European Banks' Upcoming Stress Tests and Its Real Purpose

Like our American Counterparts Stress Tests more than a year ago, this week begins the feared bank stress tests for the European banks. If the results are anything like the American banks’ stress test, then one can be assured that the results will be fixed to give the false impression that banks are far more stable than they actually are. The banks have lied to us from the beginning and there is no reason whatsoever for them to tell the retail investor the truth now.

We all know the results before the test has already begun. Every European bank will pass with flying colors and this will push money managers to invest or else potentially lose their job as the tests will continue to prop up of the economy continues. Such inflow of money could cause another move to the upside giving retail investors an opportunity to get out of the market at a higher price.

We all know that the banks are harboring terrible deficits, that housing is about ready to double dip, and the consumer is strained.

The purpose of the banks stress test is not for the benefit of giving the consumer the suspended belief that the economy is sound, but to push the market up, so that the bank’s proprietary trading desks can sell their positions at a better gain before the market starts to descend again so that they can increase their cash reserves while the investor loses more of their own. This is the reason for the European Bank Stress Test. Beware!