Two seemingly opposite dispositions among policymakers have done much to bring about the recession. One is undue faith in markets. The other is undue faith in themselves. Both were typified in the US by Alan Greenspan, the former Federal Reserve chairman, and in Britain by Gordon Brown, the prime minister. Mr Greenspan has shamefacedly admitted it. Mr Brown has yet to do so. Their failures may be partly a matter of individual psychology but they also have systemic and intellectual roots. To gain insight into these, historical parallels help.

One is tempted to compare Mr Greenspan with Rudolf von Havenstein, the man in charge of the German Reichsbank during the 1923 hyperinflation. At the height of the crisis he promised to relieve the shortage of currency through the Reichsbank’s new high-speed printing presses. But Mr Greenspan’s failings, although extending to monetary policy, were mainly in financial sector regulation, where his instinct was to rescue delinquent institutions without disciplining them.