As another Wall Street brokerage falls and worries about one of the world’s largest insurers grow, money managers can only watch and guess as to the whereabouts of the market bottom.

Comparing the events of the last few days to the Sept. 11 terrorist attacks, the dot-com crash, and the devaluation of the Russian ruble, Churchill Franklin, executive vice-president of Boston’s Acadian Asset Management, says the current volatility is taking its toll on the industry: “This is right up there. It’s stressful, for sure.”

Franklin says that calls from clients focus almost exclusively on Acadian’s exposure to Lehman Brothers, Merrill Lynch, and as of Tuesday morning, AIG. He is surprised that an offer to purchase Lehman didn’t materialize before Monday’s bankruptcy announcement. “We figured someone would have come in to pick up those scraps without putting them through that,” he says.

Stephen Jarislowsky, chairman and CEO of Jarislowsky Fraser in Montreal, was more blunt in his assessment, calling the situation a “complete breakdown of the financial system in the United States.” The repercussions will be very unpleasant, he explains, as investor confidence is plunging and will soon turn to anger when the roots of the crisis are revealed.

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“The implications are that investors have no more faith in investments,” he says. “All kinds of things were done, which prudent risk management should never have permitted.”

According to him, the end of the tech bubble in 2000 should have brought about a market correction, but the lowering of interest rates by the U.S. Federal Reserve instead spurred the real estate boom, resulting in the rise of the subprime mortgage market and its subsequent collapse.

“I don’t think that in the U.S. they’ve ever had this kind of a greed period where the whole financial system disintegrated, not even in 1932,” he says. “Anybody who understands real estate knows that if property values go up faster than inflation plus productivity, after 100 years nobody will own a home anymore.”

“Every time you have 15 years of prosperity, where recessions are not allowed to happen by building new bubbles like the three in a row we’ve now had, there’s no counterweight to greed,” he says. “The same was true for the decade of the 20s. Then when [it] hits the fan, excessive greed becomes excessive fear.”

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