The world witnessed the worst economic crisis since 1929, which was due to a recession in the US economy. The crisis triggered by the collapse of the New York stock market became known as the Great Depression.
During the 1929 crisis, a total of 16 million shares were sold with a total loss of $50 billion. The crisis lasted until 1931.
The whole thing was, as experts say, due to a periodic recession that hits the capitalist system but this time the crisis was so severe because of a conflict of interests, inadequate remedial measures and other shortcomings of the US economy.
The world, however, experiences economic crises every now and then and the one which occurred in 1992 raised alarm bells throughout the world. Luckily, this was brought under control by wealthy nations.
The US economy as well as the global economy were showing signs of slowdown prior to the Sept. 11 terrorist attacks. The main concern of the president of the United States, before the terrorist attacks, was to tackle the potential recession. The rate of growth, when George W. Bush took office, was merely 2 percent and the unemployment rate has jumped to 4.6 percent, which is too high by all standards for a country like the United States.
The slowdown in the US economy was aggravated by the low purchasing power of the American consumer because the US economy depends heavily on consumer trends. Moreover, the internal debt of the United States has increased sharply for the first time and most of the average American households became dependent on bank credit cards. The recessionary trends in the US affected the global economy except those of China and India and the Japanese economy was the hardest hit.
However, it was worse in Latin America as growth rates hit the bottom because the economies of these countries are linked to the US dollar to a large extent.
Despite economic achievements by many Asian countries during the 90s, they are now retreating as a result of the slowdown in the US economy.
The European economy is bound to be affected by any economic problem the US faces, especially at this juncture.
When the terrorists struck at New York and Washington, the economic life of the US came to a halt for one week. Thousands of major firms have been affected and production halted. Individuals too have lost heavily.
The disastrous effects of the September attacks on the US economy will surpass those of the Great Depression. Therefore, it is imperative that the international community should work together in order to minimize the damage facing the potential shortage in cash liquidity and pump new hopes into the global economy.
Above all, the international community should collaborate and cooperate closely and sincerely with the US to curb terrorism. All governments without exception can and should share the burden involved in the war on terrorism. Each country can do something inside its own borders including intercepting the flow of funds to terrorist organizations. This is the only way to ward off a major economic disaster.
