ANALYSIS OF THE CURRENT

 

SITUATION OF THE US ECONOMY

 

 
CULTURE AND REGIONAL ECONOMY OF AMERICA
 
AUTOR: Luis Armando Malo Peniche / Johana Paola Hoyos Jiménez
 

 
 INDEX    

 
1. Analysis  of  the  current  situation  of  the  us  economy  
1.1.  The world economy after the terrorist attacks  
1.2. The new security economy  
1.3. The global geostrategy  

INTRODUCTION  

Through  culture  and  its  historical  evolution  can  be  known  very  specific  areas  such  as  economic  
development  of  a  country.  The  history  of  the  United  States  began  as  a  British  colony,  which  had  
to  learn  to  live  with  a  range  of  cultures,  that  provided  the  political,  industrial,  social  and  cultural  
leaders   who   made   the   difference   and   revolutionized   the   way   of   doing   things   worldwide,   and  
overcome  all  adversities.  

These   events   undoubtedly   marked   economic   growth   in   the   United   States   and   placed   it   at   the  
forefront  as  a  world  power.  This  power  has  been  shown  not  only  economically,  but  in  areas  such  
as  scientific,  technological,  military,  academic  and  cultural,  compared  to  other  powers  that  have  
emerged  throughout  history,  both  in  the  West  and  East.  Likewise,  the  nature  area  of  influence  of  
the  United  States  has  been  Latin  America,  which  by  the  end  of  the  twentieth  century,  through  
integration   processes   of   regional   economic   integration   has   been   impacted   and   especially   for  
countries  like  Colombia,  whose  relations  have  historically  been  close.  

The  main  objectives  areto  analyze  the  geopolitical  context  of  the  US  economy  in  the  21st  century  
and  to  review  the  evolution  of  US  economic  indicators  and  the  positioning  of  US  companies  in  the  
global  market  

ACADEMIC  RECOMMENDATIONS    

• To  read  each  of  the  primers  of  the  course.  

• To  review  the  support  materials  and  supplementary  readings.  
• To  perform  a  research  of  the  concepts  described  for  each  week.  
• To   build   your   own   reading   records   with   key   ideas,   own   analysis   and   bibliographic  
reference  source.  
• To  review  the  schedule  of  activities  and  evaluation  criteria.  
• To  participate  on  the  activities  and  to  comply  with  expected  deliveries.  

2 POLITÉCNICO GRANCOLOMBIANO
 THEMATIC  DEVELOPMENT  

1. Analysis  of  the  current  situation  of  the  us  economy  

1.1. The  world  economy  after  the  terrorist  attacks  

Undoubtedly,   the   attacks   of   September   11th,   2001,   more   than   any   other   event,   show   how  
globalized  is  the  contemporary  world.  19  militants  associated  with  the  Islamic  extremist  group  al-­‐
Qaeda  hijacked  four  airliners  and  carried  out  suicide  attacks  against  targets  in  the  United  States.  
Two  of  the  planes  were  flown  into  the  towers  of  the  World  Trade  Center  in  New  York  City,  a  third  
plane  hit  the  Pentagon  just  outside  Washington,  D.C.  and  the  fourth  plane  crashed  in  a  field  in  
Pennsylvania.  Often  referred  to  as  9/11,  the  attacks  resulted  in  extensive  death  and  destruction,
over  3,000  people  were  killed  and  over  6,000  injured  during  the  attacks  in  New  York  City  and  
Washington,  D.C.  (History,  2016).  While  the  attacks  took  place  in  the  United  States,  the  effects  
were  global,  and  both  the  global  economy  and  international  politics  changed  significantly.  

         

FIgure  1.  9/11                              

Source:Tatsiana  Tsyhanova  (s.f)  

The  attacks  of  September  11  generated  both  immediate  economic  impacts,  and  the  long  term.  
The  direct  loss  of  physical  capital  in  the  September  11  attacks  was  $15.5  billion.  Unemployment  
increased  0.6%  from  September  to  October,  including  the  loss  of  60,000  jobs  in  travel-­‐related  
industries.   The   climate   of   uncertainty   led   many   businesses   to   forestall   hiring   and   new   capital  

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 investments   in   favor   of   stockpiling   cash.   Nervous   investors   unsure   of   the   economic   implications  
of  the  attacks  also  kept  capital  on  the  sidelines.    

