9/7/2011 5:04 PM ET|
Lost decade? Don't blame 9/11 alone
It's hard to see how the events on Wall Street over the past decade would have been any different had the terrorist attacks on the Twin Towers never happened.
Sept. 11, 2001, was a one-of-a-kind moment for the nation's psyche. The terrorist attacks killed nearly 3,000 people, rained down fear and grief on countless others and launched the nation into two wars.
But was that day similarly devastating for the financial world?
At first glance, it seems the answer is yes. On Sept. 17, 2001 -- the emotional date that the New York Stock Exchange reopened amid soldiers, police and Wall Streeters wearing air masks on the smoky streets of lower Manhattan -- the Dow Jones Industrial Average ($INDU)lost 684 points, at the time the largest single-day point loss on record.
Yet with a decade of hindsight, 9/11 can be seen as but one of a half-dozen financial dominoes that have fallen for the U.S. economy during a long boom-and-bust cycle -- from the 1998 collapse of the hedge fund Long-Term Capital Management, to the demise of Lehman Brothers amid the 2008 financial crisis, to more recent events, including the ongoing European sovereign-debt crisis and the downgrade of the United States' AAA credit rating.
"Nine-eleven was a shock, that we were in a new world where America was no longer as safe as it was," said William Silber, a professor and historian at New York University's Stern School of Business.
For a short time, the attacks and the fear and uncertainty they spawned were a classic case of perception versus reality -- the situation looked worse than it was.
Events like 9/11 create "sudden substantial revisions in expectations about future economic and financial variables," Christopher J. Neely concluded in his 2004 study "The Federal Reserve Responds to Crises: September 11th Was Not the First," (.pdf file).
And while 9/11, like other financial episodes of recent years, is symptomatic of the age of leverage on Wall Street, it differs in one key way: It is a classic example of an external shock, like Pearl Harbor or the 1973-74 oil embargo. It was not a self-inflicted wound, such as the subprime crisis, or a cyclical downturn, such as the 2001 and 2008 recessions.
"The difference is whether the shock has a temporary liquidity impact versus an underlying credit impact. Nine-eleven didn't necessarily go to the underlying creditworthiness of the institutions," said Silber, who chronicled the monetary crisis surrounding World War I in "When Washington Shut Down Wall Street."
Adds Silber, "It goes to (show) how easily the central bank can counteract (a crisis) and can stabilize the system."
Thanks largely to leverage, the last dozen years have been a timeline of boom and bust, of a financial-services-dominated economy out of control and a central bank compounding the problem with cheap money and other instruments of interventionist monetary policy.
"It sounds a whole lot like the economy during and after the Civil War -- one step forward and two steps back," says Charles Geisst, a professor of finance at Manhattan College.
Silber compares the modern period to the stock market crashes of 1929 and the 1930s. "There was not just one event but a series of events," he said.
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The problem wasn't/isn't the disasters of 9/11 or the natural disasters that always happen in the world. The real problem is greed and the loss of patriotism.... Brinkmanship brings in huge returns but also is prone to instability and often total failure.... Prior to the 1990's businesses ran with a long term view and a patriotic conscience... "Be a proud AMERICAN' (remember Walmart had a ad campaign - "Made in USA"). Make money the old fashion way "EARN IT!" Then the Jack Welch's of the business world rose up... Who cares where we make a profit - just make one and fast!... Close the pillow factory in Iowa and buy them from India... Child labor made for nice quick profits.... CEO salary went from 20x the workers average to 1000x the workers average.... Running a business that employed thousands of your fellow Americans was considered almost naive and unprofessional.... Building factories and investing in America was just plain stupid... Services became fungible products... Insurance companies who in the past made a few points for " doing the books" for the healthcare providers suddenly wanted 50% profit margins not on their expenses but on the throughput!... CEO's of all companies began to judge their success not in 6 figure salaries but 9 figure salaries.... My elders taught me to avoid the pushy fast talking overdressed types who tell you they are helping you but are really just helping themselves (to your pockets)... It appear the leaders of our companies and our government are all those types now.... There is no heart in America... Just the voices of the soul-less loud pushy types vying for their cut of the action....
It is said that curiousity killed the cat....true perhaps, but GREED killed the dream. And like you, I am guilty as well. I got what I deserved and if you're licking your financial wounds, to say you're innocent victim, well sure, whatever gets you through the day. The GREED is a beast that could not be fed to full. Every level of life is filled with greed and usually at another's expense. That's human nature. Zero sum game. There's a club, with a lot of power, a lot of money, ran by so few, that determine many of our outcomes in life and guess what? We are not in that club.
One thing certain, the price for a nation of freedom isn't without a financial cost. Too bad the days of a honest day's work is long forgotten. Has been for 30 years. However, Americans, if we can take our eyes off the Jerry Springer mentality and stop letting media determine who you should be, we have the potential to at least pass along to the next generation lessons to be learned. Ask someone 70 or older about their childhood....Tough times for most. And I submit those of us younger than 70 hurt the most...why? Values. Greed. We've been served!!!
NAFTA, getting rid of Glass-Steagal and excessive regulations/litigation have also killed us, as have extremely high corporate tax rates and a couple of generations of able-bodied citizens who refuse to work and insist on living on the gov dole. And don't forget the tens of millions of illegals that are sucking us dry.
The United States was attacked by the Arabs who want to destroy freedom and wipe us from the face of the Earth. They have almost succeeded. Our gutless leaders did nothing to put down the attackers and their tribal lands. Look around the arab world with all their money.
The Arabs aren't happy!
They're not happy in Gaza.
They're not happy in Egypt.
They're not happy in Libya.
They're not happy in Morocco.
They're not happy in Iran.
They're not happy in Iraq.
They're not happy in Yemen.
They're not happy in Afghanistan.
They're not happy in Pakistan.
They're not happy in Syria.
They're not happy in Lebanon.
And where are they happy?
They're happy in England.
They're happy in France.
They're happy in Italy.
They're happy in Spain.
They're happy in Australia.
They're happy in Germany.
They're happy in Sweden.
They're happy in the USA.
They're happy in Norway.
They're happy in ISRAEL.
They're happy in every country that is not Muslim.
And who do they blame?
Not Islam. Not their leadership. Not themselves.
THEY BLAME ISRAEL & THE COUNTRIES THEY ARE HAPPY IN.
THIS WOULD BE FUNNY, IF IT WASN'T TRUE........................
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