This might appear to be a tenuous link but consider the aftermath of the terrible events of 9/11.
Prior to this outrage, the world was on an uncertain path. The banking sector, once again, looked shaky during late 1998, due to the implosion of Long Term Capital Management This was the gravity defying Hedge Fund based in Connecticut, USA. These super bright individuals worked on algorithm’s that could work out market direction and placed huge bets accordingly. Only they got it wrong! The were highly leveraged and several banks wobbled. It sounds depressingly all too familiar given recent events.
The dot com boom and bust followed shortly thereafter. The IT sector took a hit which carried over into other sectors. The stock market reacted badly. It peaked on 10th March 2000. But subsequently crashed and wiped out $5 trillion of value quickly thereafter.
In September 2001 the single worst terrorist action was inflicted on the States, with world wide implications. Bin Laden’s name was etched onto the globes conscience. Who can ever forget the dramatic pictures and accounts of this horrific day.
One of the policies following the ‘shock that gripped the world’, was fiscal stimulus. This was the medicine to restore confidence to a shattered nation. Real interest rates dropped dramatically to emergency levels around the world. One of the inevitable consequences of this policy strategy was booming real estate markets worldwide.
The growth in commercial property values seemed to defy all logic, fuelled by cheap money and bankers which should of known better. The huge hangover, derived from binging on money supplied on emergency interest rates, has only just begun. Countries have been devastated and the so called robust economies are hiding their ‘dirty washing’ in crippled banks.
Some day, the laundary will have to be done.
Bin Laden has been responsible for thousands of deaths. Indirectly, is he responsible for the bankruptcy of several countries and banks? Have his terrorist activities gone much further than any politician could ever imagine?
