Word: scenario
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Dates: during 2000-2009
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...then there's North Korea. The scenario facing the Pacific Command (PACOM) posits that Kim Jong Il dies in 2016 and is replaced by a new leader who resumes the processing of uranium for the countries' long-disputed nuclear weapons program. Once two North Korean uranium enrichment plants are discovered, the United Nations passes a security council resolution to oppose the action. In response, North Korean forces cross the DMZ and launch an invasion of the south by disguising thousands of troops within groups of refugees, creating what is called "an irrgular warfare-type scenario that may require a mixture...
...Blue and Red teams sit along opposite sides of a rectangular adjoining table, with commanders in the middle beneath a large graphic display with power point slides and digital maps showing each scenario. After meeting to devise their plans, Red team members take hostile actions against the Blue team which must then fashion a response. "Our goal is to stress the blue team," says retired Maj. Gen. Chuck Thomas, a red team senior mentor. In some instances, diplomatic and humanitarian actions short of military force can be chosen as the best option. In others, force may be required. The idea...
...comforted by the results. That's because two different scenarios are used to stress test the balance sheets of financial institutions: baseline and adverse scenario. The baseline was designed to represent the consensus at the time in which the plan was presented. Unfortunately, current macroeconomic conditions are already worse than the adverse scenario (which is closer to the new consensus) for all the three variables of the test -unemployment, real GDP and home prices. (See TIME's "25 People to Blame for the Financial Collapse...
...Take the unemployment rate: the adverse scenario of the stress test is based on an average unemployment rate of 10.3% for 2009. However, at the current pace unemployment is more likely to hit the 11% mark. On a quarterly basis, the rate of unemployment is already well beyond the levels assumed by the adverse scenario for the end of the first quarter of 2009. Similar considerations apply to U.S. real GDP and home prices. (Read about the top 10 bankruptcies...
...answer to the first question is no. Recapitalization needs will likely exceed what the current stress tests suggest since macroeconomic conditions are bound to be worse than the consensus anticipates, making the adverse scenario of the stress tests look mild. At this point in time, banks are still facing well over $1 trillion in losses over the next couple of years, even if low short-term interest rates make new loans very profitable. Moreover, according to RGE Monitor, real U.S. GDP growth will inch back into positive rates only toward the end of 2009 rather than at the beginning...