© tidesofpewpew via Flickr
The dark clouds in the Federal Reserve's 2012 annual stress test are keeping bankers up at night, as banks are being asked to imagine their balance sheet situation under some horrible economic scenarios.
Under the Fed's bleakest black sky scenario, financial institutions will have to weather 13.1% unemployment, the Dow at 5,600, and Europe in severe recession.
The test, known as the Comprehensive Capital Analysis and Review, includes 12 other metrics for the U.S. market including GDP and inflation, with another 11 points for global economies.
Here are some of the key metrics, complete with headline numbers, for what would happen in the Fed's worst scenario:
U.S. Real GDP: 4Q11: -4.84%
1Q12: -7.98%
2Q12: -4.23%
3Q12: -3.51%
4Q12: +0.00%
1Q13: +0.72%
2Q13: +2.21%
3Q13: +2.32%
4Q13: +3.45%
U.S. Unemployment: 4Q11: 9.68%
1Q12: 10.58%
2Q12: 11.40%
3Q12: 12.16%
4Q12: 12.76%
1Q13: 13.00%
2Q13: 13.05%
3Q13: 12.96%
4Q13: 12.76%
U.S. 10-Year Treasury Yield: 4Q11: 2.07%
1Q12: 1.94%
2Q12: 1.76%
3Q12: 1.67%
4Q12: 1.76%
1Q13: 1.74%
2Q13: 1.84%
3Q13: 1.98%
4Q13: 1.97%
Dow Jones Industrial Average Price: 4Q11: 9,504.48
1Q12: 7,576.38
2Q12: 7,089.87
3Q12: 5,705.55
4Q12: 5,668.34
1Q13: 6,082.47
2Q13: 6,384.32
3Q13: 7,084.65
4Q13: 7,618.89
EU Real GDP:
4Q11: -1.03%
1Q12: -3.49%
2Q12: -5.40%
3Q12: -6.91%
4Q12: -4.92%
1Q13: -0.88%
2Q13: +0.35%
3Q13: +1.11%
4Q13: +1.50%
Remember, banks have less than two months to stress test their portfolios against these, and 21 other metrics. For a full list of scenario inputs visit the
Federal Reserve's site.
Word to the wise: If the Dow falls to 5800 points that means buy buy buy because everything is on sale. Even if you buy 100 shares or 50...Buy and invest. Because, when it goes back up to 13000 points you will be a very happy individual...or you can tell me otherwise and be a pessimistic pooper. There is opportunity in every calamity.