On Line DIY European Stress Test

Thomson Reuters' Breakingviews now presents an on line DIY stress test. Change the Tier 1 ratio and haircuts of the PIIGS countries and find out the capital shortfall of Europe and the shortfal of individual European banks.

An explanation can be found here and there is also an Excel spreadsheet.

Enjoy stress testing!

EU Banks : US $ 8 Trillion assets

Are European banks desperate to avoid recognizing a possible loss on their 8 Trillion Dollar US-Holding assets?


US assets, owned by European banks, increased from $2 trillion in 1999 to around $8 trillion in 2009.

In 2008 the Fed lent $600 billion to European central banks to make up for collapse of dollar funding from US money market funds.



What do, as an actuary, make up from this?

Interested? Read more about this possible time bomb at:

Market Skeptics

Moreover the Fed moves that would more than double its balance-sheet assets by September to $4.5 trillion from $1.9 trillion.

This will imply a 15-Fold Increase In US Monetary Base in September 2009.

"Trust" will be a key word in 2009!