What could the study of infectious disease teach us about the 2008 financial crisis? Plenty, argue University of Oxford ecologist Robert M. May and Andrew G. Haldane, the Bank of England’s executive director for financial stability. In a recent paper they compared big banks such as Lehman Brothers with what epidemiologists call “superspreaders”—infected people or organisms who endanger entire networks through their web of connections. 

To prevent another meltdown, financial regulators may need to focus on the health of networks, not just individual banks, May notes. In focusing on interconnections, bankers would be following the lead of designers of personal computers and utility grids; all have worked to make their systems modular, creating firewalls to prevent infection of the whole network by a single element in it. Says Philip H. Dybvig, an economist at Washington University in St. Louis: “What they’re proposing is really a version of Glass-Steagall,” an act that separated investment banks from commercial ones, revoked in 1999. Are bankers listening? May cites the U.S.’s recently proposed Volcker rule—which suggested quarantining risky hedge fund and private equity activity from other banking activities—as a sign that they may be thinking more like epidemiologists.

This article was originally published with the title Too Contagious to Fail.

5 Comments

1. 1. kbortnick 07:56 PM 4/7/11

   Please, review the article entitled: "Why bankers are like bacteria." This article by Dr. Harvey Rubin, Director of the Institute for Strategic Threat Analysis and Response at the University of Pennsylvania, appeared in the September 21, 2009 Issue of the New Scientist. The article was based on a talk Dr. Rubin gave to a meeting of financiers in New York City in July.

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2. 2. Steve3 05:45 PM 4/15/11

   I rather think bankers should be exposed to infectious diseases --- 3 or 4 times a week till there are no more.

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3. 3. Steve3 05:50 PM 4/15/11

   No more bankers that is -- I'll take my chances with disease...

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4. 4. eco-steve 07:56 AM 4/16/11

   The world financial community went bankrupt through bad policy. When the taxpayer bailed them out it was clear that socialism for the rich was being applied. Banks are no longer needed. Invest directly in green technology companies who are badly in need of capital.

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5. 5. okwhen 06:45 AM 4/17/11

   I believe the article and the interpretation is pure crap. The title should read, sadistic genius rule the world. This is my take on the entire affair. Allow me to elaborate. If you follow the World Bank and other banks you will soon discover they control our daily lives to the point of absurdity. For instance, pollution, waste treatment, power, transportation, etc are all controlled by the mighty banks dollars. These insane people are killing themselves and their own children. Yes, the common person believes they require all the thing they have to offer however, only through advertisements developed by psychologist that brainwash people from childhood.
   
   The richest countries in the world are purchasing these things on the backs of others. They are manufactured by slave labor. If you doubt this, then compare their meager existence to something you consider the lowest possible standard of living for yourself. You will discover their so called living standards are depressing. Hopefully, you understand my point.

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