September 11, 2001 in America there happened an event that radically changed the balance of power in the modern history of mankind. Al-Qaeda’s terrorist attack, under the leadership of Osama bin Laden, made it clear to the Western world that from now on no one could feel fully protected from the barbarians, disguised by sacred banners in the name of their interests, barbarians who assume a man as a small change in their dirty games.
The tragedy, which killed nearly three thousand people, led many to think about a different threat. We will not get bogged down in religion or political consequences of what happened. In our short article, we will look at it from the financial side.
First, I would like to give you a little theory and imagination. The one trading in any market, has probably realized that in order to carry out the transaction with 100% success the trader should have accurate data on the following three points.
- An asset (currency, share, index, etc.).
- Enter (opening position) and exit time (closing position).
- Market direction. If we know that USD/JPY pair will go down at 10pm Moscow time, we should open a PUT position for about 5 minutes till 10pm and set the enter time on 10:30pm. In 30 minutes you will admire a large income into your bank account.
They may argue that similar situations could not happen in real life and they will be right. Market Direction is regulated by many factors that no one can predict with 100% accuracy since there are various indicators, technical data, and news sometimes not even related to economy. All this is true, but there is a small remark. All described above does not work in emergency situations such as September 11, 2001.
Imagine that top-secret information that OPEC members are going to sign an agreement and sharply reduce oil production in 10 times come to your hand! I deliberately take the option with minimal chance for life. If you firmly believe your informant (let it be, a favorite mistress of the Emir of Bahrain), what would be your next step? That is right, you would quickly raise your funds wherever possible (borrow from that mistress) and buy an oil CALL option with all that money. You would become a multimillionaire after news release about agreement signing, and your boss who assume you as a big nothing, would nervously smoke and drink his whiskey, so that after he sleep himself sober, ask you a couple of million until payday.
That’s fiction, right? But let us make a final effort in order to understand what happened on that fateful day. Imagine that whether our fantastic agreement would be signed depends on YOU. Then many things become clear.
This is what happened that September morning in New York. Very limited circle knew about what would happen to the US economy after this scale terrorist attack. Actually, they knew about the attack itself. The first ones who were aware of attack were Bin Laden himself and his trusted circle, then those financial institutions, through which he was preparing his game on the market, and (the author, of course, has no accurate data, but there had been rumors on the Internet about for a long time) one small, but extremely arrogant intelligence. The analytics of that intelligence quickly realized what was about to happen thanks to the preparatory actions of the financial order. Its leaders, according to the same rumors, even warned their American friends that something big was preparing. Unfortunately, the Americans were ignorant.
Thus, someone knew WHAT, WHERE and WHEN would happen. Having a lot of circulating assets, one could easily play for the fall of US stock exchanges quotes, the US currency, as well as another couple of dozen co-factors, that as a result, was expertly executed.
Shares and indexes fell on a few hundred points, the dollar went into a steep dive, and that’s despite the fact that stock trading was almost immediately suspended after the CNN announcement about attack on the north tower. At that moment it occurred for technical reasons, but a few hours later, when computers started working, and the network restored, someone above made a DECISION. New York Stock Exchange (NYSE), American Stock Exchange and NASDAQ did not open on September 11 and remained closed until September 17th, i.e. for almost a week.
On September 17, when stock exchanges opened after the longest inaction period since the Great Depression in 1929, Dow Jones Index (DJIA) lost 684 points or 7.1%, to 8920, that was its biggest drop within one day. By the end of the week DJIA fell to 1369.7 points (14.3%), it was the biggest weekly drop in history. US stocks lost $1.2 trillion within a week! Losses in were not less with terrorists can act much easier, we just do not have accurate data.
The results of this action can be counted in billions of dollars. Taking into account all these huge losses, one can imagine how a terrorist attack could turn an unknown man into the idol of millions and make him so rich that he could be free to spend tens of millions of dollars to promote his idea of global jihad a couple of years.
Alas, we must admit that from a financial point of view, there was carried out a brilliant game for a fall, with almost one hundred percent probability of success, and being one of the most profitable operations in the global financial market it will become a history.
Finally, I would not blame Bin Laden and his organization only. Without the help of some (very influential) people, Al-Qaeda would not be able to carry out such an action (I am talking about its financial aspect). So, either someone somewhere helped them consciously or unwittingly (this is particularly sad).
Market analysis, trends, stock market.