The assumptions in government bank stress test are too rosy.
The actual macro data (GDP, unemployment, housing) are worse than assumed. Even so, government is unwilling to disclose the test results. Now you can imagine how bad the real situation is in America's financial sector.
The current (Q1) GDP growth rate and unemployment are far worse than it's assumed in stress test:
Now compare the assumptions with the forecast:
(click to enlarge; graphs courtesy of calculatedrisk)
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Tuesday, April 14, 2009
Rosy assumptions in bank stress test
2009-04-14T13:36:00-04:00
Paul Deng
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