The Economic Impact of the Attack on the World Trade Center and the Pentagon

587 Words 3 Pages
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
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So far, estimated net aggregate insured losses, from 55 leading insurers and reinsurers, are $19.2 billion. This figure is expected to continue rising. Rob Jones, a director in Standard & Poor's Financial Services group in London, has said that losses would have to exceed $50 billion before the entire industry were in trouble, and it is fast approaching that line. Even in Asia's emerging economies, insurance companies are likely to feel the impact of the attack. Although Asian companies are more likely to be affected by exposure to investment volatility more than by exposure to claims, the ratings on subsidiaries of foreign insurers may be affected in the event that their parent companies incur major claims as a result of the attacks on U.S. targets.
Alan Greenspan, chairman of the U.S. central bank, expects some difficult times ahead for companies and workers but remains optimistic about the long-term strength of the U.S. economy. Testifying before the House of Representatives Banking Committee September 20, Greenspan said that the September 11 terrorist attacks on the World Trade Center and Pentagon caused considerable uncertainty that resulted in business cutting back or delaying spending plans. "Indeed, much economic activity ground to a halt last week," he said. Banks and investment banks have mostly weathered the initial phase of the dislocations
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