What has 9/11 got to do with the real economy? The recovery was pretty swift and impact ineffectual. If anything the airlines and tourism may have suffered but many other industries benefited.
Since the markets didn't bottom until about 13 months after 9/11, which suggests the economy didn't bottom until some time after that, I think it's a pretty safe bet that it at least delayed the recovery. If nothing else, it scared a whole lot of people and scared people are less prone to spend or invest.
Ok you may have not mentioned the war but that is exactly where the Bush admin took it. Wrongly so. As for the liquidity and economy, my point is $700bn is a big whack down the drain. How can you not see tax cuts and extra spending was a deliberate policy coupled with low rates for an over extended period. I'm saying it. I think we've been here before.
I won't address the rightness or wrongness of the war as it's something we can't do a thing about and is a topic that just leads to needless conflict between folks who are better off trying to figure out a path forward. I did find it quite interesting, though, that the leading Democrats all refused to commit themselves to getting all the troops out by the next election, despite all of them loudly calling for the troops to come home.
As for the rest of it, at what point did I suggest increased spending, lower taxes, and lower rates were not deliberate? Of course they were - though Congress is responsible for the first two, and the Fed for the last part, so theoretically they were seperate decisions. Although that said, certain expenditures are pre-programmed (so to speak) in increase annually, so I supposed those weren't deliberately increased.
This time round it is very different. You have inflationary pressures by excess liquidity, rising commodity and fuel prices coupled with greeedy financial institutions lending excess money to punters who could ill afford property.
I don't recall money being lent to stock market speculators.
It's always different, except that it isn't. I don't have commodity charts on this machine that go back far enough to check on prices, but I do recall the talk about tight labor markets and overheated economy growth leading to inflation. Whether your or I subscribe to that particular point of view doesn't really matter because an awful lot of people do and it plays out in the markets and the economy through inflation expecations.
On the lending part, you're kidding, right?
Day traders can leverage their stock trades up to something like 4:1 (stock day traders correct me if I'm wrong on that figure). Futures traders are employing upwards of 50:1 leverage, and in the case of futures they can quickly use their equity gains to open new positions, again at up to 50:1 leverage, without even closing the first one. Just like a home equity loan, only much, much quicker in terms of turn around time.
Financial institutions are equally as happy to provide leverage to market punters who can't afford to take big losses in the markets.
Derivatives exaserbated the 1987 crash, just like they exaserbated the recent MBS and sub-prime related crisis, just like they exaserbate every financial hiccup because they allow folks to get overleveraged.
