Who's It Gonna Be?

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Does anyone else think there are too many "Nobel Prize Winning Economists?" I mean, you can't turn your head without seeing the opinion of one or another of them these days. Today it's "Nobel Prize-winning economist Michael Spence," who is pretty sure (but don't quote him) that not every bank will pass the stress tests. Of course, Spence couldn't possibly have been listening. Everyone knows that even if you fail, you pass.

Spence said in an interview with Bloomberg Television he would be "very surprised" if all the banks pass the exam, which he says will probably give a better picture of the banks' health than earnings statements. He also said that "the data on lending and credit are still not that encouraging."

Well, we just have to nod our heads when it comes to "earnings statements."

The U.S. economy will also change in the next few years, Spence said. "There's no question we're going to have a new normal," he said. "It's going to have a higher savings rate, closer to a match with the investment rate. We'll probably have a period where the cost of capital is higher because leverage is lower, and I think our growth will be somewhat diminished."

Apparently, this is Nobel Prize Winning Insight here.
Spence Says Would Be Surprised If Every Bank Passed Stress Test [Bloomberg]

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