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May 1, 2009
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The Great Unwind and its Impact
James Zukin
祖金
The Great Unwindand its Impact
1
The U.S. and the Roman Empire
Introduction
There are striking similarities between the current situation inthe United States. and the factors thatbrought down the Roman Empire, including
declining moral values and political civility at home,
overconfident and overextended military in foreign lands, and
fiscal irresponsibility by the central government.
A metaphor for Wall Street is the Colosseum. In the Colosseum, Romans fought not just individualduels, but a much deeper battle for the heart and soul of the republic –and lost.
The Colosseum was symbolic of their obsession with wealth and material excesses, destroying its valuesand exposing its vulnerability, until eventually Rome was overrun by outsiders.
The difference between the United States and the Roman Empire isthe innovation machine manned bymillions of American entrepreneurs.
Source: Economist, David Walker
The Great Unwindand its Impact
2
The Great Unwind
Financial complexity is at a tipping point.
Today the marginal utility of financial innovation may be negative.
Financial institutions established to manage risk, instead, havecreated risk.
The think tanks and universities of America did little.
have stood by as the crisis ravaged their endowments and destroyed the credibility of the market thesis,
the “market we trust”school of market idolatry has ended.
Market mistrust is increased by a dramatic rise in the number and size of Ponzi schemes that have grownfrom local to global and cumulatively will soon be crossing the $80,000,000,000 threshold.
A market without effective regulation is a “school for scoundrels”.
Taxes drive too many transactions. The Internal Revenue Code needs simplification and a focus onintegrating a much more rules-based approach into the system of the major CPA firms, the banks, andother financial institutions.
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