Economic Terror

In the recent past, we have paid painful witness to terrorism’s capacity to harm the United States financial sector. While the September 11, 2001 terrorist attacks on the World Trade Center and attempt on the Pentagon (9/11) are perhaps most commonly viewed as unprecedented physical terror attacks, they also exemplify an economic attack. Besides the immeasurable value of lives lost in the attack, there were also grave financial costs. The price of terrorism is something that is becoming more of an issue in a largely connected financial market. Where once, we worried about finance being used to support terrorism, there is now a clearer concern about the financial impact of terrorist attacks. The question is: if terrorists have noticed this, could they use this information to “doubledown” on the damage they cause?

A. FINANCING OF TERROR

The direct property damages of 9/11 are estimated at over $20 billion.The abstract cost, or opportunity cost, is estimated at around