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In memoriam

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Antony Currie
Last Updated : Jan 21 2013 | 12:12 AM IST

9/11 anniversary: The 10th anniversary of the September 11, 2001, attacks is rightly focused on the nearly 3,000 people who lost their lives - and the impact on friends, loved ones and the broader population. But there's yet another way the tragedy could be honoured: with more honesty about the economic consequences of decisions taken following the event, and calling for some shared financial sacrifice.

Policy after the attacks understandably sought to shore up security and morale. That came partly in the form of two controversial wars. It also included some attempts to jump-start the economy. America was already in a recession. Congress had just passed President George Bush's tax cuts and the Federal Reserve had already almost halved interest rates to 3.5 per cent - with two of the moves outside scheduled meetings.

More followed, with rates falling to just one per cent by 2003. Such cheap money softened the economic impact of both the downturn and the attacks. It made it easier for the likes of Ford and General Motors to offer patriotism-inspired zero-percent financing to get Americans buying cars. It also helped fuel the housing bubble. Meanwhile, the Republicans took their 2002 mid-term election victory as justification for cutting taxes further while increasing spending, not least on military action in Iraq and Afghanistan.

The mid-decade boom masked the effects of these decisions. Had the mortgage crash not sent the financial system into a tailspin, they may even have been manageable. But with the US economy now teetering on the brink of another recession, there's little wiggle room for the government or the Fed to spur economic growth.

Washington might steal a page from Wall Street for inspiration on bucking up. Cantor Fitzgerald, the bond trading house, lost 658 employees on 9/11. The firm rebuilt but not without some selflessness. For five years, Cantor paid 25 per cent of profits to the families of its victims. And yet the firm employs twice as many people now as it did a decade ago.

Nothing surpasses the human toll of September 11. But that doesn't mean the victims' memory shouldn't be drawn upon to galvanise a grieving nation that also is hurting financially, in part because of the reaction to the day's events. If politicians could talk straight with their constituents about joining together to help get US finances on track, it would be a fitting long-term tribute.

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First Published: Sep 12 2011 | 12:13 AM IST

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