Courtesy of Mish.
When it comes to stress tests, especially for European banks, the one thing history suggests is the tests will be essentially stress-free, by design. Why should this time be any different?
Nonetheless, European Central Bank President, Mario Draghi Says ECB Won’t Hesitate to Fail Banks in Stress Tests.
Translating Draghize
For those of you who do not speak Draghize I offer these translations.
Draghize: “Banks do need to fail to prove the credibility of the exercise”.
Mish: We are carefully scrutinizing several non-critical banks, looking for a couple of scapegoats, hoping to fool the public regarding the credibility of the exercise.
Draghize: “If they do have to fail, they have to fail. There’s no question about that.”
Mish: If any big banks are in trouble. They won’t fail. There’s no question about that.
Draghize: “The test is credible because the ultimate purpose of it is to restore or strengthen private sector confidence in the soundness of the banks, in the quality of their balance sheets”
Mish: The test is credible because we say it is.
ECB Executive Board member Joerg Asmussen: “This is our third and last chance to restore confidence after two previous stress tests by the EBA failed to do so.”
Mish: We are praying this stress test does not blow sky high as fast as the last two did.
Draghize: “The region’s governments will be ready to fill any capital holes that emerge as a result of the stress tests.”
Mish: The region’s governments are totally unprepared to fill any capital holes that emerge as a result of the stress tests. …
