Stress Test Not Stressful Enough

Tim Geithner is now “stress testing” the banks to see how they’ll do if the economy doesn’t bounce right back up like the Obama administration says it will (and to see which need to be given even bigger helpings of taxpayer cash when it doesn’t). 

Alas, Geithner’s stress test is not particularly stressful.  In fact, his downside case, the “more adverse” scenario, is more optimistic than the OECD’s latest base case.

Calculated Risk produced the following charts.  The first compares Geithner and OECD on GDP.  The second does the same for unemployment.  Nouriel Roubini, it should be noted, is looking for GDP of -2% in Q4, making both Geithner and the OECD look like pie-eyed dreamers. 

In any event, as Calculated Risk concludes, we can safely throw Geithner’s “base case” out the window.


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