M·CAM CEO Discusses Global Economic Changes at the Arlington Institute

Date:  Wed, 2006-07-12

Dr. David E. Martin July 12, 1006 At the turn of the 19th century, Napoleonic exploits heralded the end of the “sovereign” and gave rise to tangible property commercial private banking and asset-backed finance. At the turn of the 20th century, the emergence of efficient transoceanic and transcontinental commerce gave rise to central banks and gold standards enabling the industrial economy. At the dawn of the 21st century, we face the realization that the tangible economy and its attendant modes no longer can be represented or financed using the convention of the “balance sheet.” Value and risk are now the exclusive domain of the intangible and the asymmetric. Presaged with the collapse of the 2001 WTO debates in Doha, heralded with the recent stock market multiple personality disorder, and against the growing drumbeat of currency strain, global finance is about to experience the collapse of the tangible, industrial market paradigms and the emergence of the intangible, asymmetric risk capital era.

• In 2005, the U.S. and international governments canceled or curtailed sovereign immunity from infringement liability previously afforded to government contractors.
• In 2006, the U.S. Justice Department argued to encourage patent infringement when it feared the loss of Blackberry while the Commerce Department decried intellectual property abuses in China.
• In 2008, all banks and financial institutions will have to test their loss reserves for their exposure to “intangible economy risks” under the Basel II Accords. Neither their internal systems nor external business practices are prepared — anywhere.
• Over $1.5 trillion in uninvested capital in the Islamic world — to grow to as much as $3 trillion by year’s end — directly or indirectly stands ready to move into diversified currencies further destabilizing weakened dollars, yen, and euros.
• Infrastructures designed to arbitrate to whom proprietary limited monopolies are granted have been shown to be unsustainable and overly provincial giving rise to the emergence of “sovereign-backed” monopolies the likes of which have never been seen.
• The presumed hegemony of the Trilateral countries in terms of invention and innovation is increasingly challenged by the “Silk Road Axis”.

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