Wall Street Journal (July 24)
The European bank stress tests leave one “not much wiser.” For fear of suggesting the EU’s bailout package is insufficient, the stresses did not include a test for a sovereign default. The tests were restricted to more modest (and less revealing) shocks. The tests, however, could have been even less useful. Germany opposed the public release of results for individual banks. In the end, Spain and several other countries won this argument so bank-by-bank data is available.
The European bank stress tests leave one “not much wiser.” For fear of suggesting the EU’s bailout package is insufficient, the stresses did not include a test for a sovereign default. The tests were restricted to more modest (and less revealing) shocks. The tests, however, could have been even less useful. Germany opposed the public release of results for individual banks. In the end, Spain and several other countries won this argument so bank by bank data is available.
Tags: Banks, Europe, Sovereign default, Stress tests
The Economist (July 23)
With bank stress tests complete in Europe, Japan breathed a sigh of relief. Perhaps the euro would strengthen and the yen finally weaken. The Economist suggests otherwise. Based on the Big Mac index, the magazine believes the Euro is overvalued by 14% versus the dollar, while the yen is slightly undervalued and should rise to 85.7 versus the dollar. More extreme still, the yuan appears undervalued by 48% versus the dollar. The Big Mac index is based on the concept that wherever you are, standard goods like a burger should cost the same amount.
Tags: Big Mac index, euro, Exchange rates, Yen
