9-11 Nine Years On: Who Won?

Today marks the ninth anniversary of the terrorist attacks on the United States-September 11, 2001. Today the weather in the East is much like it was that morning: cool, clear air, low humidity and not a cloud in the sky.

There will be memorials today at the sites of all the terrorist homicidal crashes. But the elephant in the room that no one will acknowledge--today or any day--is whether the terrorists were successful in their mission. We like to think they failed--that the steel and the resolve of the American people got us back up off the ground ask quickly as the twin towers in New York went down.

To answer the question of who really won you have to look at the terrorists' targets that day:

1. The World Trade Center in New York, a symbol of America's financial muscle
2. The Pentagon, emblematic of American military power
3. The White House, the residence of the most powerful man on earth
4. The Capitol, a symbol of freedom to the world

Clearly, America continues to project military strength the world over. And while we've had two spirited presidential elections and two off-year congressional elections since that day nine years ago, it's clear that our democracy continues to function vibrantly.

But what about our financial system? True, in the last nine years we've had periods of unprecedented economic growth. But we've also had the worst recession in 30 years. If you connect the dots from 9-11, this is what you have:

• A central bank, the Fed, that flooded the market with cheap money and artificially low interest rates after 9-11 to prevent an economic collapse
• Two rounds of tax cuts that pumped even more money into the consumer markets to restore confidence in the American economy after 9-11
• A grandstanding Congress that got into the mortgage business and created a Fun House of low interest loans, no down payment loans, liar loans, and ultimately the sale of billions of dollars in real estate in deals that made no sense
• An explosion in a complicated mortgage-backed securities market fueled ultimately by the Fed's cheap money policy and Congress' meddling in the mortgage market
• An economic wild fire fueled initially by the collapse of the mortgage backed securities market but fed by the winds of panic that sucked all the liquidity out of the markets
• Not one but two ill-advised "stimulus" plans, not to mention bank and auto industry takeovers that converted precious but dwindling liquidity into government assets through the tax system
• A punishing recession caused by lack of liquidity and confidence
• A timid and cautious private sector, blamed for the collapse by the government, whose Keynesian approach to the crisis further diminished consumer and business confidence
• A crisis in confidence, credit and credibility that has lead to 10% of the American work force without jobs

So you could say that American resolve got us back on our feet after 9-11. But you could also say that the panic that 19 Islamic terrorists caused on that beautiful day in 2001 forced the American government--Democrats and Republicans--into a series of missteps: a cheap money policy that led to an explosion in mortgages that should never have been written that led to a mortgage securities market too opaque and too complex for even regulators or bond rating agencies to understand, which led to the collapse of this securities market, which led to a collapse of the West's financial system, which resulted in lack of liquidity, bankruptcies and ultimately 10% unemployment.

So maybe we didn't win after all.

Just thought you might like to know.