Shockwaves Felt In Markets for a Decade

John Beveridge

THE September 11 terrorist attacks of a decade ago continue to reverberate in financial markets. And with the benefit of hindsight, we can see that the attacks and the reaction to them played a big role in laying the groundwork for the Global Financial Crisis that is still being felt and the very costly -- in human and economic terms -- wars in Afghanistan and Iraq. In the days following the disaster, there were many people claiming that this turning point in history would spark an immediate and apocalyptic economic meltdown in the US. It is easy to see where those assessments sprang from, even though they turned out to be wildly wide of the mark -- or at the least a little premature. After the first plane ploughed into the twin towers of the World Trade Centre, trading on the New York Stock Exchange was delayed. After the second plane crashed and the towers began to collapse, the world's biggest and most influential exchange was closed for the day and did not reopen until the following Monday.

Ironically, the concerns about debt levels have seen more money flow into US Treasuries, forcing down yields and making it easier and cheaper for the US to raise even more debt. Here in Australia, we have been partly insulated from the economic after-effects of September 11 and the financial crisis, thanks to our exposure to growing Asian economies. However, we are far from immune, with share prices still trading in the doldrums, continuing consumer uncertainty and now a cautious savings culture.

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