My Tory leadership race fantasy game

‘Black swan’ theory, developed by the writer Nassim Nicholas Taleb, refers to unexpected events that have extreme consequences but are rationalised afterwards by pundits who say ‘That was always going to happen.’ Covid was a big one; Putin’s war on Ukraine another. It’s in the nature of global events that there’s always a dark-feathered disruptor lurking somewhere, waiting to make its presence felt. Right now, it just might be hidden in reports of protestors in Zhengzhou, capital of China’s Henan province, demanding their money back from four local banks that suspended withdrawals in April.

Runs on small banks are not unknown in China; nor is embezzlement by corrupt managers. The authorities’ response – using security forces to smash crowds and changing some depositors’ Covid-app codes from green to red to prevent them travelling to protest – is par for the course under Xi Jinping, whose greatest fear is widespread social unrest.

But behind this local eruption are long-running rumours that the country’s entire ramshackle banking system is increasingly vulnerable to the extended pandemic downturn and a slump in the property sector, which has overheated to account for as much as 30 per cent of both GDP and bank lending.

A $300 billion collapse of Evergrande, China’s second largest property developer (mentioned here as a potential black swan last year), was averted by state intervention. But unless Beijing can conjure the biggest systemic bailout of all time, an angry mob may one day storm the central People’s Bank of China, causing heaven knows what shock ripples across the globe. I’ll be one of the pundits saying it was always going to happen, but that will be no consolation.

Who’s up, who’s down?

Whenever there’s a Tory leadership contest, I think of my late father’s yardstick for judging politicians, which was to estimate how high they might have risen in the management hierarchy of Barclays Bank where he himself spent his working life.