The European specialist press has been contemptuous. "When is a stress test not a stress test?" asked the Financial Times, noting that the tests are based on remarkably benign scenarios. The stress tests assume a worst-case scenario for Greece under which its bonds are traded at a discount of 17 percent, when the market is already discounting them as facing a 25 percent loss.

The separate German version of the newspaper, FT Deutschland, suggested that the stress tests are "a whitewash, intended to solve a public relations rather than the financial problem."

The European stress tests are meant to repeat the apparently successful use of stress tests on U.S. banks last year, which helped ease the financial panic that lasted from the Lehman Brothers collapse in the fall of 2008 into the second quarter of 2009.

Europe's bigger banks are hardly more flattering. Commerzbank analysts have warned the low credibility of the tests means there is a real danger that this would backfire. A Deutsche Bank analysis released last week found only two -- Allied Irish Bank and the National Bank of Greece -- of the 91 banks to be tested are likely to fail the low threshold of 6 percent of Tier One capital. Few analysts believe this truly reflects the health of Germany's troubled Landesbanken.

"So far the European-level regulators have been trying to dodge the problem," said Daniel Gros, the director of the Center for European Studies in Brussels. "Right now financial markets are stressed because of the looming losses increase in Spain and maybe elsewhere. That's a real problem that has not been addressed yet, I believe. European banks have actually lent hundreds of billions to Greece, and over a (trillion) to Spain in total, and their governments would have to intervene and to recapitalize some of the weaker ones."

The results of the stress tests are to be released July 23, two days after ECB chief Jean Claude Trichet meets the heads of the largest European banks to assess the findings, which are expected to lead to the recapitalization of several European banks. Trichet has already claimed that the "pessimism has been overdone" about the European banking system and the wider economy in his news conference last week.

Trichet said international investors were far too pessimistic in their assessment of the economic prospects of the eurozone, adding that the all-European World Cup soccer final was a sign that one shouldn't underestimate the Europeans. The ECB's chief economist, Jurgen Stark, chimed in alongside Trichet last week to echo the claim that things were looking up in Europe.

"The European politicians have understood that the crisis is a wake-up call, that they have to change their behavior -- and that is what we are seeing," Stark said. "It's not only fiscal consolidation. It's also a commitment by governments to embark on structural reforms. This is key."

They were speaking at a conference last week that brought together economists who specialize in monitoring the European Central Bank, run by Frankfurt's Center for Financial Studies, close to the bank's headquarters. And few of those present were nearly as confident as the bank's senior officials.

"Bank stress tests in the eurozone won't save the euro. This is because the eurozone primarily has a sovereign debt problem, not a banking problem," commented Steven Barrow, currency strategist at Standard Bank.

Professor Manfred Neumann of Bonn University said the ECB and other European officials were papering over the wide crack that had appeared between the mostly solvent northern European countries and the endangered southern ones. "This cannot last. If you do this for another 10 years, the euro will fall apart," he said.

There were even some crossed wires with the International Monetary Fund, whose deputy head John Lipsky was in Frankfurt and tried to help.

"I'm sure the stress tests that will be chosen, the scenarios will be realistic ones and will serve the purpose," Lipsky said. "It looks like all the preconditions that are necessary for a productive and constructive step are being filled."

But then Stark attacked the IMF, saying the fund "has not caught up to the reality in Europe. The IMF is underestimating the strength of the economy in Europe."

Certainly German exports have risen with the weak euro and German unemployment is down but that serves to intensify the problem of structural imbalances in Europe, in which German trade surpluses with its EU neighbors have saddled them with massive trade deficits, in the same way that China has built huge trade surplus with the United States.

One of the real concerns about the weak recovery so far is that it has been based on a revival of German and Chinese exports and a growing U.S. trade deficit -- which was one of the main reasons the global economy got into trouble.

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