What Investors Can Learn From World War I

Updated on June 1.

Editor's note: At the recent BookExpo America, David A. Andelman moderated an educational program titled "Investing in a Sustainable World: How the Green Revolution will Create New Industries, Opportunities, Economies and Fortunes." For more information about BookExpo America, click here.

Nearly ninety years ago, the leaders of the western world met in Paris to remake the globe -- in their own image. As I describe in my book, A Shattered Peace: Versailles 1919 and the Price We Pay Today, they redrew ancient national boundaries, established global economic systems and with their colossal errors borne of hubris and self-centered desires to perpetuate an old economic and political order, laid the basis for many of our most profound and destabilizing crises today.

For four decades, I have traveled the world, reporting from nearly 60 countries -- first as a foreign correspondent for The New York Times (NYT - Cramer's Take - Stockpickr), then as chief Paris correspondent for CBS News (CBS - Cramer's Take - Stockpickr), and beginning June 1 as the new editor of World Policy Journal, the U.S.-based international magazine dealing with global issues. Each place I went in my travels, I would ask people where they thought the principle problems of their nation and their region began.

I thought they would point to World War II or the Cold War, or in Asia, the Vietnam or Korean Wars. But the thoughtful people would almost unanimously pause, then say, "I believe I'd have to say the First World War, and the Treaty of Versailles that ended it."

That ending was only the beginning -- a very bad beginning for much of the world.

When the leaders of the victorious Allies came to Paris in January 1919, they proclaimed themselves the world's government. There was no one left standing to challenge this arrogant assertion. With the power to bestow or withhold freedom and self-determination, Britain's Lloyd George, France's Clemenceau, Orlando of Italy, and American President Woodrow Wilson, set about to recreate the world in their image.

The result was a series of large, heterogeneous nations -- weak, poor and deeply dependant on the great powers for their prosperity, defense and indeed, their very survival.