PAD 540 The Economy, Global Finance, and Inequality

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The Economy, Global Finance, and InequalityPAD 540ANH NGUYEN3/01/2012Dr Udoh UdomIn the aftermath of the September 11 attacks, the global economy experienced significantdisruptions, including recession, rising government debt, shifts in trade policies, andincreased security measures. Using the information provided, analyze the economicimpacts of the 9/11 attacks on both the U.S. and global economies. Discuss the short-termand long-term consequences on trade, consumer confidence, labor markets, and economicgrowth. Additionally, explore the relationship between global poverty and terrorism asoutlined in the provided references.

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Following the terrorist attacks on 9/11, an already weak international economywas weakened further. The attacks occurred as the world economy was experiencing itsfirst synchronized global recession in a quarter-century. Global growth was 1.4% for2001–down considerably from 4% in 2000. As a result of stimulus monetary and fiscalpolicies, particularly in the United States and China, the recession turned toward a weakeconomic recovery.Prior to 9/11, the slowdown in the U.S. economy already was being transmitted toother economies through trade and investment channels, particularly through a sharpdecline in U.S. imports of high-technology components from Asian suppliers. Theaftershocks of the terrorist attacks were felt immediately in foreign equity markets, intourism and travel, in consumer attitudes, and in temporary capital flight from the UnitedStates. Central banking authorities worldwide reacted by injecting liquidity into theirfinancial systems. After a few months, most began to turn upward again, but whatrecovery has occurred has been fragile and difficult to sustain.(Gail Makinen,2002)The recession, along with increased government spending for the anti-terrorismcampaign, contributed to rising federal debt in the United States and other nations.Combined with a weakening dollar that pushed up the exchange value of the yen, Euro,Chinese renminbi, and other currencies, central governments intervened to bolster thevalue of the dollar by purchasing more U.S. debt instruments.Since 9/11, in particular, stock market values in the United Kingdom, Germany,France, Canada, and Japan have tended to move in tandem with those in the UnitedStates. On each of these markets, equity values, after initially recovering from the 9/11shock, have subsequently fallen, and on September 11, 2002, they generally were below

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