New Martenson Report Ready for Enrolled Members

Sunday, May 3, 2009, 7:43 PM

There's a new Martenson Report ready for enrolled members.

This one concerns the results of bank stress tests due to be announced this week.

The Bank Stress Tests Have Already Failed

Here's part of the conclusion:

A “stress test,” at least as far as I understand it from a scientific or engineering standpoint, is supposed to encompass a set of conditions beyond normal, or expected, values. The bank stress-test assumptions are already exceeded in each case by real-world conditions, and therefore will be neither illuminating nor predictive when they are released. Let’s all be thankful that the Federal Reserve and Treasury Department do not design bridges. If they did, they might “stress test” them by simulating an average load of traffic under average conditions and declare them perfectly safe.

I advise you to tune out what is certain to be an upbeat assessment of the condition of our banks, when the stress test results are finally released.  My opinion is that the stress tests were specifically designed to be neither stressful nor revealing.  Instead, they were designed to produce expected results for the purpose of instilling confidence in banks and in the crisis management team.

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