Bank of Stress

The government will be putting large banks under a "stress" test to see if they can withstand the severe economic climate.

On Friday Obama stated that there will be no nationalization of banks that are close to failing although we suspect many have failed and are not reporting the damage accurately.

The thought is that in spite of Obama's statement, there may very well be some banks that are brought under national control perhaps just temporarily.

There are no details given here about what the "stress" test is.

This particular angle of the recession, banking, is the most salient point regarding the direction of the market in the upcoming week. If investors like the plan that Geithner provides, then we could see a small rally. Right now particularly after last week where we quickly plummeted through the 7000s in the DOW and we are on the verge of the 6000s, my own personal optimism is heavily dampened.

The magnitude of the recession is emerging in its horrid totality and we must remember that this recession is experienced even more aggressively in other parts of the world.

Reuters: U.S. bank stress tests to show capital needs: source

The lack of detail in Geithner's bank plan, particularly about a $500 billion to $1 trillion public-private fund to soak up toxic assets, has fueled investor concerns that bank takeovers could become an option.