The Medieval Financial Crisis

As we all know, when times are bad, the Middle Ages will always be there to step in and lend a hand by providing newspaper writers and bloviating pundits with a handy metaphor for just how bad times are.  The current global financial crisis is, naturally, the latest in a long line of things so bad that it almost outmedievals the medievals.

Take the behavior of the government regulators who were supposed to protect us from that sort of thing.  The editorial board at the Business Daily chides them thus:

When the crisis started mid last year, even the famed regulators of the west stuck to a familiar tune: ‘do not panic, everything is under control’. A year later, the phrase ‘under control’ is akin to the medieval assertion that the earth was flat.

Expect Henry Paulson to be brought before the Pope soon to recant his backing of the repeal of the net capital rule.  If he’s true to form, he will mutter under his breath, “Nevertheless, the market does move.”

Of course, it’s not just the government that is reminiscent of the Middle Ages.  Last month, The UK’s Telegraph sagely advised us to be mindful of the lessons of the past in reacting to the crisis:

The worst thing to do now would be to impose medieval remedies. Back in the 1930s, the depression was cemented not by the Wall Street Crash of 1929, but by the hard-nosed policies of the US politicians, who allowed so many banks to fail that they set off a domino effect that took almost a decade of thrift to recover from. It was the financial equivalent of leeches and blood-letting.

What is the statute of limitations for the historical metaphor? Will we have to wait until 2525 before we can properly describe a depression-fighting tactic as “positively early twentieth century, the equivalent of letting banks fail and setting off a domino effect”?  Actually, I suppose that’s not metaphorical enough.  In the year 2525 (if man is still alive), financial analysts would probably say that the latest bailout plan is “like Popeye of the early twentieth century, always promising hamburgers today and never thinking about Tuesday.”*

A few days after warning of medieval strategies, the Telegraph ran an editorial that chided the Irish for not listening and taking their own medieval steps, quoting

One economics professor [who] has described the guarantee as the biggest “beggar-thy-neighbour provocation since medieval armies catapulted bubonic plague-ridden corpses into the cities they were besieging”.

After a little digging, I found that the unnamed economics professor is Willem Buiter, who teaches at the London School of Economics.  This is not the first financial crisis with a whiff of the medieval for Buiter.  The 1992-1993 Exchange Rate Mechanism Crisis** Buiter explained,

The dictionary definition of quest as “a journey in search of adventure, as those undertaken by knights-errant in medieval times” fits well the complex web of events in the European currency markets, from the early fights in defense of the monetary Snake up to the more recent battles against successive waves of speculative attacks in 1992-93.

I’ll let this one slide, as we all remember how King Arthur beheaded the bear market of 545 on the slopes of Mont Saint-Michel while wielding the famed Excalibur, which could slash the interest rate in fifteen countries on a single day.***  But the bubonic plague catapult thing sticks in my craw.  Is launching corpses at a city you’re besieging really “beggaring your neighbor?”  Usually, that term is reserved for, well, cases like the Irish plan to insure deposits in their banks, which props up their own economy by drawing investors to it, but hurts the neighboring countries’ economies by drawing them away.  Whichever armies these are that are flinging bubonic-plague ridden corpses, they’re not hurling them at their neighbors, but their enemies.

Also, pity the poor medieval generals who had to constantly plan around the general lack of readily available bubonic plague corpses until around 1340 or so.****

Speaking of the plague, Tony Blankley, a columnist for the Washington Times, ends his recent excursis on the crisis with an extended metaphor that compares the economists and treasury secretaries of the aughties to the poor medieval wise men who couldn’t figure out why the plague was striking:

The [medieval] cable medical news network’s Rhineland correspondent would certainly have reported on the possible success at holding back the plague that the Germans seemed to be having for a while as a result of the urgent intervention of the flagellants – a group of monks and laymen who believed the plague was the direct result of human sin (see, for comparison, the current explanation by Barack Obama and John McCain that greed has caused the financial crisis). The flagellants whipped themselves in public for the public good.

This makes me wonder who the medieval newspaper columnists compared the medieval cable news network’s reporters to.  Perhaps this is the great tragedy of the Middle Ages: the medievals lacked a sufficiently horrible thousand year span to compare their own troubles to.  The medieval man, when calling in to his favorite radio show, was forced to say to Sir Rush of Limbaugh, “Oh, dear, this is the worst crisis since, well… last week, when things were actually just about this bad.  Crap.  Sorry, I’ve got to go die of the plague now so that newspaper columnists in days to come will have some way to explain their sub-prime mortgage fueled credit crisis.  Whatever that is.”

*This joke makes more sense if you look at the Wikipedia entry for 1929, like I did, and thus know that Popeye debuted in the same year as the stock market crash.
**I don’t want to pretend to any great economic knowlege.  The first I heard of the 1992-1993 Exhange Rate Mechanism Crisis was in the title to the book in question, Financial Markets and European Monetary Cooperation: The Lessons of the 1992-1993 Exchange Rate Mechanism Crisis.
***And whose scabbard protected him from ever hemorrhaging assets, a gift from the Lady of Capital Liquidity.
****For the record, many historians doubt the account of the Tartars hurling plague corpses over the Genoese walls at Caffa.  As the argument goes, de’Mussis, the writer who chronicled this event, was probably fabricating an explanation for why the Genoese, whom God had aided against the heathens by cursing them with plague, also came down with plague themselves.

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