Recently US Govt. published the reports of stress test which it had conducted on all the banks with assets more than $100 Billion. As expected the result of stress test has not caused any stress and has obediently taken stress out of the government. It served the purpose of proving mathematically what was not getting proved with common sense that US banks are not stressed enough. After so much of futile exercise, the result came out with a meager figure. However the legitimacy of stress test has already been questioned given the parameter which has been used and also the timing of the whole exercise.

Nothing can be far from the truth that banks are almost well capitalized and can lend the money to public. After spending more than $400 Billion on bail outs , by giving money literally free and providing huge subsidy to banks who pay millions in bonus to their chiefs, the reason deter of stress test is nothing but mysterious. As many have argued that this exercise is an eye wash to remove attention from a simple common sense fact that lending is still not picking up. If banks are well capitalized then why lending is in such a dire situation? What is preventing banks from lending the money? But alas! The taxpayer is the feeblest voice and the Wall Street has taken this exercise in a good stride and the media has not been able to do much about it.

After giving free money and bailing out with taxpayer’s money, government’s stress test has assumed macroeconomic parameters which are normal case in today’s scenario and they do not show the stressed condition. E.g. Economy will contract by 3.3% and will remain constant in next year. Well that is the normal case in today’s scenario. Where is the stress? Further, fall of housing prices have been assumed to be mere 22%. Those who are testimony to the index will not help but laughing at this childish figure. Also the unemployment rate has been assumed to be some 9% and just to put things in perspective this figure has already crossed 8.9% in April 2009.

The reason of failure of bank was primarily a mere fact that the stress tests which were designed earlier did not visualize the real stress condition rather they extrapolated from current figures which is nothing much expectation of continuation of status quo. Even a graduate student will be able to tell that this can be everything else on the earth except stress test. Today we need something more than political gimmick. The result has given boost to stock prices of the banks and likes of Goldman Sachs and BofA have not lost a second to en-cash this. They have already raised or are raising enough cash to repay the loans.

If this whole comedy was not enough, the mooting of idea of public private partner ship for buying toxic asset is more laughable. When situation was quite worse the treasury gave away money in hoards without charging a penny leaving taxpayer is fuming, all thanks to captains of likes of Goldman Sachs commanding powerful position in Capitol Hill. When things go bust put tax payer’s money and when things look bright bring in private money. This hara-kiri is almost unheard even in the regimes of the most financially corrupt dictators. The common tax-payer was always at the receiving end and will remains so even after having got the CHANGE.