I was stunned and very surprised to find out of how little it took for the terrorists to put the United States on its knees. Today I have realized how fragile the entire American system is.
I live in New Jersey, but only twenty miles from the World Trade Center site in New York City. About four miles from my house I have a beautiful view of the New York skyline and I could see the two gigantic twin towers of the World Trade Center. Now, when I look in the direction where the twin towers used to stand I feel a strange feeling.
The terrorists destroyed a few buildings and they killed about three thousand people. The attack will have a profound impact on the lives of the people who lost loved ones on September 11, 2001. It also had a negative psychological effect on the US population, when we realized how vulnerable we all are to any kind of terrorist attacks.
We can consider the 3,000 people who died in the attack to be a very small loss in terms of people when we compare that number with the total size of the US population of 270 million people. The monetary loss of an estimated $100 billion dollars also can be considered a small loss when compared to the size of the US economy of $9 trillion dollars.
The damage to the US seems small when put in perspective to the damage done to other countries in the last 20 years. For example, most Americans don't even know where Sudan is located in our globe, and they don't know that they have had a devastating civil war going on since 1983, where more than 2 million have been killed.
In the last 25 years we had a war in Angola that killed over 600 thousand people. In Rwanda over 500 thousand people were killed in that civil war in the 1990's. There are too many countries around the world that have been completely destroyed by civil wars such as Congo, Ivory Coast, Colombia, Somalia, Liberia, Afghanistan, Serbia, and Bosnia, just to mention a few.
If one watches American television here in the New York area on a regular basis, it would seem that there is only one problem around the world—between Israel and the Palestinians. Israel has the latest in war technology, including tanks, F-16 jets, helicopters, atomic bomb, etc. The Palestinians have stones, sling shots, small firearms, and as a last resort they blow themselves up as suicide bombers.
US on its knees?
The terrorists did not only destroy a few buildings and kill over 3,000 people in the US. They continued to score victory after victory over the United States in the last year. They also destroyed the American way of life. Let me explain what I mean.
In my opinion the US Constitution and the Bill of Rights is one of the greatest documents ever written. These documents are a masterpiece. These documents embodied the soul of the American nation. It is what sets the United States apart from the other nations. I wish every American would send a copy of the US Constitution and the Bill of Rights to all the politicians in Washington D.C. to remind them of what this country is all about.
After President Bush declared war on terrorism, the US government took some drastic measures to wage such a war. On October 26, 2001 President Bush signed into law the USA Patriot Act of 2001. This law is based on the assumption that Americans are willing to give up their civil liberties in exchange for safety. A legislative analysis of the USA Patriot Act by the American Civil Liberties Union shows the following:
1) For immigrants, the law is a dramatic setback that gives the government the authority to detain—indefinitely in some cases—non-citizens who are not terrorists on the basis of vague allegations of a risk to national security.
2) Allow for indefinite detention of non-citizens who are not terrorists on minor visa violations if they cannot be deported because they are stateless, their country of origin refuses to accept them or because they would face torture in their country of origin.
3) Minimize judicial supervision of federal telephone and Internet surveillance by law enforcement authorities.
4) Expand the ability of the government to conduct secret searches.
5) Give the Attorney General and the Secretary of State the power to designate domestic groups as terrorist organizations and deport any non-citizen who belongs to them.
6) Grant the FBI broad access to sensitive business records about individuals without having to show evidence of a crime.
7) Lead to large-scale investigations of American citizens for "Intelligence" purposes.
There are 23 pages in this new act dealing with the subject of money-laundering. This extensive section of the USA Patriot Act dealing with money laundering also gives the government new powers and makes it easy for the government to freeze and confiscate assets of anyone, including American citizens. The USA Patriot Act increased substantially the risk of doing business in the US because of the possibility of confiscation of assets and property.
