Both the European Banking Authority and the European Central Bank have conducted what are known as “stress” tests on over a hundred banks in Europe. A stress test involves creating a theoretical scenario of a financial crisis and checking whether the banks have sufficient capital to pay their creditors and depositors on schedule even in the throes of a financial panic. The scenarios are speculative, but the authorities attempt to make them plausible. Unfortunately, many of the European banks failed these stress tests and are therefore now required to raise additional capital. The problem is that raising capital means that money is diverted from profitable investment and just stored in case of an emergency. Which means that private capital is not available to stimulate economic growth. And the banks seem to be getting weaker over time.
Brazilian President Dilma Rousseff has been narrowly re-elected in a hotly contested election. The election cycle has been up and down for President Rousseff, but Brazilian voters seem to have rejected the pro-business policies of her opponent Aecio Neves.
Two pro-western parties have received very strong showings in the Ukrainian Parliamentary elections held today. The two parties, however, failed to achieve a clear majority in the Parliament, so Ukraine will be governed by a coalition of parties next year. Unfortunately, the elections were seriously flawed because millions of voters in the eastern parts of the country, currently under the control of Russian speaking separatists, were not able to vote. The inability to collect those votes will seriously compromise the legitimacy of the new government.
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I feel like this graphic may be a bit misleading. Aren’t a higher proportion of banks in the 2011 test failing than the one in 2014? (20/90 = 22.2% of banks in 2011, 25/150 = 16.7% in 2014) Or is a higher number of banks failing still more catastrophic regardless of sample size? My inner statistician is a little confused.
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Your inner statistician isn’t confused–your numbers are correct. What is concerning about the graphic is that there are more vulnerable banks now, and the shortfall of capital is much larger. The results are skewed by the different number of banks that were test–the difference is quite large. So a strict comparison is not possible. But the capital shortfall is huge.
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The “social gains” referred to are the money transfers for “Bolsa Familia” where poor families receive a stipend when their children go to school. Many fear that this redistributive effort will be lost if the Brazilian economy falters. As far as wanting it all, I’m not sure that Brazilians are much different from any other nationality. As far as I can tell, most citizens enjoy receiving benefits, but hate paying taxes. The Americans are particularly egregious in this respect.
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“Brazilians want it all. They are worried about the economy being sluggish and stagnant but they want to preserve social gains that have been made” What kind of “social gains” is he referring to and why couldn’t the two go hand in hand?
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