Banks to give us all a stress test

Jack looks at his watch, it's 15.40.  His friends are meeting down the field in 20 minutes to play football. If he does not get there by then, chances are he won't get picked, and will be out of the game. but Jack ha s a big problem. He still has to do his Maths homework, and then his homework is complete.  So Jack rushes his Maths homework to be in time for the match.  When's he's finished he quietly puts his book and maths copy away. He knows his sums are bound to be wrong, but doesn't want his ever watchful Mother to know. So he shouts "See ya later mam going to the field", and makes a run for the door. But just as he has his hand on the look a booming voice echoes "Err, where do yuo think YOU are going? You haven't shown me your Maths homework yet".  his heart sinks, he knows what's coming next. Having seen all his figures, his mother will make him redo them til they are right, an will sit at the table beside him to make sure he takes his time. why couldn't it have been his dad at the door? He'd have mere asked him had he got his phone with him, and wit an affirmative reply, waved him on.  But no his Mother is a stickler for these kinds of things. she wants to make sure everything is done correctly. 

This in a way describes the various strands that makes up the economic officialdom, and economic commentators in the EU.  Some, like France are like Jack fear the consequences if the full extent of the problem was uncovered. they are the child who fears the consequences of not being at the match in time, of having to explain to his mates exactly why he wasn't there on time.  Whereas Germany and Finland  would be in the group who wish to see everything  in detail, and often complain to the teacher in the school about other parents not checking their kids homework and the like, and in her view dragging her child back with them.  "Why won't the school take actions to force the other parents to properly oversee their kids homework, and general educational development outside of school hours? She would thunder"  It's not as easy as that" the teacher would explain. the teacher knows some of the other parents are unable to read or write, while some lack basic skills in arithmetic. 

The teacher feels said parent does not need to know this fact, and would not tell her.  Had she told Jack's mother, she would have caused a right old ruckus, and who knows where it would all end.  But in the back of the teachers mind, se is half full of dread. A special extraordinary meeting of the Parents Committee is taking place in a few weeks, orchestrated by Jack's Mother, and she is determined to raise the issue once more in front of a myriad of parents, and it's likely some of the parents present will back her up, and demand straight answers from the principal.   The teachers and principal tried in vain to get her to call a halt to her campaign, but no matter how many fudges they offered, she was having none of it.  Some of the parents on the night will be found out, as lacking numeracy and literary skills, and this will cause not just embarrassment, but serious problems all round.  Will some parents they seek to pull their kids out of the school, and home school them? 

The banks here are just like Jack.  They have put out statements claiming everything is fine and dandy their end, but refuse to provide any solid tangible evidence to back these assertions up.  surely if everything was indeed fine and dandy, surely they would go out of their way to prove just that, opening the books for  all to see and so forth. But the more they divert and spin, the more I, and many economists and the like start top stress.  The question here is not whether or not there will be holes in the banks balance sheets, but how big they will be.  If there was found to be enormous holes in the Irish banks that needed a lot more capital to fill them in, it would have the capacity to derail and economic upturn that this country is, and could face in the future.  The country is very fragile as it is, and as we have seen in previous years, it does not take much at all for freefall to commence. 

 It is primarily Germany and Finland who are going hell for leather for full stress tests on the banks.  It appears clear to me that Michael Noonan,. and some of his other counterparts are desperately seeking another fudge to get them out of this mess for another while.  Yup the plane may only have one engine in operation but look! it's still flying! but this time around, the box could be empty, with al the fudge used up already, and the Germans refusing to go to the shop and buy another box.

 Another thing that worries me is all the recent bond sales the NTMA has engaged in.  Yes, it has brought much needed finance into our economy, and helped us overcome some hurdles. But what I'd love to know is, what terms and conditions were these bonds bought with?  For example, if the banks were to be found with huge gaping holes, and this dragged the whole Irish economy with it, with the binds crashing, what happens then?  Will the bondholders  be forced to walk away badly burnt, or  will we the taxpayer, via another de facto bailout, be forced to pony up and cover their losses yet again?

It's going to be a very nervous 2014 for sure!