Patricia Cohen has an interesting story in today’s NYT about Media Cloud, a very cool-sounding system designed by some folks at Harvard’s Berkman Center for Internet & Society (including my old friend Yochai Benkler) to track the flow of topics and ideas through the media. This passage bothered me a just little, though:
Using some of the database’s more specialized tools, Mr. Benkler investigated who first floated the idea for a temporary takeover of the financial system by the government, as was done in Sweden in the 1990s. Paul Krugman, a columnist for The New York Times, first raised the idea in September 2008, but it was a cluster of influential economic and political bloggers like Brad DeLong and Matthew Yglesias who kept the idea alive. After the subject disappeared for a couple of months, the bloggers then resurrected it early this year as Washington began discussing the details of a bank rescue plan.
That’s not quite how it happened. There was a genuine (if low-profile) media discussion of a Swedish-style bank rescue back in March 2008. I know because I participated in it—as did Krugman. It started on March 14 with a report right here at the Curious Capitalist of a speech by current Bank of Sweden Governor Stefan Ingves, who as a Finance Ministry bureaucrat in the early 1990s had been one of the masterminds of Sweden’s successful bank job. A couple days later economist David Rosenberg, then at Merrill Lynch, made a far more forceful case than I had for doing things the Swedish way. Then Krugman weighed in on my post about Rosenberg, saying it all sounded interesting but the price tag could be in the vicinity of $850 billion. Then, in a post I remain inordinately proud of, I responded:
[A]n $850 billion price tag attached to a cleanup that resolves most of the current credit problems, wipes out the shareholders of insolvent institutions, and leaves us with a more rational regulatory setup (as the Swedish bailout seems to have done) actually sounds like a pretty good deal to me.
A couple weeks after that, Ambrose Evans-Pritchard reported in the Telegraph that:
The US Federal Reserve is examining the Nordic bank nationalisations of the 1990s as a possible interim solution to the US financial crisis.
This got a fair amount of attention. Somewhere along the line, journalists also began discovering a June 2007 Federal Reserve Bank of Cleveland paper by economist O. Emre Ergungor titled “On the Resolution of Financial Crises: The Swedish Experience” (pdf). And I’m sure I’m missing some other early episodes of Swedophilia.
But as markets calmed down in the aftermath of the Bear Stearns collapse/rescue/takeover, the issue faded from view. In early September, a couple of Swedish officials—Bo Lundgren and Lars Hörngren—came to New York to speak at a conference on “How to Tackle A Financial Crisis: The Case of Sweden in the 1990s.” They stopped by TIME beforehand to chat (because, they said, they’d been reading my blog posts on Sweden), and said that up then the American response to the crisis hadn’t been all that bad:
“The drastic actions taken in Sweden were with a concern that all the banks were about to go bust,” said Hörngren. “That’s clearly not the case in the U.S. … You cannot draw that strong a parallel to the Swedish situation yet.”
“Hopefully never,” Lundgren added.
Less than a week later, Lehman failed and it did start to look as if all the banks in the U.S. (and Europe) were about to go bust. That gave discussions of the Swedish solution a relevance and importance that they hadn’t had before—meaning that Krugman bringing up the subject that month was important and influential in a way that earlier media mentions had not been. So in trying to track the news life cycle, Benkler isn’t wrong to begin there. He just misses the gestation.
Update: Yochai Benkler e-mails to say that the reason Media Cloud didn’t catch the gestation of the Swedish-bank-takeover meme in March 2008 was that Media Cloud didn’t exist yet. But he puts it more entertainingly than that:
I wish my answer was “oh, we knew about this and discounted it because it was too early in the cycle to be relevant to the recession fighting debate.” Instead it is: when you were writing this, Ethan [Zuckerman] and I were sitting in the Berkman Center conference room needling each other about whether the blogosphere is an echo chamber or a source of agenda setting interventions, and decided that this was actually an answerable question, if we had the right tools.
