Trust! Why it Has Been Lost and How to Regain It

TL;DR

This paper analyzes the causes of the trust erosion in financial systems, emphasizing the importance of a multidisciplinary approach to restore trust in both Wall Street and Main Street after the recent financial crisis.

Contribution

It offers a comprehensive perspective on the loss of trust, linking historical financial bubbles to current systemic issues and proposing a multidisciplinary strategy for rebuilding confidence.

Findings

Loss of trust stems from financial bubbles and systemic failures.

Restoring trust requires cultural change and multidisciplinary approaches.

Trust recovery is essential for financial stability and societal well-being.

Abstract

This essay suggests that a proper assessment of the presently unfolding financial crisis, and its cure, requires going back at least to the late 1990s, accounting for the cumulative effect of the ITC, real-estate and financial derivative bubbles. We focus on the deep loss of trust, not only in Wall Street, but more importantly in Main Street, and how to recover it on the short and long terms. A multi-disciplinary approach is needed to deal with the nonlinear complex systems of the present world, in order to develop a culture of fairness, and of upside opportunities associated with a risky world.