Did someone say stress tests of banks?
Where did I hear that before?
Oh wait. Now I remember. Wasn’t it back in September 2008 when they were telling us about stress-testing the Irish banks? What a success that was!
Now here they come again, using spurious terminology that they don’t understand, pretending to be doing something real and meaningful, adopting the language of science and engineering for something intangible, something based on lies, deceit and fear.
This is not a stress test of the banks. It’s just modelling. A stress test is something very real, hard and visible.
A stress test is something that finds out if the wing of your plane will break off or stay on.
A stress test is a way of seeing if that bridge will fall down or carry you safely across the water.
A stress test is a method of finding out if your submarine’s hull will collapse like a cheap Easter egg.
How is it done? Very simple. You pile more and more weight onto something until it breaks, and then you know how much punishment it can take. You do it again and again to make sure the first result wasn’t a fluke.
That’s stress testing, which is far more reassuring than all the mathematical predictions in the world. When you sit into the new Dreamliner, you can be sure that they confirmed the modelling and analysis by breaking things until they were satisfied with the strength of them.
That’s because the Airbus engineers know what they’re doing, unlike the bankers — the kind of people who lend spurious credibility to their dodgy number-juggling by misuse of solid industrial language. The sort of people who call an insurance policy a product.
If anyone tries to persuade you that the Irish banks passed a stress test, tell them they’re talking nonsense. The Irish banks passed no test, either in the abstract, theoretical world of financial modelling, or in real life.
The real stress test has already happened and we know how that went.