Seattle Bubble Forum Archive

I would say it is more accurate to say that a decline in general sentiment, and optimism, is what led to BOTH the dot com crash and 9/11. it is no coincidence that wars and economic downturns occur at the same time, but it is not because one leads to the other. Rather, when societies swing to feeling pessimistic (as part of a general cycle going from optimism to pessimism), they begin to cut back spending and investing, which leads to economic contraction.

Likewise, the despair that many people feel as a result of this pessimism (which may be exacerbated by a lack of jobs, or future prospects) can lead to anger and fear-mongering. The people who attacked American on 9/11 were generally frustrated young men who felt they had no future. It should be no surprise that there have been no major terrorist actions over the last several years, with the global economy booming and money just gushing into the middle east. Young Arab men are having too much fun spending money in Dubai at night-clubs these days rather than plotting to blow up American buildings.

Unfortunately, we are embarking on another down-cycle in societal sentiment again, and once the global economy heads into a recession I expect to see a LOT more angry unemployed men looking for someone to blame, and take revenge upon...

Likewise, all those hords of Chinese peasants currently slaving away erecting masses of condo towers for speculators will be sorely angered when their paycheques stop (when the bubble collapses). I wouldn't want to be a communist leader in China over the next 5 years!

I think you've got a few things wrong.

First, wars and economic contraction do not normally coexist. During times of war, the government is generally pumping tons of money into the economy. Additionally, military research also tends to drastically increase. The new money drives the economy during and shortly after a war (even if there are shortages of many materials). The research done during a war tends to drive extra economic growth for years down the road.

Look at WWI. The unsustainable growth that eventually led to the Great Depression started in the good times (for Americans at least) that followed the war. Likewise, the Great Depression didn't really show signs of residing until WWII started.

I always felt like this general correlation may have been why we got into Iraq. We had a recession starting, and those in charge knew that wars typically stimulated the economy...so let's start a small scale war that should be easy to win, and take the economic stimulus.

Regarding the rise in violent crime during poor economic times, I think you're spot on. But I disagree that the good times economically are the reason we haven't had a terrorist attack here in 6 years. The oil money doesn't really flow down very well. In many Arab nations, the poor are just as poor as they were 8 years ago. The difference is that there's also a war going on. Why go half way across the world to fight the infidels when you can go 1 time-zone away to fight them? In short, my theory (with no proof at all, just a gut feeling) is that the war has focused the attention of most terrorists away from civilians here. When the war ends, I expect we'll be getting undue attention again.