I wonder what the long-term full impact of the USA Patriot Act will be on the US culture and economy—the capital flight from the US economy, the impact on immigrants and their families who are living in the US today, the impact on new immigration to the US, and the impact on civil liberties of the American people.
The USA Patriot Act represents a major victory of the terrorists over the United States and its free society. We can see another victory for the terrorists in the creation of the Homeland Security Agency, a department which is exempt from following the rules and guidelines set by the US Constitution and Bill of Rights. This is another example of how the American people handed their civil liberties on a silver platter to the terrorists' cause. From what I understand, this new Homeland Security Agency is an organization similar to the Soviet KGB or the German Gestapo.
The US government has been operating for a long time with two fine organizations; the CIA and the FBI. Both organizations operate under the rule of law, meaning the US Constitution and Bill of Rights. This new Homeland Security Agency looks very suspicious to me with its secret intelligence court. Even two American citizens were put on trial and denied the right to meet with a lawyer. As we all know, democracy and justice can die behind close doors.
As reported in The New York Times on September 10, 2002, the Bush Administration unveiled the new TIPS program ( for Terrorism Information and Prevention System ) to recruit Americans to spy on their fellow Americans. These developments make me wonder if the US is in the process of becoming a fascist nation with the blessings of the American people.
Two weeks ago when I was talking in the telephone with an aunt of mine in Brazil, she asked me why Americans hate Brazilians. I asked her why she was asking me that question, because I had no idea what she was talking about. She told me that she was watching on television in Brazil the story of about 30 Brazilians illegal immigrants who had been caught in the US when the federal government started using every available statute to hunt down and punish terrorists.
These people were not terrorists, they were immigrants trying for a better life in the US, but they were treated as if they were dangerous people. These people were deported from the US. They were not allowed even to go home to get their personal belongings. They arrived in Brazil with only the clothes they were wearing when they got caught in the US. What happened to the belongings of these people, including the contents of their houses, cars, etc?
The same type of treatment is being given to illegal immigrants from other countries.
I bet that when they are deported to their original countries, the local media also are reporting on the mistreatment received by these immigrants in the US. I am sure that this kind of reporting is not helping the image of the US in foreign lands.
The American media usually does not report on these issues which impact our lives here in the US. The American media would rather expend half of their daily broadcast on the subject of Israel and the Palestinians, and the other half demonizing Saddam Hussein and Iraq.
I told my aunt that they are not giving this hash treatment only to Brazilians. They are giving this treatment to immigrants in general. Just God knows what really is going on here in the US, since the current government administration has a policy of doing things in secret.
The American overreaction to the terrorist attack of 9/11 has major long-term consequences to the US economy. The New York Times reported on October 13, 2002 that "slowdown on US visas stalls business, science, and personal travel plans. A global slowdown in the issuing of American visas to foreigners is disrupting lives in the United States and abroad. It is interfering with scientific research and business deals, forcing some people to postpone medical treatment and weddings and stranding others away from their homelands, say government officials and advocates for immigrants. Foreigners have been waiting months for security clearances to the US."
Life Is Hell
Life has become a nightmare here in the US for illegal immigrants (It is estimated that there are over 6 million illegal immigrants living in the US today. To put it in some perspective, that figure represents twice the entire population of a country such as Uruguay, and most of these people are living in fear in the US.) Most of these illegal immigrants came to the US looking for a better life.
I asked a friend of mine who has a large Brazilian restaurant in Newark, why the restaurant was so empty. I used to go there for dinner on a regular basis and I noticed that lately the restaurant was empty during some weekdays. He told me that a large number of illegal Brazilian immigrants who lived in the Newark area were returning to Brazil, because of the new situation here in the US. The job market is dead in the New York Metropolitan area and they can't find any type of work. On top of that, they were afraid most of the time of being caught by the US government and ending up in prison, and then of being deported to Brazil.
On many occasions when I was waiting for my food at the restaurant, I heard the conversation of the other patrons, and they usually were complaining to each other about how hard it was to find any kind of work today here in New Jersey.
