Attack raises troubling questions on U.S. economic policy
Alan T. Saracevic, 16.09.2001
It is no coincidence that terrorists targeted the World Trade Center.
World trade helped get us into this mess.
Specifically, what many around the world regard as our oppressive foreign
policy, heavily influenced by business interests, helped get us into this mess.
Now, before you start hyperventilating, let me explain. This does not mean
America deserves the despicable and deadly acts of lunatics. This does not
mean we had it coming. What it does mean is this: Our foreign policy helped
create a climate for this extremism, and we should cop to it.
I realize that's not a popular sentiment. Not since the Gulf War has this
country experienced such a high level of patriotism. And that's a good thing.
In times of war, unity is essential.
But, just the same, this country's thirst for Middle Eastern oil has caused
us to make some fatal blunders in the desert. Blunders that created a
generation of Osama bin Ladens.
A cursory look at bin Laden's life paints a picture of a strong-arm U.S.
He was born to wealth in Saudi Arabia, where our government has propped up
and defended King Fahd's oil-driven monarchy.
In interviews, bin Laden has said the presence of the U.S. military on what
he considered sacred ground in Saudi Arabia during the Gulf War in 1991 was
the turning point in his philosophical attack on the United States. There is
no question oil played a pivotal role in our decision to defend Kuwait and
After the Gulf War, Fahd withdrew bin Laden's passport and pushed him out
of his homeland after Saudi intelligence caught him smuggling weapons into the
country from Yemen.
Bin Laden moved on to Sudan and eventually to Afghanistan, where his hatred
of the United States grew, fed by our support of Israel. While most would by
argue our support of Israel is driven by political and historical ties, its
strategic location amid the world's biggest oil fields cannot be ignored.
Sadly, none of this is news. U.S. political policy in the Middle East has
been driven by our business interests for decades. We have propped up
governments from Iran to Kuwait to Israel to Saudi Arabia in order to ensure
the westward flow of oil. We have done so with little regard for local
populations, their politics, their religions, or their freedom.
SUPPORTING TYRANTS: Most every regime we have supported has been
tyrannical. The only democracy we support, Israel, is in the midst of an
endless battle over sacred ground.
Middle Eastern terrorists, including bin Laden, have devoted their lives to
freeing the land Israel occupies and to toppling U.S. imperialism.
Nobody wants to hear this, but tyranny breeds terrorism. U.S. corporations,
and the military might they subsidize, have profited in foreign lands for
decades, too often taking what's best for them and leaving social chaos in
Whether we like it or not, this nation's economic engine has to do some
soul searching about its role in global socioeconomics. Once again, nothing
justifies the slaughter of the innocent -- by either the haves or the have-
nots. Just the same, the families of thousands of victims are left wondering
how we got to this awful place.
Whether the perpetrators of this heinous crime were, indeed, Muslim
fundamentalists may be pointless. I think there's a case to be made that this
has less to do with religious ideology than it has to do with economic
While we seek in vain to take our pound of flesh to ease our pain, the have-
nots of the world will continue to reach out for their pound of gold, or their
pound of revenge.
Can we find a common ground? Can we let others into our bank vaults? And
can we stay out of their coffers? Here's hoping that the senseless death that
has shaken us to the core will foster a meaningful change in our foreign
policy. That policy can no longer be driven by pure business interest. If it
is, we can expect more of the same.
END OF AN ERA: As the trauma unfolded around us last week, many people said
that life will never be the same again. Most importantly, our sense of safety
has been shattered.
On another level, a golden age in human travel has passed.
Since the late 1960s, people have taken for granted their ability to travel
the globe in relative freedom. Affordable air travel leveled the cultural
playing field between the jet set and the masses.
As a child, I remember flying the globe with my family, following my father,
a college professor, on teaching assignments. We went to Rio de Janeiro and
Peru and London and Venezuela. Travel seemed fun back then, rife with KLM
playing cards and Pan Am carry-ons. I would get clip-on pilot wings and make
visits to the cockpit. Salty peanuts and bad movies rounded out a thrilling
As the years went by, the seats got smaller and the lines became longer.
The crashes grew more frequent and hijacking became part of the national
lexicon. Delays were expected. Air travel became a drag.
