Monday, May 11, 2009

Stress tests not very stressful

(CCBlog users note: the site is linking to the wrong post. Check the archives to the right for the post you are looking for. Sorry for the confusion.)

Robert Kuttner has had some astute things to say throughout the current financial crisis. Here is his take on the so-called "stress tests" which weren't all that stressful, and why the weren't. Money quote:

Why is the Fed low-balling the problem? The hope is that by keeping the banks afloat for a few more months, and trying to entice private capital back to the table, the recovery in other parts of the economy will spill over onto the banks. But the greater likelihood is that weakened banks will continue dragging down the rest of the economy.

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