Or perhaps a very good one. Larry Elliott.
Picture the scene. A whizz-kid chemist from the food laboratory department provides a report to the chief executive of a leading supermarket. The boffins, he says, have developed a wonderful new pork pie, which is marvellously tasty and could make the company a mint.
The chief executive, who came from the finance department and knows far more about balance sheets than he does about pork pies, asks what the catch is. The only catch, the guy in the white coat replies, is that each pork pie contains a small amount of a toxic ingredient – but it is so tiny that there is no real risk. What\’s more, it is the toxic element that gives the pie its unique and irresistible flavour.
Given the all-clear by the board, the company starts selling pies by the shed load because, at first, they are hugely popular. All the other supermarket companies follow suit, and soon there is a full-blown craze for them. Warnings that there could be side-effects are ignored, and even when there are unconfirmed reports that people are starting to get sick, the supermarkets keep flogging them.
Eventually, customers die and the roof falls in.
This, of course, is an allegorical tale. The supermarket are the world\’s big banks. The pork pies are the unfathomable financial instruments that have poisoned the global markets. The boffins are the financial "rocket scientists" who constructed their complex – and useless – mathematical models to show that risk was infinitessimally small.
The reason it\’s a very bad analogy is that of course all pork pies do indeed contain small amounts of toxins. So does everything else in the world. As Paracelsus told us, it is the dose which is the poison.
Which of course makes it a very good analogy, for in every financial product there is indeed risk, just as there is toxin in every pork pie.
But that\’s not the way Larry wants us to take his analogy of course.