This week’s large banks stress tests by the Federal Reserve project losses in pronounced downturn at $700 billion. This scenario is likely in the event of a widespread and prolonged economic downturn.
Are we headed into one with attendant risks of a financial crisis? Looks unlikely. I examined financial crisis over the last 3 decades and was quite unable to come up with common root causes that trigger these events – necessitating different tools each time . Here is a visual I update that speaks to this.