The  attacks  resulted  in  estimated  total  insured  losses  of  $35.6  billion,  the  largest  of  any  terrorist  
incident   in   history.   Many   large   insurance   and   reinsurance   firms   faced   hundreds   of   millions   of  
dollars   in   claims   from   the   attacks.   Ironically,   the   post-­‐attack   environment   was   also   a   time   of  
opportunity  for  the  industry.  More  perceived  risk  meant  higher  demand  for  insurance  and  fewer  
players  in  the  market,  resulting  in  higher  prices.  (Klein,  2016)  

The   attacks   resulted   in   a   sudden   and   deep   decline   in   demand   for   commercial   air   travel,   with  
immediate   and   severe   consequences   for   airlines.   Predictably,   passenger   traffic   fell   sharply   on  
domestic  and  transatlantic  routes,  with  US  airlines  scheduling  3000  fewer  flights  per  day  than  
before  the  attacks.  

The   actual   macroeconomic   impact   of   9/11   is   difficult   to   separate   from   larger   macroeconomic  
trends:  the  already  underway  recession  in  the  United  States  and  the  subsequent  strong  revival  of  
the  US  and  global  economies.  Certainly  there  was  significant  lost  growth,  in  the  US  economy  and  
the  world  economy  (with  the  US  as  the  world’s  largest  importer),  as  a  result  of  9/11.  The  attacks  
deepened  the  existing  US  recession  and  severely  affected  certain  sectors.  (Klein,  2016)  

1.2. New  Security  Economy  

Figure  2.  Al  Qaeda  

Source.  Lehnerer,  G.  (s.f)    

4 POLITÉCNICO GRANCOLOMBIANO
 The  biggest  economic  impact  of  the  9/11  attacks  was  the  debt  crisis  of  the  United  States.  After  
the  attacks  on  the  towers  of  the  World  Trade  Center  and  the  Pentagon,  it  took  place  one  of  the  
biggest  public  spending  programs  in  US  history:  the  War  on  Terror. Involving open and covert
military operations, new security legislation, efforts to block the financing of
terrorism, and more.  

On  September  20,  2001,  President  George  W.  Bush  declared  the  War  on  Terror.  In  his  speech,  he  
said:  “Americans  should  not  expect  one  battle,  but  a  lengthy  campaign,  unlike  any  other  we  have  
ever  seen.  It  may  include  dramatic  strikes,  visible  on  TV,  and  covert  operations,  secret  even  in  
success.  We  will  starve  terrorists  of  funding,  turn  them  one  against  another,  and  drive  them  from  
place  to  place,  until  there  is  no  refuge  or  no  rest.  And  we  will  pursue  nations  that  provide  aid  or  
safe  haven  to  terrorism.”  (Bush,  2016)  

Thus,  Bush  launched  the  war  in  Afghanistan  to  find  and  bring  to  justice  Osama  Bin  Laden,  the  
leader  of  Al  Qaeda.  The  war  in  Afghanistan  did  not  cost  much  at  first  -­‐20  billion  dollars  and  13  
billion  dollars  needed  to  launch  the  Department  of  Homeland  Security.  However,  on  March  21,  
2003,   President   Bush   sent   troops   to   Iraq,   arguing   that   the   Central   Intelligence   Agency   (CIA)   had  
found  weapons  of  mass  destruction,  and  that  the  leader  of  Iraq,  Saddam  Hussein,  was  helping  Al  
Qaeda  members.  At  the  end  of  Bush's  term,  the  War  on  Terror  had  cost  around  $  5  trillion,  taking  
into   account   the   cost   of   the   war   in   Afghanistan,   the   war   in   Iraq,   the   cost   of   maintenance   of   the  
Department  of  Homeland  Security,  care  veterans  and  more  than  $  1  trillion  of  additional  interest  
payments  on  debt  of  war.  

Critics   charge   that   the   "war   on   terrorism"   is   an   ideology   of   fear   and   repression   that   creates  
enemies  and  promotes  violence  rather  than  mitigating  acts  of  terror  and  strengthening  security.  
The  worldwide  campaign  has  too  often  become  an  excuse  for  governments  to  repress  opposition  
groups  and  disregard  international  law  and  civil  liberties.  Governments  should  address  terrorism  
through   international   cooperation,   using   international   law   and   respecting   civil   liberties   and  
human  rights.  Governments  should  also  address  the  root  causes  of  terrorism,  notably  political  
alienation  due  to  prejudice,  state-­‐sponsored  violence  and  poverty. (Global  policy  )  

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forum,  2016)  Investopedia,  (2016)  

High  levels  of  debt  to  the  United  States  due  to  high  military  spending,  led  to  a  crisis  in  2011  when  
the  Tea  Party  Republicans  balked  at  raising  the  debt  ceiling.  In  2013,  the  Tea  Party  again  refused  
to   raise   the   debt   ceiling,   or   finance   the   government,   which   led   to   a   global   fears   that   the   United  
States  stops  paying  the  debt.  