About a year ago, before 9/11, I was leaving this Brazilian restaurant in Newark, when on my way out I heard the private telephone conversation of a Brazilian young man in his mid 20's. He was very upset and was saying that he had been looking for any job in Newark for days and he could not find anything. He also said that he had no money and that he had had nothing to eat in more than two days. He told his friend that he was starving and did not know what to do. I tapped on his shoulders and when he turned I could see on his face how desperate he was. I gave him enough money for a meal and wished him well. To make things even worse, most of these illegal immigrants can't even speak English and they don't know where to go to find any kind of help.
I have first-hand experience as to what is happening here in the New York/New Jersey job market, since I also have been looking for a job for a while. I see a large number of qualified people every day when I go to the labor department and nobody is finding decent jobs in accordance with our education level. We have all the skills but where are the jobs? If we can't find a job here in the New York Metropolitan area, then forget about finding a job in the rest of the country.
In an article entitled "Out of a job and no longer looking, " The New York Times on September 29, 2002, wrote that the real unemployment rate in the US is completely misleading. It is close to double the numbers reported by official government statistics. Millions of discouraged unemployed people have turned to disability insurance.
Instead of 5.8 percent, the real unemployment number is close to 12.0 percent. People who run out of unemployment benefits are not counted anymore as being unemployed. The government statistics are all smoke and mirrors, and hype of meaningless information. I wonder if the stock analysts that covered Enron, WorldCom, and other worthless companies also worked on the published numbers of these government statistics.
Many of the people that I meet at the labor department on a regular basis have exhausted their unemployment extensions, and they are living now by depleting the nest egg that they have accumulated for the retirement years. These people are in their 50's; they don't know how much longer they can keep going on in this fashion, and they don't know what they will do when it is time for retirement and the money is all gone. Seems to me that we are in the process of milking the American economic system dry.
I hear people from other lands saying that American politicians don't care about other countries. When I hear that, I think to myself, why should the American politicians care about the people of other countries, when they don't care even about the American population? For example: those bastards left Washington for the elections break, without giving an unemployment extension to the American people who most need their help at this time.
The new Brazilian government should learn here in the US how to hype misleading information and show how things are going well when in reality they are losing money or are falling apart. How to live in the world of illusion.
There is one thing no one can take away from the US government and US corporations: they are the masters of illusion. We can see that on a daily basis not only in Hollywood and on the Disney Amusement Parks, but also in the business world and the government's economic statistics.
I am sure that Brazil also can become a world economic power if Brazil is allowed by the world community to borrow itself to a ridiculous amount of $8 trillion dollars of debt, such as the United States.
Today economics and finance are so much out of touch with reality. The financial markets are destroying the Real, the Brazilian currency, when Brazil has only a total $250 billion of debt, and at the same time the US dollar is so strong in the international financial markets, when the US government has over $8 trillion dollars of debt, and many states are choking with red ink here in the US. American consumers and American corporations also are all choking in debt.
The numbers are so ridiculous today that they don't make sense to me. The total Brazilian government debt is considered high at $250 billion dollars. And at the same time the total US government debt is so high, at over $8 trillion dollars, that the US government has to pay as interest on its debt the amount of approximately $200 billion dollars per year. The US pays in interest per year an amount close to the entire Brazilian government debt. Something is wrong here. The total US government debt is 32 times the amount of the total Brazilian government debt.
The US Deflation
Seems to me that the financial markets of the world lost any common sense, and they are driven only by hype and nothing else. In the new deflationary environment that we will be living in the future, God knows for how long, the US economy is in a position for a repeat performance of the great depression of the 1930's.
It is like a recipe for big trouble to be in debt during deflationary times. The housing bubble is ready to be burst, just like the stock market bubble. From that point on, consumer confidence and everything else will go down hill. Companies lay off people, there is less buying power, they lay off even more people, we have a deflationary spiral and so on. People with no jobs can't pay the bills including credit cards and mortgages.
