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The Economic Impact of the Attack on the World Trade Center and the Pentagon
The effects of the attacks on the World Trade Center and Pentagon are rippling throughout the world, by sector, by region, and by market. Bond markets, inside and outside the U.S., already jittery from a deceleration in worldwide economic activity, are struggling to find direction in the aftermath of the attack. There now seems little doubt that the U.S. and global economies will slip into recession. The aerospace, insurance and banking industries, directly connected with the attack, will suffer the most.
The airline sector had already been suffering a slowdown as a result of lower economic growth and cutbacks in business travel. Then, at the moment the first plane hit the first tower, the U.S. airline industry was dealt an even more severe blow. In the ten days that followed, nine U.S. airlines were downgraded or had their ratings put on credit watch with negative implications. Airports and aerospace also felt the credit impact. In New York, the Port Authority of New York and New Jersey, housed in the World Trade Center, was placed on credit watch with negative implications, and, in the days that followed, every North American airport and airport-related special facility and 13 commercial aerospace companies--airplane manufacturers; engine producers; suppliers of aircraft systems, components, and materials; and vendors providing aviation support were put on credit watch with negative implications. The effect of the attack on the World Trade Center, due to diminished air travel, goes further in affecting the hotel industry and tourism.
Now, as the death toll rises and as property damage is beginning to be assessed, it seems quite likely that th...
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...ounting credit problems that some banks may have. Investment banks could be especially vulnerable to the business interruption and potential impact of a further slowdown in already weak capital markets. Any aggressive share buybacks will further reduce the tolerance threshold for earnings pressures. Outside the U.S., the attacks are likely to add to the pressures of banks, as investment volatility becomes a threat to the already precarious financial positions of banks.
Though the economic effects of the attack on the World Trade Center and the Pentagon have raised various opinions from financial analysts, none of them has the capacity to fathom fully how the tragedy of September 11 will play out. But in the weeks ahead, as the shock wears off, they should be able to better gauge how the ongoing dynamics of these events are shaping the immediate economic outlook.
For starters a few days before the attack on 9/11, the airlines stocks did go up. Which means the supply and demand was greater. America was making more money, which is good. The airlines that stocks markets went up, were the airlines that were hijacked which than lead to them going bankrupt. Gabi Logan was saying on USA today “ Despite this government-funded measure, several prominent American airlines declared bankruptcy not long after the 9/11 attacks.” Due to bankruptcy more than just money was
* The economy in the US and around the World was affected since the war on terror began.
Qantas has undertaken significant changes over the last decade to cope with internal and external factors such as the terrorist attacks on September 11, 2001 which effectively reduced the demand for international travel. Qantas initially reduced its international travel flying capacity by 11%. Fortunately, the collapse of Ansett which halted domestic competition in the Australian aviation industry which had dropped the bidding price war for consumer finances, softened the blow on September 12, 2001.
On the morning of September 11/2001, 19 terrorist working for the Al Qaeda terrorist organization hijacked four commercial planes. They attempted to fly them into multiple U.S targets. One of the planes, American Airlines, flight 11, crashed into the north tower of the World Trade Center at 8:50 a.m. Another plane, United Airlines, flight 175, crashed into the south tower at 9:04 a.m. These tragedies took the lives of nearly 3000 people and affected the lives of millions.
The attacks of 9/11 resulted in history’s longest stock market shut down since the 1930s. The New York Stock Exchange remained closed for six days after the attacks. Furthermore, Davis (2011) reports that upon reopening, the New York Stock Exchange fell almost seven hundred points, the biggest one day loss in history. Additionally, Jackson (2008) reports a 14% decline in the Dow Jones, a loss the Dow still felt almost a year later. But, it was American Airlines and United Airlines that experienced the greatest loss. Following the reopening of the stock market, American experienced a 39% decline and United experienced a 42% decline (Davis, 2011). However in face of discouraging numbers, Jackson (2008) reports that the U.S. markets rebounded second only to Japan, showing the great economic resilience of the U.S. While the stock markets present a bleak outlook immediately following the attacks, the financial loss is far from reassuring.
B. The 9/11 attack had immediate and long-term economic impacts, and to this day some continue. The economic effects coming from the September 11 attack were initially shocking. It caused global stock markets to drop sprucely. The September 11 attack resulted in approximately 40 billion in losses of insurance. It led to one of the biggest government spending programs in the U.S. history, the War on Terror. The biggest economic impact of 9/11 was how the increased defense spending led the U.S. to a debt crisis.