If   the   United   States   had   stopped   paying   the   debt,   global   economic   consequences   would   have  
been   disastrous.   According   to   the   director   of   International   Monetary   Fund,   Christine   Lagarde,   if  
we  think  of  a  scenario  of  default,  would  have  "increases  in  the  interest  rate,  collapse  of  stock  
markets  and  consequences  really  serious,  not  only  for  America,  but  for  the  whole  economy  in  the  
world,  because  the  United  States  has  a  great  role  in  the  economy  and  is  very  important  for  other  
countries      

Undoubtedly,   the   increase   in   defense   spending   after   September   11th   has   contributed   to   the  
worsening   fiscal   situation   in   the   US   and   has   had   serious   consequences   in   various   economic  
sectors.  This  explains  that  most  of  the  American  people  prefer  to  stay  out  of  another  war  that  
may  continue  to  affect  the  economy,  as  it  has  done  in  the  last  years.  

6 POLITÉCNICO GRANCOLOMBIANO
 The  global  geostrategy  

Geostrategy   is   a   foreign   policy   concept   associated   with   different   geographical   factors   such   as  
location,  resources  and  potential  strategic  partners.  

Geostrategy  searches  to  see  which  territories  are  of  special  interest  by  various  factors  of  strategic  
value,  such  as  the  Suez  Canal,  the  Panama  Canal  or  the  Strait  of  Hormuz  (extremely  important  oil  
route).  

The   concepts   of   geopolitics   and   geostrategy's   have   been   moving   in   new   directions   since   the  
collapse  of  the  Soviet  Union  in  1991  and  the  terrorist  attacks  on  the  World  Trade  Center  and  the  
Pentagon  on  September  11,  2001.  

A  reconceptualization  of  this  term  has  been  necessary  for  analyzing  in  a  better  way  the  global  
changes   that   brought   the   downfall   of   the   Soviet   empire   and   to   achieve   prediction   of   some  
geopolitical  realities  of  the  new  global  system.  

For  example,  for  the  United  States  during  the  Cold  War,  Eurasia  was  extremely  important  in  terms  
of  geostrategy,  as  having  control  of  that  geographical  area,  would  contain  the  Soviet  Union.  

Since   the   beginning   of   the   Cold   War,   the   United   States   relied   for   the   most   part,   on   nuclear  
deterrence  in  order  to  prevent  Soviet  expansion,  especially  in  central  Europe.  In  the  late  1940s  
and  early  1950s,  when  in  fact  had  a  monopoly  on  the  deliverability  of  nuclear  weapons  in  the  
world,  the  United  States  postulate  the  doctrine  of  nuclear  retaliation  in  response  to  a  possible  
Soviet   aggression.   However,   as   the   Soviet   strategic   capabilities   grew,   it   became   necessary   to  
adjust  this  doctrine.  In  the  1960s,  the  United  States  changed  its  strategy  and  leaned  toward  a  
flexible  response  to  a  military  challenge  from  the  Soviet  Union.  

Given   the   situation   that   both   the   Soviet   Union   and   the   United   States   had   nuclear   weapons,  
embarking   on   a   nuclear   conflict   was   practically   a   suicide;   it   would   be   a   mutually   assured  
destruction.  

With  respect  to  the  war  on  terrorism  declared  by  the  President  George  W.  Bush  in  2001,  it  has  
different   geostrategic   connotations   in   some   respects.   Bush's   preventive   war,   shows   how   its  
geostrategic  thinking  focused  on  states  whose  foreign  policies  were  perceived  as  threats  to  the  
security  of  the  United  States.  Even  though  the  United  States  embarked  on  a  different  strategy  in  
this  new  struggle,  so  did  its  main  enemy  of  the  moment.  

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Figure · Osama  

Source Francis Dean (s.f)  

In  this  regard,  Al  Qaeda  knew  how  to  usein  the  moment  the  geo-­‐strategy  of  suicide  attacks  against  
US  and  Western  countries,  showing  the  weaknesses  in  the  defense  systems.  Al  Qaeda  inferred  
that  weakening  the  power  of  America  and  the  West  would  create  opportunities  for  strengthening  
the  Islamic  fundamentalism  in  diverse  lparts  of  the  world,  especially  in  the  Middle  East.  

