The Coppola column
The end of the second millenium was greeted with great expectations of tranquility and advancement. Seems like the world needs more time to get there.
“Someday, life will be fairer, need will be rarer, greed will not pay;
God speed this bright millennium on its way, let it come someday. “
So sings Esmeralda in a song written in 1996 for Disney’s film, Hunchback of Notre Dame. Her song looks forward to the year 2000, the Millennium year.
I remember the joyful celebrations as the world left behind the bloodstained 20th century and entered the 21st. Fireworks displays in cities all over the world proclaimed a new age of peace and prosperity.
But the joy was short-lived. Two months later, the dot com bubble burst. Recession spread across the globe.
Then, in September 2001, terrorists flew passenger planes into the World Trade Centre and the Pentagon, killing over 3,000 people. It was the worst terrorist attack in history. And it changed the world forever.
In response to the terrorist attacks, the United States and its allies launched a “war on terror”. Over a million people died in Afghanistan and Iraq. Twenty-five years later, the war still rages. It is shaping the global economy, setting up crisis after crisis. And there is no end in sight.
At first, the West seemed oddly detached from the war. The mild dot-com recession did not seriously disturb the “Great Moderation”, the period of low inflation that started after the ERM crisis of 1992. Nor did the 9/11 attacks, terrible though they were. The subsequent seven years were a period of economic calm and stability.
But underneath the seeming calm, a credit bubble of mammoth proportions was growing.
But underneath the seeming calm, a credit bubble of mammoth proportions was growing. It burst disastrously in 2008 when the investment bank Lehman Brothers abruptly collapsed, bringing down financial institutions worldwide.
To this day, people blame the disaster on excessive risk-taking by banks. But what the Great Financial Crisis (as it is now called) really did was destroy an illusion. In the aftermath of the dot-com crisis and the 9/11 attacks, fearful investors wanted safe assets. Banks, insurance companies and credit rating agencies colluded to create them. But what they created turned out to be a house of cards. When the Lehman disaster destroyed these “safe assets”, it was a second major blow to the USA’s financial might. Today, the “safe assets” on which fearful investors depend are US sovereign bonds – and the people of the US have elected a President who pursues policies that seem designed to undermine them. The future of the US dollar as the world’s principal reserve currency is now in doubt.
In Europe, the Great Financial Crisis (GFC) morphed into a sovereign debt crisis. Greece, the worst affected, suffered the deepest peacetime depression since America’s Great Depression. The “Eurozone crisis”, as this is often known, was a major factor in the UK’s 2016 decision to leave the EU – a decision which, ten years on, now stands exposed as an economic disaster.
Less well known in the West is the effect of the GFC on the Middle East. Quantitative easing by Western central banks, particularly the Federal Reserve, caused global food prices to soar and hungry people to rise up against their governments. The “Arab Spring”, as this is known, brought down the governments of Tunisia and Egypt, and sparked civil wars in Iraq, Libya, Syria, and Yemen.
Most destructively of all, the economic and political instability caused by the GFC enabled the rise of Islamic State (ISIL) terrorists in Iraq, Lebanon and Syria. Between 2013 17, ISIL terrorists captured large parts of the Middle East, committing horrific atrocities and destroying priceless historic monuments. They were eventually defeated by Syrian, Kurdish and Iraqi forces supported by two international coalitions, one consisting of Western forces led by the US and the other an unholy alliance of Russian, Iranian and Syrian forces.
But were the 9/11 attacks really exogenous?
Economists call the GFC an “endogenous shock”, because it was generated from within the economic system itself. In contrast, 9/11 was an “exogenous shock”, originating from outside the system. Or so we are told. But were the 9/11 attacks really exogenous?
Strictly speaking, an exogenous shock is something like an earthquake or a tsunami – a natural disaster that is not caused by human activity, cannot be foreseen and against which there is no defence. As I write, Venezuela is in the aftermath of two major earthquakes in its most densely populated area. Over a thousand people are known to have died, and tens of thousands are missing. The scale of destruction is unimaginable.
The terrorist attacks on 9/11 don’t meet this definition. They weren’t a natural disaster. They were a deliberate attack on the USA’s financial and military might. True, they didn’t arise from within the global economic system. But they did arise from the political system. Terrorism is endogenous to an unjust and unstable political system in which some people are privileged above others.
The source of the 9/11 attacks – and the subsequent rise of ISIL – is firmly located in the bloodstained 20th century. Usama Bin Ladin, the leader of Al-Qaeda, the terrorist group which carried out the 9/11 attacks, said in 2004 that the destruction of the World Trade Centre was, in part, revenge for Israel’s destruction of buildings in Beirut during its 1982 invasion of Lebanon, which the USA had fully supported. As I write, Israel, armed and financed by the USA, is once again destroying buildings in Lebanon. Nothing has been learned from 9/11.
Following the GFC, people in the West endured a decade of harsh cuts to public services as governments tried to reduce the deficits caused by bailing out banks and supporting damaged economies. Then came the Covid-19 pandemic, swiftly followed by Russia’s invasion of Ukraine, and in October 2023, Israel’s equivalent of the 9/11 attacks.
The USA and its allies have shown themselves willing to shed blood without limit.
The USA and its allies have shown themselves willing to shed blood without limit. But this has not eliminated the terrorist threat. Far from it. Al-Qaeda and ISIL are not gone, and both remain committed to bringing down the mighty USA. And Israel’s pummelling of Iran and Syria and razing of Lebanon and Palestine is empowering terrorists all over the region. Western powers that arm and support Israel are in the firing line. Another major terrorist attack is only a matter of time.
Of course, by this point, the 20th century had already seen one world war, and a second was brewing. But even though we haven’t had a world war, this century is every bit as bloodstained as the last, and we are making no progress at all in making life fairer, need rarer and greed less rewarding. If anything, the rise of billionaire oligarchs on both sides of the Atlantic, and their increasingly strong grip on political elites dependent on them for funding, is making political and economic systems even more unjust and unstable.
Since the 2000 millennium celebration, every New Year has been ushered in with firework displays symbolising peace and prosperity. But this “bright millennium” is not the clean break from the bloodstained past for which we had hoped. Rather, it is its continuation.
