{"id":367,"date":"2009-05-09T10:10:00","date_gmt":"2009-05-09T10:10:00","guid":{"rendered":"https:\/\/clusterfamilyoffice.com\/blog\/?p=367"},"modified":"2009-05-09T10:10:00","modified_gmt":"2009-05-09T10:10:00","slug":"la-prueba-del-algodon-o-stress-test","status":"publish","type":"post","link":"https:\/\/clusterfamilyoffice.com\/en\/la-prueba-del-algodon-o-stress-test\/","title":{"rendered":"The Cotton Test or Stress Test."},"content":{"rendered":"
It has been criticised ad nauseam<\/a> the stress test for Geithner<\/a>. The reasoning was that a \u00ablitmus test\u00bb could only harm the US banking sector and its share prices: if the results showed a general pass, it would highlight the test\u2019s futility and lack of rigour, and the markets would therefore punish this charade. If, on the other hand, the test singled out banks unable to withstand a worsening of the economic situation (which was both inevitable and imminent), these banks would plummet on the stock market, triggering extremely dangerous panic, amid fears of further Lehman Brothers-style collapses that could hardly be tolerated. But this prediction overlooked the fact that transparency also has a price \u2013 and a significant one at that.<\/p>\n

The projected figures for the worsening of the situation, used in the stress test, are set out in the table below:<\/p>\n

\"\"<\/a>
We note that, in the least negative scenario, the US economy is projected to contract by -2% in 2009 and to grow by 2.1% in 2010. In the most negative scenario, the economy is projected to contract by -3.3% and recover by 0.5%, respectively. Another variable is unemployment, which affects the general ability to service debts: between 8.4 and 8.9% in 2009 and 8.8 and 10.3% in 2010. We also see the projected fall in property prices (houses): between -14% and -22% for 2009, and between -4% and -7% for 2010.<\/p>\n

Some also question the forecasts themselves, but in general the criticism centred on the futility and\/or danger of publishing the results. Well, as things stand today (tomorrow is another matter), the effects of publishing the stress test are clear: greater transparency and confidence, which is translating into increased investor support for the major US banks. And that boost in confidence is a godsend for the world\u2019s largest banking system.<\/p>\n

\"\"<\/a>As we mentioned last April in The Banking Crisis II and speculation in the US banking sector<\/a>, the Obama\u2019s bailout plan<\/span> dispels the possibility of the major banks going bankrupt. The fact is that this possibility of Chapter 11 <\/span>Until very recently, it was trading at the share prices of the most high-profile US companies. The credibility of that rescue plan, as well as the publication of the results of the litmus test<\/span> credible and apparently rigorous (despite widespread criticism<\/a>), have shed light on the future of the major North American banks.<\/span><\/p>\n

\"\"<\/a>Anything could happen in the markets over the coming months, but the systemic risk posed by the big banks and the spectre of Lehman Brothers are no longer a factor. Now it is \u00abmerely\u00bb a matter of fine-tuning the valuation of the goodwill<\/span><\/a> and in any capital increases that may take place. However, the irrational and unfundamental value of the US banking system is proving to be the basis for the current share price, as we said last November<\/a>. All it took was to dispel the spectre of bankruptcy for the shares to trade well above their intrinsic value. We do not see this phenomenon even in sectors as significant as the automotive industry.<\/p>\n

\"\"<\/a>The fact is, we are talking about something as vital as money \u2013 and the system that manages and creates it. These are such weighty matters that the mere guarantee of the survival of the major banks means that share prices, which previously reflected the risk of these institutions going bankrupt, have now been surpassed. The fundamental value, just like the size\u2026 no always<\/span> It matters.<\/div>","protected":false},"excerpt":{"rendered":"

Se ha criticado hasta la saciedad el test de estr\u00e9s de Geithner. Se razonaba que una \u00abprueba del algod\u00f3n\u00bb s\u00f3lo pod\u00eda perjudicar a la banca norteamericana y a su cotizaci\u00f3n en bolsa: Si los resultados daban el aprobado general se evidenciar\u00eda la inutilidad y la falta de rigor del test, por lo tanto los mercados […]<\/p>\n","protected":false},"author":6,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[],"class_list":["post-367","post","type-post","status-publish","format-standard","hentry","category-sin-categorizar"],"_links":{"self":[{"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/posts\/367","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/comments?post=367"}],"version-history":[{"count":0,"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/posts\/367\/revisions"}],"wp:attachment":[{"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/media?parent=367"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/categories?post=367"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/clusterfamilyoffice.com\/en\/wp-json\/wp\/v2\/tags?post=367"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}