[dadipentak]

In a valiant effort to save the greedy monsters who created this mess, our esteemed leaders are preparing to sacrifice everybody else.

NYT: "The Fed is making all 31 banks run some pretty depressing numbers through their models: an 8 percent contraction in the gross domestic product, the Dow Jones industrial average collapsing to 5,700 points by the middle of next year, and an unemployment rate rising above 13 percent by 2013. The six largest banks must demonstrate they can also withstand a euro zone crash that whacks European governments and financial institutions."

The 1% thinks austerity is good (for the rest of us.) I'm unconvinced.

[reeftool]

I think the idea is to run this "stress test" and correct problems. I have a bad feeling that the test will be "passed", giving everyone a false sense of security. The events in the fall of 08 were mostly psycological. The financial world went into a state of panic. Everybody wanted to cash out and run. A simulation test will never be the same as the real thing. There will always be things that are overlooked, especially the biggest wild card of all and that's people. The reaction of people to an event is unpredictable.

[dadipentak]

The numbers cite in the test are pretty sobering. I know they'll say that it's a worst case scenario but still... Say we just go with a 6% decline in GDP, DJA at 7000 and 11.5% unemployment. The banks may survive--the rest of us, not so much.

[jeffkrol]

Be Thankful That Doomsday Never Comes - Forbes

In the 1980s, the Reagan administration used massive government spending and stimulus efforts to pull the economy out of the terrible 1970s. Government debt levels grew to what were then frightening record levels. It was projected the U.S. government would be bankrupt by the year 2000, Social Security would be history, the next generation would face hard times as a result of the debt load.

Again, the doomsday forecasters were extending the current trend, not able to picture the dramatic economic reversal of the 1990s that would reverse the budget deficits to budget surpluses

...............


MMT... now..