I appeared as a guest on BBC 2’s Newsnight programme on 23 July, in which Linda Yeuh, Max Wolff, Gavin Esler, and I discussed the European bank stress tests.
Here is what I had to say:
- “I don’t think the tests were credible. I wouldn’t agree that the 0.4% reduction in GDP, which they looked at as an economic downturn, as a double-dip, is the worst that you could realistically envision and when you look at what we’ve already had that’s a small fraction of what could occur frankly.”
- On the stress tests: “This looks like an exercise in firing an arrow and then drawing a target around it.”
- “One of the great differences between American stress tests and the European stress tests is that clearly in the United States it’s not necessary to apply a sovereign default as being a likely outcome.”
- On the absence of stress tests for a sovereign default: “ Do I regard it as something that you can take as an assumption that because the European Central Bank says it will do anything to prevent a default that there won’t be one? No.”
- “Nothing has changed of any significance in the structure of banking in Europe or the United States in terms of those parts of the structure which contributed to the crisis – nothing whatsoever.”