The Burj Khalifa in Dubai, begun in 2004 and completed in 2009, soars skyward for more than half a mile.

You can make a lot of comparisons between the fact that we erect structures and edifices ever taller and ever more dazzling in that they soar skyward from progressively smaller bases, and the fact that we use financial engineering to try and create greater asset wealth from an existing economic base of activity.

The two concepts are certainly related; the use of lighter and stronger materials and the application of better science have helped us overcome natural forces that thwart our attempts to build Olympus on Earth. And it’s also true that financial engineering has made our economies more efficient; the advent of derivatives, which includes options, futures, and other forms of risk-management tools, has genuinely allowed us to build more wealth upon an existing level of economic activity, domestically and globally.

The “Icarus” factor, which I create here as a metaphor for humans who try to fly too high (I could just as easily have used the “Babel” factor), comes into play when motivation for our edifices, architectural or financial, is impure: does pride drive the desire to build the world’s tallest building, or is greed behind the desire to “inflate” asset prices upon a weak economic foundation?

Most Americans are unaware of the extreme leverage available in commodity and currency markets, and of the inherent leverage in our banking system (the fractional reserve system). Excess leverage has been at the heart of every major financial calamity outside of world war or natural disaster. We continue to use and permit the use of extreme leverage in futures speculation and the banking system.

As I write this and think of the multi-trillion dollar response (on several fronts) to the attacks on the edifices of the Pentagon and Twin Towers, I wonder if those attacks ultimately weakened the supporting structures of our financial system as well.

In late 2009, Dubai received a $10 billion bailout from banks and Arab neighbor Abu Dhabi.

Plans are underway in neighboring Saudi Arabia for a building to soar over one mile in the direction of heaven.

WH