Unemployment Worse than Stress Tests

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Government stress tests had an unemployment rate of 9.1% in May. Most analysts expect unemployment to hit 9.2% in May.

In other words... we're outpacing the "adverse scenario" stress tests.

If we pass 10.3% unemployment, then we will *exceed* the stress scenario.

With an additional 1% unemployment, we're talking about 10 billion more in write-downs on credit card debt and real-estate defaults, This will exceed what major banks than have in reserve... and the market has eaten its full in stock issuance and bond conversions, so where will the banks get the money from?

Answer: Expect another round of bailouts in the Fall... right about when the second phase of swine flu will hit.

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Lo! In the east against the blazing shadow of a rising sun, there come four men striding in unison, each step a journey, against the terrible winds.

Saturday, May 30, 2009

Unemployment Worse than Stress Tests
Posted 4:40 AM

Government stress tests had an unemployment rate of 9.1% in May. Most analysts expect unemployment to hit 9.2% in May.

In other words... we're outpacing the "adverse scenario" stress tests.

If we pass 10.3% unemployment, then we will *exceed* the stress scenario.

With an additional 1% unemployment, we're talking about 10 billion more in write-downs on credit card debt and real-estate defaults, This will exceed what major banks than have in reserve... and the market has eaten its full in stock issuance and bond conversions, so where will the banks get the money from?

Answer: Expect another round of bailouts in the Fall... right about when the second phase of swine flu will hit.

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