Effects on septeber 11 2001 Essay Example | Topics and Well Written Essays - 500 words

Effects on septeber 11 2001 - Essay Example The modest effect was due to the Federal Reserve’s liquidity support to the financial community. One of the immediate effects of the attack though, is the downturn of the stock market. One lasting effect of the 9/11 tragedy is the increase in government funding in making production, distribution, finance and communication more secure in the US. More resources will be used for security rather than enhancing productive capacity (Makinen,7). In the aspect of world economies, additional security layers were placed in transporting goods which made it more costly in terms of distribution. There were greater impediments to the free movement of goods, services and capital (Makinen, 8). This also resulted in a slowdown in the growth of productivity. The effect of the terrorists’ attack was greatly felt in the tourism, airline and aviation and insurance industries. Even before 9/11, the airline industry was already experiencing financial troubles. The attack compounded the financial woes of several airline companies but the Federal government responded with an aid package (Makinen, 9). Air travel dropped tremendously as an aftermath of the attack; thus, there were several lay-offs in the industry. The insurance industry is one of the most affected industry by the 9/11 attack. â€Å"The loss of life and property gave rise to the largest property/casualty claim in history, estimated at US$40 billion† (Makinen, 9). Although the insurance companies were able to cover the claims, they became reluctant in providing coverage against future terrorists’ attack, not to mention that they do not have ample experience in deciding on the insurance rates and computing the reserves for it. Before the attack, the agriculture and food sector were already recovering from low prices and slow exports. Days after the attack there were some setbacks in the economy because of a stop in the commodities