The Airline Industry is a fascinating market. It has been one of the few industries to reach astounding milestones. For example, over 200 airlines have gone out of business since deregulation occurred in 1978. Currently, more than 50% of the airlines in the industry are operating under Chapter 11 regulations. Since 9/11, four of the six large carriers have filed for and are currently under bankruptcy court protection. Since 9/11 the industry has lost over $30 billion dollars, and this loss continues to increase. Despite the fact that the airline industry is in a state of despair, JetBlue has become the golden example, a glimpse of what the industry could be.
The attacks that occurred on 9/11 took place on September 11th, 2001. In this devastating event, four different attacks had taken place. Each of the attacks were carried out by terrorists. The group responsible for the attack was Al-Qaeda, a militant Islamist organization that is known to be global in present day. The group itself has a network consisting of a Sunni Muslim movement that aims to make global Jihad happen. Furthermore, a stateless, multinational army that is ready to move at any given time. This terrorist group focuses on attacking non-Sunni Muslims, those who are not Muslim, and individuals who the group deems to be kafir. Ever since the late 1980s, Al-Qaeda has been wreaking havoc all around the world. The leader of the group once being Osama bin Laden. Three planes were bound for New York City while another plane headed towards Washington, D.C. which was supposed to take out the U.S. Capitol. Two of the airplanes crashed into the World Trade Center. One plane hitting the North Tower and the other hitting the South Tower. The third plane had crashed into the Pentagon taking out the western side of the building. The last and final plane was focused solely on taking out the U.S. Capitol in Washington D.C. but failed due to passengers of the plane coming hijacking it from the hijackers. The passengers attempted to take out the hijackers but sadly failed, crashing it into a field in Pennsylvania. Throughout the content of this paper, we will be focusing on the role of media when it comes to 9/11; more specifically: how the media's coverage of 9/11 manipulated our feelings towards 9/11, how it affected Islamophobia in America, and the lasting effects of 9/11.
After September 11th, 2001, the airline industry experienced a significant drop in travel. The reasons for the airline industry downfalls also included a weak U.S and global economy, a tremendous increase in fuel costs, fears of terrorist's attacks, and a decrease in both business and vacation travel.
... of the United States, the attacks gave severe impact. The stock market did not open after September 11 until September 17; the effect causing a historical drop in United States’ stock price. The United States losses resulted in $1.4 trillion in valuation for the week.
According to the International Air Transport Association, 2001 was only the second year in the history of civil aviation in which international traffic declined. Overall, it is believed that the IATA membership of airlines collectively lost more than US$12 billion during this time (Dixon, 2002).
On September 11, 2001, a terrible disaster struck the United States. Two planes crashed into the World Trade Center in New York City, New York. The only time US soil had been attacked since the Japanese bombed Pearl Harbor. The attacks occurred not only at the World Trade Center’s twin towers, but also at the Pentagon and what would have been the White House. The attack on September 11th was one of the most devastating events this country has ever experienced.
The events that unfolded on September 11th and the days that followed also profoundly effected the stock market. It is the purpose of this paper is to examine what happened to both the Dow Jones Industrial Average and the NASDAQ after September 11th and how it is similar to events such as the bombing of Pearl Harbor, the Oklahoma City bombing, and the Gulf War in terms of how the stock market experienced a blow and bounced back after a while.
Airline and travel industry profitability has been strapped by a series of events starting with a recession in business travel after the dotcom bust, followed by 9/11, the SARS epidemic, the Iraq wars, rising aviation turbine fuel prices, and the challenge from low-cost carriers. (Narayan Pandit, 2005) The fallout from rising fuel prices has been so extreme that any efficiency gains that airlines attempted to make could not make up for structural problems where labor costs remained high and low cost competition had continued to drive down yields or average fares at leading hub airports. In the last decade, US airlines alone had a yearly average of net losses of $9.1 billion (Coombs, 2011).
The recession was preceded by the global boom of 2002 - 2007, which resulted in risky investment decisions by individual companies, which eventually left the markets teetering on weak financial supports. Cracks in the over-optimistic market started developing, first with the collapse of individual companies, including Goldman Sachs and Lehman Brothers, but those cracks quickly spread to the housing market and soon impacted the entire U.S. market. At the same time, markets all around the world tumbled, wiping out trillions of dollars in value for global investors. In the U.S., unemployment shot up by 5%, while the S&P 500 lost up to 40% of its value in one year. The events of 2008 and the realization of Firm-specific and Market Risk left investors with few safe-havens to protect their investments (International Monetary Fund,