Credit crisis: new problem or ancient Roman history?

When things are looking dim, I often look to history to provide perspective. Learning that other societies have faced similar circumstances–and that my problems are not unique–is a reassuring experience. The tales of history provide an unusual source of hope.

So what can history tell us about the economic crisis? Mind Your Decisions reader John sent me an article from the website Fourmilog offering an interesting historical perspective.

Here’s an excerpt:

There is but scant innovation in human folly. Every generation convinces itself that it’s living in a “new era”, where “all the rules have changed”, and consequently stumbles into the same potholes which swallowed countless ancestors. Knowing some history (rare today) and paying serious attention to its lessons (rare in any age) is an excellent way to avoid all-too-predictable calamities. Take the current woes in the credit markets, triggered in part by government meddling in the mortgage market. Certainly, this must be an unforeseen consequence of our twenty-first century fibre-optic globally connected financial system, with computer-modeled financial derivatives, risk management strategies, and all the rest of the hooey cooked up by all those bright fellows on Wall Street–how could they have possibly anticipated the mess they were getting us into?

Well, by reading Tacitus, for one thing.

Tacitus mentions the solution to the crisis was a government “bailout”:

The destruction of private wealth precipitated the fall of rank and reputation, till at last the emperor interposed his aid by distributing throughout the banks a hundred million sesterces, and allowing freedom to borrow without interest for three years, provided the borrower gave security to the State in land to double the amount.

I find the comparison very fascinating. What’s your take?

I highly recommend reading the entire article.