Table-Top Crises

The table is tense. On one side, George Osborne and Mark Carney grip the various sheets of paper held in front of them nervously, knuckles white from the pressure. Janet Yellen sits across from them, flanked by Jack Lew. Senior representatives from the International Monetary Fund (IMF) consult the rulebook as the table waits with baited breath, the electric quality of the nervousness in the air threatening to make hairs stand on end and hearts beat faster than they were ever designed to.

With a final scattering of murmurs, the game masters finish their deliberations, and prepare to cast judgment.

"On a three-plus roll, the economy sinks. One or a two, the bond markets stabilize," the master intones. George reaches for his die, slipping them out of the purple, velvet pouch he carries with him for such occasions.

"I'm a wizard," he whispers, sotto voce.

He exhales. The room is so silent that the bead of sweat that just left Carney's nose hits the table with a deafening boom. Everyone is holding their breath. He reaches back, and throws...

It's certainly a lot harder for 2008 to happen again, but they haven't achieved the overarching goal of herd immunity.

Alright, so the "wargames" being held today probably have more in common with economics lectures than the noble art of table-top gaming, but who doesn't have a small smile at the idea of Osborne in a magic hat?

For those unaware, senior representatives from the UK and US's governmental structures are running a simulation today, testing whether the financial system could withstand another Lehman event. Simulations are, after all, very much in vogue at the moment, with Waking Shark II, Quantum Dawn II, and various other wargames being held periodically for any number of scenarios. It comes off the back of a rather damning IMF report that warned of another financial crisis in the works the other day, all of which has been mana from heaven for the business pages of the broadsheets.

We're all done for, they universally lament.

Perhaps so, but the world is a very different place from 2008, where loose regulations and somnambulent governments all contributed to a disaster that spiralled out of control so fast that it was hard to contain. Gordon Brown may have been roundly mocked for his faux pas on the campaign trail that he saved the world, but his quick action can't be underplayed for its decisive role in holding the line against the contagion.

Could it happen again today? Of course it could. It's in the nature of interconnected financial systems to spread viruses when they take root, just look at how a small head cold spreads within days inside a trading floor or a newsroom. But what regulators have been trying to do is increase the antibodies to such a disaster.

Have they succeeded? It depends on your definition of success. It's certainly a lot harder for 2008 to happen again, but they haven't achieved the overarching goal of herd immunity, where regional rules have similarly robust protections in place, which can work with neighboring jurisdictions relatively seamlessly.

At least this time, there's no element of political football involved with such an important topic.

"In 2008, the judgment of my predecessor and others was that banks like RBS were too big to fail," says Osborne. "I want to make sure that either myself or my successors in this job would have real options and would avoid bailing in the taxpayer. I'm pretty confident that is the case."

Oh, wait.

On a side note, please be aware that the deadline for entries into the American Financial Technology Awards has been extended by a week, through to close of business in New York on Friday. An in-depth knowledge of D&D Third Edition is not required to enter.