You'll read a load about the Spanish Banks 'stress' tests (which they largely passed with just minor blemishes) in days ahead, but one thing worth remembering is that all the congratulatory patting on the back the Spanish authorities about to receive means diddly-nothing.
Here's what the ECB had to say about the most farcical of all 'stress' tests ever conducted anywhere this side of the Zimbabwean border - the stress tests of July 2010 which even the Irish banks passed with flying colors:
"The stress-testing exercise is comprehensive and rigorous. It confirms the resilience of EU and euro area banking systems to major economic and financial shocks. The exercise, therefore, represents an important step forward in supporting the stability of the EU and euro area banking sectors."
The farcical bit was of course that the 'comprehensive and rigorous' tests of 2010 found all euro area banks needing just €3.5bn of capital...
And here's what the ECB had to say about July 2011 stress tests that failed to find much at fault with the Spanish banking system (italics are mine):
"The European Central Bank (ECB) welcomes the publication today of the results of the EU-wide stress-testing exercise, which was prepared and conducted by the European Banking Authority (EBA) and the national supervisory authorities. The EU-wide stress test in the banking sector has proved to be an important tool to enhance transparency in the EU banking system. It provides for the disclosure of all the information that is relevant for the market to assess the resilience of the institutions in the context of an adverse scenario."
So let's not exercise too much about today's ECB 'welcoming' of the Spanish stress tests (link here)...
