In the ongoing saga of correlation between economic indicators driving the corruption index driving fraud, Bloomberg posted an article on new stress testing requirements for banks. If we read into it, we see that the Fed is testing for a situation where unemployment will increase to 11% and then back to 9% over this and next year. This continues the theory that China will suffer issues with growth this / next year which will force the economy into a double dip recession. With this we should expect a fairly significant rise in fraud over the end of 2011 and throughout 2012.
“The Fed’s adverse economic scenario included a 1.5 percent decline in gross domestic product from the fourth quarter of last year through the end of 2011, said the people, who declined to be named because the Fed hasn’t made the details of the review public. The scenario assumed growth resumes, with output rising 4 percent over the fourth-quarter 2010 level by the end of 2013. Unemployment would peak at more than 11 percent by the first quarter of 2012 and drop back to 9.5 percent by the end of 2013.”