People have to sell their houses, and the flood of new houses on the market depresses even further the market price for houses. After a while, if you have some money, you can buy what used to be a $100,000 house for about $ 15,000. The last time we had deflation on this large scale in the US was in the 1930's and very few adults remember those days.
Recent experience in Japan and here in the US showed us how quickly asset values (in equities or real estate) can melt away. Remember, asset values decline very fast but the liabilities don't go away. If you just bought a house for $400,000 and have a mortgage for that amount, when housing values decline in the near future and that house is worth only $200,000 or less, you still owe the bank the $400,000. Your debt doesn't go away, as asset value is declining. I am not surprised that they are trying very hard in Washington to change the bankruptcy laws. The creditors know that massive losses are on the horizon related to the deflationary wave that will affect the US economy.
Here is some further information which I am quoting from the article "The Risk That Won't Go Away,” in Fortune magazine dated March 7, 1994: Financial derivatives are tightening their grip on the world economy. And nobody knows how to control them. Like alligators in a swamp, financial derivatives lurk in the global economy. Deriving their value from the worth of some underlying asset, like currencies or equities, these potentially lucrative contracts are measured in trillions of dollars. But they also lie in convoluted layers in a tightly wound market of global interconnections. And that gives them the capacity to bring on a worldwide financial quake.
“...The lead actors, small in number, are derivative dealers: the big commercial banks, the major securities firms, plus an occasional outlander from insurance. For these players, derivatives have become an imposing source of profits, earned largely on the fastest-growing, most controversial instruments of all: customized, over-the-counter contracts written between a dealer and another party.
“...Counting everything, including both derivatives traded on the futures and options exchanges and over-the-counter (OTC) derivatives, the notional value of derivative contracts outstanding is today an estimated $16 trillion. That leaves the GDP of the US, at around $6.4 trillion, in the dust. ...Most chillingly, derivatives hold the possibility of systemic risk—the danger that these contracts might directly or indirectly cause some localized or particularized trouble in the financial markets to spread uncontrollably.
“...An imaginable scenario is some deep crisis at a major dealer that would cause it to default on its contracts and be the instigator of a chain reaction bringing down other institutions and sending paroxysms of fear through a financial market that lives on the expectation of prompt payments. Inevitably, that would put deposit-insurance funds, and the taxpayers behind them, at risk."
That Fortune magazine article also mentioned that the derivatives market was growing at a 40 percent rate per year. That means that on the conservative side, the value of contracts in the derivatives market must have grown by over 300 percent since March 1994, and the estimated value for them at the year end 2002 should be over $ 50 trillion dollars.
I don't understand why, after such a sharp stock market decline since January 2000, compounded by the economic losses of 9/11, the collapse of the telecom, and airline industries, and massive corporate fraud on corporate America, how come all this did not result in major losses for the banks, insurance companies, hedge funds, and other financial institutions, creating havoc in this derivatives market. Massive losses in this derivatives market can sink the entire US economy.
The new deflationary wave which will hit the US economy will be bigger than the Japanese wave. This will be the biggest deflationary contraction in world history. It is a record that most Americans hope that they don't achieve.
The New York Times on October 14, 2002 had an article: "Auditors Say US Agencies Lose Track of Billions." According to the article, the US government accounting system is in shambles. The Enron corporation accounting system and information are more accurate and reliable than the US government system. We all know what happened to Enron. Auditors plug numbers at government agencies by the billions of dollars.
If the US government financial numbers are as bad as the article describes, then I don't understand why the US dollar is not crashing, and losing its value in relation to other currencies.
The combination of all of the above opens the door to Brazil become the next world economic power. In other words, Brazil will pick up the pieces from the decline of the United States.
Ricardo C. Amaral is an economist and author. He can be contacted at firstname.lastname@example.org