EU Banks Survive Stress Test (What a Joke!)

In the Opinion Page of today's "Wall Street Journal" entitled, Not So Stressful: Pass the Greek Valium, I have copied the following excerpts from the article (Please read the full article.):

1. "Two months ago, credit markets in Europe nearly went off the rails over concern about what a sovereign debt default in Greece would do to the Continent's banks. After last night's release of the result of a Europe-wide stress test, we're not much wiser."
2. "The EU's committee of national bank regulators repeatedly says that its stress test includes a "sovereign shock" scenario. But crucially, "a sovereign default was not included in the exercise."
3. "In other words, bank regulators in Europe think Greece, Spain, Portugal and the rest are too big to fail. Germany and France will always save them in the end, so the consequences of a default don't even need to be considered."
4. "Speaking of Spain, it has some €430 billion in national debt outstanding, as well as being home to five of the seven banks that failed yesterday's stress tests. A Spanish default, all by itself, would sorely test the ability of the EU to prop up its struggling sovereigns. But don't worry. A sovereign default in Europe has been declared impossible.

I am so glad that the EU did this stress test.  Now, we can all relax.  Right?  Thank you EU for your wonderful reassurance.

After reviewing the EU stress test for banks, I am even more comfortable with my inverse index ETFs.

Some day, very shortly (IMHO), reality will sent in not only on the Continent but here in American that there is a price to pay for all that outstanding debt.  What will happen then is not going to be pretty.  I am reminded of a question that General A.S. Johnson asked of a soldier following the defeat at the battle of Shiloh.  The shattered Confederate army fled for their lives in a panicked rout.  The General, desperately trying to rally his troops to stand and fight, grabbed a passing soldier and demanded, "Private, why are you running?"  The private hurriedly replied, "General, I am running cause I can not fly."  The take away from this story is that General will be the Federal Reserve Chairman, Ben Bernanke, and the Private will be everyone else trying to get out the door at the same time.