I don’t pretend to be an expert economist, nor do I have a complete understanding of international finance and the machinations of the World Bank. I look to you, dopers, for reassurance.
I’m worried about the Bush administration’s fiscal policy. Politically, I’m pretty much a centrist. I voted for Gore, but I would have been tempted to vote for McCain if he was the Republican nominee, especially if I had a crystal ball and knew of the 9/11 attacks in advance. To digress for a moment; I put more stock in politicians who served in wars because they tend to understand the horror of war and, to my mind, are more reluctant to commit our troops unless it’s absolutely unavoidable. But that is an aside, and I’m interested in a different matter here.
Has this adminstration brought us to financial cliff? If another major terrorist attack occurred, would the financial strain bankrupt our country?
It’s just my view that today, February 25, 2004, we have no margin, no fiscal safety net should our economy take another hit. I believe the Bush administration is counting on a huge economic boom to offset it’s spending and tax cuts. But suppose that is subverted by another cataclysmic event?
Depends on the type and severity of the attack I suppose. If someone managed to nuke New York, LA, DC and Chicago I suppose that would cause a pretty severe financial crisis and come very well push us over the edge to ruin.
Maybe some of the really financially savy dopers will chime in on this one. However, I think you are painting an overly dreary picture of the economy, America’s current solvancy, the current strength of the dollar, etc, and the damage Bush has done to it all. I don’t see us on any kind of ‘cliff’ atm that we could be pushed over to financial ruin from even another 9/11 type disaster. You’ve been listening too much to the foaming at the mouth wing of the Democrats. We simply aren’t that bad off atm. Not saying it wouldn’t hurt, not saying we wouldn’t (most likely) go into another recession…but financial ruin? Thats on par with the guys that say that 5.5 billion will die from the peak oil crisis looming over us.
While I don’t agree with the amount of spending Bush has been doing, and I don’t like to see huge deficits, it’s important to keep this in perspective. In the 1980’s, the deficit was as high as 6% of GDP. The deficit is right now about 3.8% of GDP, and will be going down next year. Japan is running 6.5% GDP deficits right now. The U.K, France, and Germany are all running deficits in the 3% of GDP range, so the U.S. isn’t even that far off their mark.
Sam has a point. Big deficits are bad, and if persisted in long-term can be truly financially crippling, but I don’t think they’re our biggest fiscal problem right now.
IMHO bigger immediate problems for the US are the trade deficit, ballooning consumer debt, and housing bubble. We are literally mortgaging ourselves up to the hilt in order to maintain our former consumption patterns, and that is bound to make investors nervous. It isn’t so much that we’re deep in the red right now—it’s that we’re still acting like we’re deep in the black.
A dirty bomb combined with a few more wars costing a couple hundred billion dollars is not going to bankrupt us. I’m not saying that it would be a fiscal cakewalk, but the US is not going to bankrupted.
There is evidence tha SAl-Queda and Bin Laden benefitted from the drop in stock prices following the 9/11 attacks. If they sold short, they made a fortune. So, far from meaningless terrorattacks, these attacks may well be the means that Al-Queda uses to sustain itself.
The actual affects on the American Economy of 9/11 were exaggerated. The US can survive the loss of two buildings, what are they, a few billion each? That’s a drop in the bucket for a 12 trillion dollar economy. The real threat to the economy was not that two buildings fell down, but that CNN showed everybody them falling down. A few million people sharply curbing their purchases one day is much more damaging. People didn’t feel like buying new cars or flat-screen tv’s because 9/11 ‘scared’ them. It’s not like they could not go out and buy new cars, but that they didn’t desire them for a while. That’s why George Bush encouraged/ordered the people to maintain their spending habits after the attack.
So, the US can survive the loss of the golden gate bridge, or a gas attack in disneyland, or a what have you, because the country’s so huge. Even if Baltimore gets nuked (worst case scenario) it’s not like Los Angeles, Seattle, Detroit, Columbus, Houston, Boston, or Orlando can’t recover. Thus the only way to threaten the american economy is not by physical acts but to alter the economic activity of the citizens.
I suppose you could broadcast another atrocity on TV, but in my opinion it would only be met with more outrage, not fear. I just don’t think people are in the mood to be afraid anymore.
Everyone is correct I can’t imagine a scenario where an attack bankrupts the U.S. out of the blue (barring multiple +10ish nuclear weapons smuggled in country) or even does tremendous lasting systemic economic damage … There * could* be a devastating effect on certain industries: Securities, Airlines, specific-area Real Estate.
As outlined by** Broadus ** and others, the true systemic problems would come from people’s fears and reactions: by curbing spending, postponing investment etc.
But I would submit any effect would be short lived. We lost our innocence 9-11 (he said dramatically) and I think anything that follows (almost no matter how horrific it is) will be to a certain extent expected – we will not be as shocked next time even if it is 10X worse, so we would recover from what shock we did have faster.
Deficit shmeficit. The problem isn’t just the deficits but their result. This nation is in the hole to the tune of seven fucking trillion dollars and our debt is increasing by more than $2 billion every day. You can’t say that we are OK because things were worse back in the 80s. They weren’t. Hell, we have never even gotten around to paying off the deficits from back then let alone our current overdrawing and the future looks even bleaker. There is no will to significantly cut spending or raise taxes and the Boomers are going to start retiring in a few years. We don’t need a terrorist attack to send our economy down the tubes. Our collective irresponsibility is doing it for us.
The American economy survived a four year war with the Third Reich and Imperial Japan at the same time; it survived a civil war; it survived several depressions; it survived a cold war that went on for four decades. Another terrorist attack is not going to cause economic collapse. The United States has an immense depth of resources that have not even begun to be tapped.
The problem is going through heavy sacrifices for real wars… not fake ones. Any country is willing to go through heavy government spending for valid reasons. Its not IF the US should be going through economic hardship as much as WHY… IMHO.
As for another Terrorist attack… it really depends on what they hit. If they just kill people its bad… but not very bad. If they cause major havoc in a big city it might affect the economy or if they hit a key industry.