Like an indulgent university professor who never fails any students, US Treasury Secretary Tim Geithner has pronounced that all 19 of the big US banks subjected to stress tests are solvent. Voil?! More signs of those mythical green shoots that are heralding economic recovery. Never mind that quite a few independent analysts have taken those results to task, believing the banks have been let off the hook too easily and their problems glossed over; the long-awaited results are good enough for stock markets to go on with the current merry rallies from their most recent nadir in early March. If the goal is to reassure investors rather than truly test the solvency of US banks, Mr Geithner has succeeded, at least for now. Given the fanfare with which the Treasury chief announced those tests in February and the inevitable public scrutiny they have generated, it would be hard for any official not to try to put a gloss on the test numbers. Markets are cheering because the results appear less bad than many had anticipated; at least no bank needs more taxpayer money - for now. These days, news that is merely less worrying is good enough for markets to cheer about. But that only shows how bad things really stand with most economies, including that of the United States. It is hard to square Mr Geithner's all-clear with the fact that more than half the banks need to raise a combined US$75 billion in additional capital. Bank of America alone must raise US$34 billion. Citigroup, which has been at the centre of the financial meltdown caused by toxic assets and has been rescued more times by US taxpayers than anyone can remember, will need to raise about US$5 billion. Surprisingly, Wells Fargo, widely seen as one of the few financial institutions to have emerged from the crisis relatively unscathed, needs to boost its capital base by up to US$15 billion. Not too long ago, Bank of America chief executive Ken Lewis said the US government gave money to so many banks under the troubled asset relief programme to hide the bad banks among the good ones so markets would not punish them. Now we know which bank, or banks, form the weakest link. It appears the worst is probably behind us; perhaps the bank tests are a sign of that. But markets are getting far ahead of themselves. As Joseph Yam Chi-kwong, chief executive of the Hong Kong Monetary Authority, warned yesterday, economic fundamentals simply do not support the rallies. He believes big inflows of funds from institutional investors, including hedge funds, are primarily responsible for pushing up share valuations and inflating asset prices. They can withdraw just as quickly. Instead of looking for a quick profit, investors should steel themselves for a bumpy ride to recovery.