Then came Tuesday's coordinated hijacking disaster. Air travel, as we know
it, will change. For the worse.
As the financial ramifications of the crisis ripple through the airline
industry, expect bankruptcies to thin the ranks of carriers. The decreased
competition, coupled with insurance and security concerns, will increase air
fares. Flying will return to its roots: a perk for the privileged.
For those of us who grew up assuming the world was a Pan Am flight away,
this will be a major change. For the first time in a long time, the world is
Pressure rises on BOJ after U.S. attacks
Tamawa Kadoya, 16.09.2001
TOKYO The creeping shadows of a global recession, compounded by turmoil from the deadly terror attacks in the United States, may push the Bank of Japan to further ease its hyper-loose credit policy next week, analysts said on Friday.
With markets awash in liquidity and short-term interest rates already hovering at zero after four easings in monetary policy this year, many doubt the practical aspects of another loosening in credit when the BOJ's policy board meets next week.
But analysts said the central bank may have no choice but to take further steps to show its resolve in stemming deflation and preventing a weak Japan, already teetering on the edge of recession, from contributing to a global economic meltdown.
BOJ Governor Masaru Hayami said on Friday the attacks would be one factor in deciding policy at its meeting on Tuesday and Wednesday. "Given it has had such a big impact, it will be a factor in making a decision," he said.
He added that the bank would do its utmost to tackle deflation after an unprecedented two straight years of falling prices.
But he said the BOJ's ample funding so far had not been feeding into bank lending and corporate activity, and stressed that structural reforms pledged by the government of Prime Minister Junichiro Koizumi remained vital.
Last month, the BOJ's Policy Board expanded its quantitative easing policy by raising the target on current account deposits at the BOJ to 6 trillion yen from 5 trillion yen.
Analysts said the most likely scenario is a further rise in this target and they doubt it will be more aggressive.
"I think there is a high possibility the BOJ will raise the target on current account deposits to seven trillion yen at the next meeting," said Hiromichi Shirakawa, chief economist at UBS Warburg.
"I don't think they will shift to a new policy framework as their main goal right now is to ensure smooth settlements of funds," he said.
Boosting the target is an unorthodox form of easing that works primarily by providing banks with extra reserves to back up additional lending.
To inject more liquidity, the central bank also last month increased its outright Japanese government bond (JGB) purchases to 600 billion yen per month from 400 billion yen.
But despite those additional easing moves, Tokyo stocks have continued to slide, hitting 17-year lows below 10,000 in the wake of Tuesday's attacks by hijacked aircraft on the World Trade Center in New York and the Pentagon in Washington.
A senior government official, who declined to be named, told Reuters on Friday he expects the BOJ to take steps next week to bolster its monetary easing policy.
"The BOJ will strengthen its fight against deflation. The specific steps will be up to the BOJ," he said. "The economic impact from the U.S. terror attacks is a special factor. The problem lies with how to deal with the deflationary trend."
Dismal data also showed the economy teetering on the brink of its fourth recession in a decade, with gross domestic product showing a 0.8 percent contraction for the April-June quarter.
Machinery orders, a leading indicator for capital investment, dropped for a third straight month in July while Japan's current account surplus shrank for the eighth straight month in July.
"The fact is Japan's economy hinges on developments in the United States and a consensus is growing that a recovery there, expected toward the end of the year, will be later than that," one BOJ official said.
The BOJ, along with the U.S. Federal Reserve and European Central Bank (ECB), has been pumping an unusually large amount of liquidity after the terror attacks, underscoring the Group of Seven (G7) statement that central banks would "provide liquidity to ensure that financial markets operate in an orderly fashion."
Since Wednesday, the BOJ has kept current account deposits at some 2 trillion yen more than its 6 trillion yen target.
Speculation is growing that major central banks could ease monetary policy in a concerted fashion, although the ECB decided not to cut rates at its policy-setting meeting on Thursday.
The ECB, the first major central bank to hold a policy meeting after the attacks, said it was confident the U.S. economy would not suffer fundamental damage.
But market participants are expecting the Fed to slash interest rates, even before its next scheduled policy meeting on October 2. (Reuters News)
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