Jim Rogers: Stress Test Is a PR Exercise
Web Producer, CNBC.com
The stress test in which only seven of 91 European Union banks failed is just a public relations exercise and wasn't tough enough, famous investor Jim Rogers told CNBC.com Monday.
On Friday, EU authorities released the results for the stress tests, with many analysts saying the criteria had been harsher than the ones used to test US banks a year ago. But Rogers said the European test was "a PR exercise just as was America's."
They were "a waste of time – and journalistic ink," he wrote in an e-mail.
Many analysts criticized the fact that a sovereign default in Europe had not been taken into consideration in the criteria for the test, but the head of the Committee of European Banking Supervisors (CEBS) told CNBC that sovereign exposure of banks taking the test had been disclosed.
The European stress tests assume an average fall in gross domestic product of 3 percent, an increase of 6 percent in unemployment and a 6 percent hike in market interest rates.
But there are other factors that haven't been taken into consideration, Rogers said.
"There are more problems coming in the currency markets, pension funds, US states and cities, etc. None of this was considered although the latter is only indirect for the European banks," he said.
European bank stocks rose Monday morning after stress test results, but Rogers said he was not interested in financial stocks. He also said he was not interested at the moment in going long on any stocks.
The European Central Bank will "keep trying for the foreseeable future" to save the euro zone's weaker countries, Rogers said.
Asked what his position was on the euro, Rogers, who bought the single European currency back in June, said he is "watching at the moment."