It  is  worth  mentioning  that  the  United  States  is  not  the  only  country  that  uses  geostrategy  as  a  
mechanism  to  maintain  or  increase  the  power.  So  do  other  countries  or  blocs  of  countries  like  the  
European  Union,  the  North  Atlantic  Treaty  Organization  (NATO)  and  Russia,  China  and  Central  
Asian  countries  with  the  Shanghai  Cooperation  Organization  (SCO).    

8 POLITÉCNICO GRANCOLOMBIANO
  

Figure 4. NATO  

Source: Pavel Strezhnev (s.f)  

#33342316  

This  shows  that  the  strategic  response  of  a  country  with  the  geography  remains  one  of  the  most  
important  factors  in  the  establishment  and  maintenance  of  power  in  the  international  level,  since  
states  can  increase  or  maintain  their  positions  of  power  by  applying  a  geostrategy  that  focuses  
on  control  of  resources  or  actions  of  other  actors.  

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 REFERENCES  

Bush,  G.  (2016,  July  01).  Theguardian.  Retrieved  from  Text  of  George  Bush's  speech:  
https://www.theguardian.com/world/2001/sep/21/september11.usa13  

Davemanuel.  (01  de  July  de  2016).  Davemanuel.  Obtenido  de  The  Federal  Reserve  Is  Now  The  
Single  Largest  Holder  of  US  Debt:  http://www.davemanuel.com/2010/11/23/the-­‐largest-­‐single-­‐
holder-­‐of-­‐us-­‐debt-­‐is-­‐now/  

Dictionary.  (2016,  July  07).  Dictionary.  Retrieved  from  http://www.dictionary.com/  

Economist.  (2016,  July  07).  Economist.  Retrieved  from  http://www.economist.com/economics-­‐

a-­‐to-­‐z/b#node-­‐21529399  

Encyclo.  (2016,  July  07).  Encyclo.  Retrieved  from  http://www.encyclo.co.uk/  

Global  policy  forum.  (2016,  July  01).  Global  policy  forum.  Retrieved  from  War  on  Terrorism:  
https://www.globalpolicy.org/war-­‐on-­‐terrorism.html  

History.  (2016,  July  01).  History.  Retrieved  from  9-­‐11-­‐attacks:  http://www.history.com/topics/9-­‐

11-­‐attacks  

Investopedia.  (2016,  july  01).  Investopedia.  Retrieved  from  

http://www.investopedia.com/articles/investing/061015/military-­‐spending-­‐us-­‐versus-­‐
everywhere-­‐else.asp  

Klein,  A.  (01  de  July  de  2016).  kas.  Obtenido  de  The  Costs  of  Terror:  The  Economic  
Consequences:  http://www.kas.de/wf/doc/kas_10991-­‐544-­‐2-­‐30.pdf?131022171603  

List  of  figures  

Tatsiana Tsyhanova (s.f) 11 Patriot Día, 11 de septiembre nunca olvidará. Día nacional
de la memoria. [Vectores]Recuperado de
http://es.123rf.com/search.php?word=44257683&srch_lang=es&imgtype=&Submit=+&t_
word=&t_lang=es&orderby=0&mediapopup=44257683  

Lehnerer,  G.  (s.f) ISIS y Al Qaeda nube de palabras sobre fondo blanco.[Foto de archivo]
Recuperado de
http://es.123rf.com/search.php?word=31727652&imgtype=0&t_word=31727652&t_lang
=es&oriSearch=44257683&orderby=0&srch_lang=es&mediapopup=31727652  

Francis Dean (s.f) LEWISTON/IDAHO STATE /USA _ American News magazine Time
and Newsweek Osama ben Laden dean news on recently american issues 7 April 2011  

10 POLITÉCNICO GRANCOLOMBIANO
 LEWISTON/IDAHO STATE /USA _ American News magazine Time and Newsweek
Osama ben Laden dean news on recently american issues 7 April 2011[Foto de archivo]
Recuperado de  

http://es.123rf.com/search.php?word=9475475&imgtype=0&t_word=9475475&t_lang=e
s&oriSearch=31727652&orderby=0&srch_lang=es&mediapopup=9475475  

Pavel Strezhnev (s.f) OTAN en el mapa del mundo sobre fondo blanco [Vectores]
Recuperado de
http://es.123rf.com/search.php?word=33342316&imgtype=0&t_word=33342316&t_lang
=es&oriSearch=9475475&orderby=0&srch_lang=es  

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