Tuesday, 23 November 2010

Ireland: A Real Live Stress-Test Unfolds

Quick comment from Germany:

That Irish Bail-out ... looks like those feeble bank "stress tests" might themselves be put to the test. And still they resist increases in CapAd requirements.

In the circumstances of mid 2010 it was always fatuous to simulate exposure to PIGS sovereign risk with a haircut alone, as we argued at the time, and may shortly discover for real.

It all depends on how quickly events develop. So far, Drew's Law of Slow-Mo Dominos is holding ...

ND

9 comments:

Mark Wadsworth said...

How are the long suffering German taxpayers taking it? How many of them want OUT of the Euro or even OUT of the EU?

Nick Drew said...

I don't think we even begin to understand the depth of their commitment to the 'political project', Mike

remember the pain they patiently absorbed (and continue to take) with the re-unification

some of it is to do with 'solidarity' (which we also barely comprehend), but plenty of it is self-interest, too, according to a very mature & long-sighted view (even if possibly erroneous)

hatfield girl said...

'I don't think we even begin to understand the depth of their commitment to the 'political project'

Absolutely. And this goes for the other member-states too. There's no other way of being envisaged than being in the European Union. The UK is unique in its 'membership despite itself.'

Nick Drew said...

incidentaly, I spend my time here surrounded by professional people - Germans of course, but also several other EU nationals - and none of them bats an eyelid at the bail-outs thus far, they just wonder whether Spain might be a bit indigestible ...

so I don't know who the German taxpayers are who might revolt

could be a figment of the UK media's imagination - it's what they (we) assume would be the case, (and you can always find some mug in the street who will give you a vox-pop to suit your Birt-ite pre-decided news story)

Elby the Beserk said...

Yes, the same occurred to me Nick. I've done stress-testing on large library system databases, simulating up to 500 concurrent accesses to see how the system handles it. Complex, but to a certain extent mechanical, with a lot of work putting together the scripts that are to be enacted.

I have no idea how that would translate to stress-testing a bank, or even if it is in fact possible to do it in a meaningful way. Given that all the banks need to be tested at the same time for it have any meaning whatsoever.

Bill Quango MP said...

http://www.thefirstpost.co.uk/71920,news-comment,news-politics,german-exit-from-euro-a-realistic-prospect-in-2011-deutsche-mark-deutschmark?DCMP=NLC-daily

Germany to leave the Euro.

Nick Drew said...

Interesting, Bill, but there I read

"A major stumbling block is that the current level of the euro suits Germany very well - and its banks have piles of euro-denominated investments: a devaluation would be a big hit for them"

which is quite telling as well

though of course, as we speak those banks are busily offloading shit to the ECB ...

Bill Quango MP said...

Quite.
I didn't give it any credence either.

But someone 'falling out of the eurozone temporarily..' may be a possibility.

Anonymous said...

http://www.youtube.com/watch?v=2N8gJSMoOJc