler, post the channel stuffing chart. I like looking at it!

Wed, 06/01/2011 - 11:27 | 1328820 carbonmutant
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The former chairman of Egypt’s Bank of Alexandria was held overnight at New York’s Riker’s Island jail complex after being arraigned in Manhattan on charges of sexually abusing a maid at the Pierre Hotel in New York.

Manhattan judge Gerald Lebovits around midnight last night set bail for Mahmoud Abdel Salam Omar, chairman of El-Mex Salines at $50,000 bond or $25,000 cash, according to the Manhattan District Attorney’s office. Omar also was ordered to surrender his travel documents, prosecutors said.

Wed, 06/01/2011 - 11:25 | 1328839 Cash_is_Trash
Cash_is_Trash's picture

72 years old.

Way to go!

Wed, 06/01/2011 - 11:55 | 1329013 augie
augie's picture

I guess that's how the elite cull their own.

Wed, 06/01/2011 - 11:27 | 1328827 Boilermaker
Boilermaker's picture

It's gotta work better than the truth!

Wed, 06/01/2011 - 11:31 | 1328850 RobotTrader
RobotTrader's picture

The fix is in, here comes another fabled "v-bottom".

No way the PigMen are going to let the XLF drop any further, otherwise their livelihoods are at stake.

Wed, 06/01/2011 - 11:38 | 1328900 Internet Tough Guy
Internet Tough Guy's picture

Momo, you are still a perfect fade.

Crisis now over, nobody needs gold, but they are clamoring for bank stocks
RobotTrader - Mon, May 30, 2011 - 10:55 PM

Heh, so typical.


Wed, 06/01/2011 - 11:41 | 1328924 lieutenantjohnchard
lieutenantjohnchard's picture

excellent follow up. hat tip to ya.

Wed, 06/01/2011 - 11:39 | 1328906 lieutenantjohnchard
lieutenantjohnchard's picture

as his seed capital continues to diminish even with his paltry 30% commitment of widows and orphans stocks the unemployed, part time contract 1099 processor posts ever more at zh and yahoo finance to distract himself from looking at the sea of red on his etrade portfolio screen.

it was just yesterday that the unemployed, part time contract 1099 processor was telling the world the stock market was poised for lift off to new highs, and for everybody to go long, except himself.

Wed, 06/01/2011 - 11:40 | 1328933 Internet Tough Guy
Internet Tough Guy's picture

Always fade him. He's money in the bank.

Wed, 06/01/2011 - 11:42 | 1328931 SheepDog-One
SheepDog-One's picture

MomoFader, 2 weeks ago- 'The markets are not pricing in QE3, the markets are pricing in a robust consumer driven recovery'

Wed, 06/01/2011 - 11:52 | 1328985 lieutenantjohnchard
lieutenantjohnchard's picture

very nice. so much material. so little time.

Wed, 06/01/2011 - 11:29 | 1328857 Translational Lift
Translational Lift's picture


Wed, 06/01/2011 - 11:33 | 1328863 High Plains Drifter
High Plains Drifter's picture

again with the stress test? this joke never ends does it?

Wed, 06/01/2011 - 11:36 | 1328904 redpill
redpill's picture

Unrealistic assumptions and errors?  Are they using the BLS birth/death model?  X-12-ARIMA perhaps?

Wed, 06/01/2011 - 11:44 | 1328920 BlackholeDivestment
BlackholeDivestment's picture They are just ''buying'' more time, with ''our labor'', until it's the ''Scottish Rite'' time for the 9/11/11 NWO Emergency Hopium Withdrawal Crisis Call, the call that's right for the dealer(s), Benny and the Chairsatan Jets?

Wed, 06/01/2011 - 11:43 | 1328935 SheepDog-One
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OK EU members...empty out your pockets on the table and count up the spare change lets see what we got!

Wed, 06/01/2011 - 11:42 | 1328947 TruthInSunshine
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Cleansing of the Temple
“ And Jesus went into the temple of God, and cast out all of them who sold and bought in the temple, and overthrew the tables of the moneychangers, and the seats of them that sold doves,

And said unto them, It is written, My house shall be called the house of prayer; but ye have made it a den of thieves.

”   Matthew 21:12-13
Wed, 06/01/2011 - 12:54 | 1329283 AcidRastaHead
AcidRastaHead's picture

I never pegged Jesus as the angry type that throws fits.  I guess that boils down to errors and my unrealistic assumptions.

Wed, 06/01/2011 - 20:00 | 1330876 Anonymouse
Anonymouse's picture

I believe that is the only instance.  Desecration of the temple was a serious affront to God.  Theft in the name of God.  "Doing God's work" if you will.

Wed, 06/01/2011 - 11:52 | 1328986 Marge N. Callz
Marge N. Callz's picture

"Data won't be received until mid to late June."  Plenty of time to move their sovereign debt exposure from their trading book to their bank book.  Just like last time, most will pass with flying colors and weeks later will ask for help.

Wed, 06/01/2011 - 12:37 | 1329226 AcidRastaHead
AcidRastaHead's picture

If a stress test is supposed to make an assessment based on a bad to worst case scenario and they cite unrealistic assumptions, then obviously their view of bad was unrealistically rosey.  Don't worry though they'll find the right mix of false inputs to get the desired final results.  As error prone and unrealistic as it may be, just as long as it doesn't hurt the markets.

Wed, 06/01/2011 - 12:58 | 1329311 Bansters-in-my-...
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If any bankers are reading this......

............FUCK YOU's.......

Do NOT follow this link or you will be banned from the site!