Euro banks getting real stress tests

Every time the Eurozone, or any country does a bank stress test, you can be certain it's a slobbering pack of lies. The last Eurozone bank stress test complete in July, 2011, had only 8 banks fail based on their Tier 1 capital ratios.

Those eight European banks not strong enough to withstand a prolonged recession need to raise 2.5 billion Euros in capital, an industry health check aimed at reviving investor confidence showed on Friday.

The entire Euro banking system only needed 2.5 billion Euros, and that was only in the case of a prolonged recession. To date, I am unaware of any official recession being called in Europe. Mild slow down is how I've read it from official sources.

Today, two independent auditors released results showing that just Spanish banks need from 16-25 billion Euros, 6 to 10 times the amount needed for all of Europe last year. That is, unless those banks face an adverse scenario, in which case they will need up to 62 billion Euros, 25 times the amount needed by all European banks from the stress test last year.

Since every stress test is a slobbering pack of lies, the real capital needs of Spanish banks alone is probably around 250 billion Euros, roughly 100 times as much as all European banks supposedly needed last year.

Real stress tests are coming, and the liars will break under the pressure.