“Deprived of our hopes

Robbed of our dreams

We DEMAND change!”

“Create a self-sustaining system by allowing companies to regulate each other and ultimately

themselves through spontaneous order and social pressure.

Governments should act as facilitators and not as players in order to avoid policy resistance”

Call to Action

Agenda

1. The Highest Order Issue

2. Stakeholders

3. Feedback Loop

4. Solution to the Main Issues

5. Recommendation

GOVERNMENTMEDDLING

Need for more SECURITY

OVERCONFIDENCE

GREED

DISTRUST

FEAR

1929: Stock Exchange Crash

1999-2001: Internet Bubble

2007-2010: Financial Crisis

Highest Order Issue: Government Meddling History repeats itselfEmotional Forces in a Fragile Economy

PATH DEPENDENCY

MORAL HAZARD

INFORMATION ASYMMETRY

Forces

LACK OF TRANSPAREN

CY

Stakeholders ImpactMotivations

Government Desire for Economic stabilization

Lobbies Exert political pressure for private interest

Federal Reserve under Alan Greenspan

Desire for Economic stabilization

Wrong fiscal policiesLack of control

“Wall Street” Maximize clients’ portfolio return Maximized “elites” profits

Rating AgenciesGive assessments on the

financial strengths of Companies and

Governmental Entities

Misleading information to the Public

“Voluntary” Stakeholders: did they act according to their “public” motivations?

Injects Stimulus Packages &Amends the

Reinvestment Act

Actions

Repeal of Glass Steagall

(1999)

FED lowers interest rates to 1%

(2003)

Subprime Mortgagesand CDOs

Gave an increased amount of biased

ratings

Open the doors for “opportunistic” behaviors

Increase the power of banks

“Involuntary” Stakeholders: how were they affected?

Stakeholders Externalities affecting them

“Main Street” & Entrepreneurs

Homeowners

Tax Payers & the Public

Unemployment

Distrust

Bearing the cost of bailing out the whole system

Devaluation of Houses

Housing market crash

Increased uncertainty

Demand stagnation

Less accessibility to credit

Layoffs

Feedback Loop: what are the main issues?Governmen

t interventio

n +

Gov’t Debt

Interest rates

-

+Housin

g Market

’s Lendin

gSubpri

me+

+Defaul

ts

Investments

+

+

STAGNATION

+

-

STABILITY

- +

Increasing effect

Decreasing effect

Economic instability

Lack of Innovation

Breach of Public Trust

Main issues

+

Stimulus Package

Demand for

houses+

+TRUS

T

Economic slowdow

n

+-

+

New Role of Government

Why not: Displayed inertia toward path dependency

How: Facilitating and stepping into the field in instances of “Black Swans”

Spontaneous Order

How: Involving Institutions’ diverse interests by interaction on Supervisory

BoardWhy: Increasing accountability and

reciprocal check & balances

Social PressureHow: Spreading an increased sense

of responsibility and accountabilityWhy: Social Pressure & Public Opinion reinforces necessity for

transparency

Economic Stability

How: Allowing constant and spontaneous self-adjustment

Why: Rigid-rule based system promotes path dependency

“Create a self-sustaining system by allowing companies to regulate each other and ultimately themselves through spontaneous order and social pressure. Governments should act as facilitators and not as players in

order to avoid policy resistance”

HOW do we tackle the main issues? And WHY?

“Create a self-sustaining system by allowing companies to regulate each other and ultimately themselves through spontaneous order and social pressure. Governments should act as facilitators and not as players in order to

avoid policy resistance”

Media & Public

Government

Government

Government

Companies within a Country

United Nations (UN)

Transparency

Interconnections

Transparency

Transparency

Closed systemOpen system

Recommendation: how is the System Globally Sustainable?

Members of the Supervisory Board of the Institution

Government Governme

nt

Government

United Nations (UN)

Transparency Transpar

ency

Transparency

Recommendation: Increase diverse Stakeholders’ participation

Union RepresentativeMain Street RepresentativeWall Street RepresentativeMember of Federation of industries…Board Members of the Company

GOLDEN GATE TEAM 8: ARIANA RIZZATO, FREDY ANDRANGO, ISRAEL NAVA, SIMONE SCHMALZBAUER, SHEKHAR BHARAT SINGH, SUGAR EVELYN BITONGGA

“Create a self-sustaining system by allowing companies to regulate each other and ultimately

themselves through spontaneous order and social pressure.

Governments should act as facilitators and not as players in order to avoid policy resistance”

Call to Action