Mohacsy's Safe Portfolio Member Forum

[RichardTC]

The Fed needs to be called out on the rosy assumptions in the stress test. Baseline for 2009 umemployment is 8.4% (we're at 8.5% currently) and the more adverse scenario is 8.9%. I'd be surprised if we don't surpass 9% unemployment by the end of the year. Baseline GDP is -2.0% and more adverse is -3.3%. The Economist is forecasting -3.2%. Baseline home price decline is -14% and more adverse is -22%. Case-Schiller's latest report shows an average 19% decline in home prices for 20 major cities. Let's just be honest here, the "more adverse" scenario should be "baseline" and the Fed should have much worse assumptions for "more adverse". In short, the stress test is a joke.