Terrorism And World Market

Terrorism and the Market 

Terrorism is a real threat to all nations in the world. Wherever there are different groups of people, there are sure to be conflicting ideas. Some of the differences in opinions and beliefs lead radicals to turn to terrorism to push their ideas onto others and to send messages that result in the death or injury of many. While this tactic is frowned upon by society as a whole, it is all too real a danger to ignore. The human tragedies that result from terrorist acts are horrifying and the economical impacts that follow terrorism can be almost as devastating. 

Fear

Terrorism can bring an economy to its knees because of fear. Businesses may be afraid to operate as normal because of fear that another attack will happen. Increased costs in security can cause companies to fall on economic hard time ultimately decreasing the value of their stocks and hurting shareholders. One such example of this phenomenon is the resulting collapse of small or floundering airlines after the September 11th attacks on Americans in 2001. Fear can often lead to erratic stock market behavior. Those that play the stock market are looking for predictability and a terrorist attack provides anything but a stable market.

Resilience

Although the typical reaction of the market to a terrorist attack is an immediate downturn, the initial panic, fear, and shock does wear off. This has historically resulted in markets recovering from their short term slumps and even going on to long term bull periods. Such turnarounds were witnessed after terrorist acts like the Kennedy assignation, the World Trade Center Bombing, and the Oklahoma City Bombing. The market turnaround is attributed to many things ranging from a society that bonds together to overcome tragedy to changes in security that make people feel more secure and more confident than before. 

Human Loss

The loss of human life is undoubtedly the tragic side of terrorism. The effects of the deaths of loved ones are tremendous. The business world does not go unaffected by these human losses; the loss in labor force and other key players in a company can cause significant negative effects. During the September 11th attack, the lives of many were lost, including top level executives from Morgan Stanley, Merrill Lynch, American Express, and many other publicly traded companies. Not only did these companies lose a corps of wonderful human beings, but many lost their most important leaders and thinkers. The result was a tragedy for the victims’ families and the companies, as well.