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Accusing a man of being “ergi,” which is basically unmanly, was enough of an insult to be answered with blood. A specific instance of something that qualifies a man of being ergi is taking the passive role (bottom) in homosexual intercourse.
Author and Norse historian Neil Price describes “Viking” culture as being one of the most homophobic in history.
Thor literally doesn’t want to dress as a woman in this story EXPRESSLY because he fears being labeled ergi. He says this explicitly.
This is story is a comedy, and this portion of it is told as a joke at Thor’s expense, where Loki and Freya tease him about it.