What effects did the World Trade Center bombing have on the western market?

Karl Hungus

You know, it just kinda popped into my head.

All you hear about when someone mentions Sep 11 is always about the tradgedy of the waste of human life.

Now, don't get me wrong. I mean absolutely NO dis-respect to anyone who has died in the WTC bombing! None what so ever.

But other than all the loss of life, what has the US economy lost?
I'm extremely fuzzy on this part.

What if it had happened like the in Fight Club? The massive corporate buildings destroyed without any injuries.

I'm just rather unsure about the details of the western market's loss on this.
Can anyone help here?

WhiteWashMan

it put the cost of airline insurance up about tenfold

bonkey

Originally posted by AngelWhore
I'm just rather unsure about the details of the western market's loss on this.
Can anyone help here?

It slightly accelerated the onset of the depression which we were beginning to get hit by anyway.

It gave companies something to blame for said depression which they had no control over

It caused dramtic shifts in travel patterns, adversely affecting some, benefiting others

Oh - and yeah - it made a mint for US arms manufacturers, especially with all this expenditure of weapons which need to be restocked, as well as the increased funding to help homeleand defence and all that.

So - the winners were the non-airline-based travel companies, and the US arms industry.
The real losers were the airline industry.
Everyone else was gonna lose anyway - this just gives them something to blame.

jc

The Sweeper

Originally posted by bonkey


It slightly accelerated the onset of the depression which we were beginning to get hit by anyway.

It gave companies something to blame for said depression which they had no control over

V. true - as we were heading into a period of depression, a lot of companies were looking at ways of tightening belts to prepare for the dip. September 11th gave a number of large organisations a good excuse to lay off a couple of hundred workers, which had a domino effect.

Instead of a gradual slump into a time of high interest rates, uncertainty, lack of job security, high unemployment and financial scraping across the boards, we woke up on September 12th and we were there.

Good example is the AIB life assurance offer package for its customers at the end of last year. If you signed the offer form you got something like a grands cover for free, payable on your death. The whole point of sending you the form in the first place was that you could sign up to larger amounts of cover for very little money. Can't remember the amount, say it's €3.50 a month or something and that got you something like €20,000 payable to your nearest and dearest on your death.

Good idea - played on people's recently realised mortality fears because of September 11th, plus makes AIB some money...

You'd hardly notice that leave your account, but it's €42 a year, and if even 50,000 of AIB's customers take on that deal, that's an extra €2,100,000 in income that AIB have managed to acquire each year... yeah, they'll have to pay out, but the beaty of life assurance is that you usually have a long period of time before you do have to pay out on it. It's certainly a good idea to get them though the sparse times...

bonkey

Originally posted by Minesajackdaniels
V. true - as we were heading into a period of depression, a lot of companies were looking at ways of tightening belts to prepare for the dip. September 11th gave a number of large organisations a good excuse to lay off a couple of hundred workers, which had a domino effect.

I'm curious. Does anyone with a financial background know if entering a recession "violently" is better or worse in the long run (recovery wise) than a gradual slip n slide.

I also notice that a lof of people blame the Sep 11 events for the massive layoffs. Take a look at (say) the IT industry, where failing companies would often wipe off thousands of workers at a go. This type of behaviour is not uncommon at all.

Again, I think 9.11 was a contributary factor, in that it pretty much convinced anyone who was borderline "will we wont we" on cutback policies that the asnwer was "you will, and its probably not enough either". I dont, however, subscribe to the commonly held view that these companies used 9.11 as the reasoning for the layoffs. They may have blamed it for the recession, but the truth is that the recession was coming, and it was the recession which caused the layoffs.

So, yeah - maybe the layoffs occurred in a shorter time, but I'm not even convinced of that. I get the impressions that big businesses have learned that cutting large numbers periodically is far more cost effective than cutting small numbers frequently.

jc

Saruman

It helped Ryanair buy 100 aircraft at bargain prices and since they are making huge profits at other airliners expense (as are other budget airlines) then the economy has not gone to **** its just altered... people are still spending money but now its on different things and different services than before.. like gas masks in the US... major business after the anthrax scare!

The Sweeper

Originally posted by bonkey

I also notice that a lof of people blame the Sep 11 events for the massive layoffs. Take a look at (say) the IT industry, where failing companies would often wipe off thousands of workers at a go. This type of behaviour is not uncommon at all.

Again, I think 9.11 was a contributary factor, in that it pretty much convinced anyone who was borderline "will we wont we" on cutback policies that the asnwer was "you will, and its probably not enough either". I dont, however, subscribe to the commonly held view that these companies used 9.11 as the reasoning for the layoffs. They may have blamed it for the recession, but the truth is that the recession was coming, and it was the recession which caused the layoffs.

I agree with the fact that the layoffs were on their way, I just think that the companies used 9.11 as an excuse - it's never easy communicating 900 layoffs to your staff, and I believe many companies may have been fusthering about wondering how to do it and when to do it - I reckon 9.11 gave them a launchpad and many of them took up the opportunity.

Victor

Originally posted by Minesajackdaniels
I agree with the fact that the layoffs were on their way, I just think that the companies used 9.11 as an excuse - it's never easy communicating 900 layoffs to your staff, and I believe many companies may have been fusthering about wondering how to do it and when to do it - I reckon 9.11 gave them a launchpad and many of them took up the opportunity.

This can be looked at in a number of ways. Before Sept. 11th, companies felt they could continue, albeit with trimmed down plans. The negative sentiment created meant that those companies _had to_ decide to cut.

Property / Construction (US). Positive impact in NY, replacing space lost in the WTC. Those companies that continued trading that had been in the WTC have taken up most of the vacant space in NY/NJ. With supply constrained rents will rise short-term, this will affect rent-sensative office based firms. Long-term people may look for alternatives.

InsuranceGenerally positive outlook, as people are more conscious of the need for insurance and premiums will be higher.

AirlinesNot only are passenger numbers down, but people are travelling in cheaper classes, as companies see it as an excuse to cut costs. Increased security costs.

AerospaceBoost for military manufacturers. Shift for airliner manufacturers from premium to standard models.

IT Allowed companies see that too many IT projects were fickle with doubtful returns.

Karl Hungus

Thanks for all your info guys.

It really helped satisfy my curiosity.

Sand

I'm curious. Does anyone with a financial background know if entering a recession "violently" is better or worse in the long run (recovery wise) than a gradual slip n slide.

I dont believe it makes much difference, beyond the fact that there will be a large number of workers unemployed in a short space of time, rather than gradually - which would allow workers to find a new job easier as they would have less imediate competition.

A sudden "violent" recession would probably be caused by supply shock, such as the 1970s OPEC oil crisis. Japan suffered a severe, but short, recession and bounced back for their strong showing in the 80s. Europe followed a policy encouraging aggregate demand, which led to a less severe recession but a higher level of inflation than would otherwise have occured. In the long run the market will adjust and will return to its natural long run tendency - of course in the long run were all dead as one economist said. Thats off the top of my head - hazy first year memories- you could find more detailed work in an economic/finance journal.

I agree that 9/11s role in the reccession is overstated. Theyve been talking about problems with the economy since the Gore-Bush contest. Companys then started cutting orders, trying to second guess a consumer market which at the time at least showed no sign of slowing. Its basically a self fufilling prophecy- if enough influential groups and people start talking about and preparing for a recession then youll have one. Again it is likely some economist somewhere is writing a paper about it that will offer more detailed info.

chernobyl

It gave companies a justifable reason to make serious cutbacks, which had to be made.