Now that’s what I call a stress test Post author By Kevin O’Rourke Post date August 5, 2010 HT Calculated Risk Categories In Banking Crisis, World Economy 3 Comments on Now that’s what I call a stress test ← More Comments on AIB’s Half-Yearly Report → The New Banking Data for Ireland 3 replies on “Now that’s what I call a stress test” The follow-on link to a WSJ article is also informative. I was one of many analysts complaining about the assumed modest property price declines in the stress test, and I used Ireland as an example. Ireland was far from the worst — some of the other countries had even less appropriate “worst case” scenario forecasts for property prices – particularly Greece – and this affected the results of the test quite dramatically. http://online.wsj.com/article/SB10001424052748704719104575389251817348376.html Looks like Jim Chanos will soon be a very rich man with his short bet on Chinese real estate and related assets. But as Matthew Yglesias points out a 60% decline isn’t such a dramatic scenario where a 68% increase has happened the year before: http://yglesias.thinkprogress.org/2010/08/chinese-regulators-tell-banks-to-prepare-for-home-price-declines-of-as-much-as-60-percent/ Comments are closed.