Fwd: STRATFOR: Real-Time Analysis - Economics of the Attacks

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Is "Act of War" covered by standard commercial insurance or by FEMA?

>From NSDMG (National Security Decision Making Simulation Game) discussion
group =

If this business with the WTC has anybody interested in structural
engineering, I'd recommend a couple of books, "Why Buildings
Stand Up" and "Why Buildings Fall Down" by Mario Salvadori.
They are fairly conversational, intended for the layman.  "Why
Buildings Fall Down" is, of course, the more fascinating of the two.
There's a lot of detective work involved in identifying structural
failures.  Salvadori includes a number of modern examples,
including the failure of the roof of the Kemper Arena in Kansas City,
the shedding skin of the Hancock Tower in Boston, and, of course,
the failure of the Tacoma Narrows bridge.

MacWheel99@aol.com (Alister Wm Macintyre) (Al Mac)

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Date: Tue, 11 Sep 2001 14:39:12 -0500 (CDT)
From: <alert@stratfor.com>
To: redalert@stratfor.com
Subject: STRATFOR: Real-Time Analysis - Economics of the Attacks

___________________________________________________________________


                            S T R A T F O R

                    THE GLOBAL INTELLIGENCE COMPANY

                        http://www.stratfor.com
___________________________________________________________________

                          11 September 2001

Explosions Cripple American Economy

1940 GMT, 010911

The attacks in New York City and Washington, D.C., targeted
obvious symbols of American prestige and power: the World Trade
Center and the Pentagon. The attackers achieved a crippling blow
against America's economic infrastructure as well.

New York City is one of the richest cities on the globe,
independently raking in more annually than all but the world's
most advanced states. In 1998, the city's budget exceeded that of
some major countries, including Russia.

But New York is more than just a wealthy city of 8 million
people. It is the financial capital of the world's largest
economy. As the significance of what happened in New York sank in
across the country, America's smaller exchanges closed down one
by one. But it is the New York Stock Exchange that moves global
financial events.

Minutes after the attacks, authorities shut down the entire
island of Manhattan, virtually sealing it off from the rest of
the world. The NYSE, located a mere half mile from the collapsed
World Trade Center, has suspended operations until further
notice. That action alone set off secondary tremors in stock
exchanges the world over. By 11 a.m. CST, all active, major
global exchanges were registering sharp losses.

Even with the ongoing global slowdown, America's market
capitalization is larger than its massive $10 trillion GDP and
more than all other financial centers combined. A fair portion of
the value of that capitalization is sure to evaporate over the
next few days.

The seemingly invincible dollar has lost its footing as well.
After regularly gaining against major currencies for the past few
years, the dollar dropped 1.8 percent against the euro and 1.5
percent against the yen. Since most of the world's $1.1 trillion
in daily foreign exchange trades take place in New York - and
those markets are closed - this drop is a mere glimpse of what is
to come.

Foreign financial markets are already trembling. The Paris
exchange immediately plummeted 7.4 percent, the London exchange
5.7 percent and the Frankfurt exchange 7 percent. Oil traders are
betting that the United States will seek retribution against a
Middle Eastern target; that has pushed crude oil prices up to a
nine-month high.

The infrastructure that supports high-powered business is also
either crippled or locked down. Officials at the Sears Tower in
Chicago, keenly aware the tower is the country's tallest
building, have ordered an evacuation. And the offices in the 110-
story World Trade Center were the backbone of many financial
powerhouses such as Morgan Stanley Dean Witter, China
International Trust, Yamatane Securities America and Farmers
Union Control Exchange. New York City plays host to more
multinational corporation headquarters than any other city in the
world.

As the financial disaster ripples outward, the insurance industry
will be in for a very rough time. For instance, Westfield America
Inc. signed a 99-year, $3.2 billion lease on the now nonexistent
World Trade Center Building only last month. This is merely one
example of the size of the insurance claims that will be filed in
coming weeks. Staggering claims could be filed by the companies
that were tenants of the World Trade Center. Meanwhile, liability
insurance for canceled airline flights will be paid out, and life
insurance policies for the uncounted dead also must be paid.

The direct impact on American companies cannot be estimated until
the exchanges reopen, but European insurers are already rattled.
An index that follows large European insurance companies fell
more than 10 percent within an hour of the World Trade Center
collapse. The carnage to come in American markets will be
harrowing.

Beyond New York, the Federal Aviation Administration has shut
down the country's entire commercial air network, canceling all
civilian flights. With an average daily capacity of 55,000
flights, the daily loss to the industry ranks in the hundreds of
millions.

Industry confidence is sure to plummet to historic lows.
Preliminary reports indicated that U.S. military fighters shot
down another suspected hijacked passenger plan outside of
Pittsburgh. Though the report remains unconfirmed, the chance --
however remote -- of the government shooting down civilian
passengers would certainly put a damper on an airline industry
only recently recovered from a wave of mergers and price wars.

Related industries, such as tourism and shipping, will suffer
equally. Again, European markets are leading the fall. British
Airways and Hilton Group both shed more than one-fifth of their
stock value within hours of the attacks.

Life will not return to "normal" soon for the airline industry.
More than 2 million passengers travel through U.S. airspace
daily, but the FAA is often accused of designing security
regulations more to produce a sense of security than actual
safety. A complete security overhaul must be conducted before the
air routes can be safely reopened. Even a partial fix will take
days, if not weeks.

Back in New York, the cordon around the shattered remnants of the
World Trade Center -- until this morning the nexus of the
financial world -- will remain for days as rescue workers set to
the grim task of picking through the rubble. The economic damage
-- the full extent of which will not be discerned for months --
will be equally grim.

_________________________________________________________________

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Copyright 2001, Strategic Forecasting, LLC