Financial Crisis in the 1st Decade of the 21st Century

FINANCIAL CRISIS 1
FINANCIAL CRISIS IN THE 1ST DECADE OF THE 21ST CENTURY
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FINANCIAL CRISIS 2
The first decade of the 21st century faced several financial events. Some of the events
were good while others were not welcoming in the financial market. Terrorist attacks happened
causing serious consequences which included hurricanes, financial fraud and collapse of the
economic bubbles among other repercussions. The following discussion shows some of the
economic crisis that happened in the first decade of the 21st century.
Year 2000: Occurrence of the Dot.com
This refers to the time when the internet was the elegance. Investors discovered great
prospective in the online commerce. However, there was much infancy in the online business.
The talk in the market in those days was the ‘new economy’ which was generally referred to as
the Internet-driven frugality. Most of the online stocks like yahoo.com were enlisted in the
NASDAQ. The stockholders were becoming rich off the insolvent stocks that had very elevated
rates and huge earnings ratios (Gilpin, 2018, p. 132). In April 2000, there was an inflation report
that led to a speculative bubble burst, and this led to enormous losses in investments.
2001 terrorist attack
The 9/11 attack among other attacks shaped the financial events for the first decade of the
21st century. The economic climate that followed after the 9/11 attack was never the same
anymore. This was the third time when the New York Stock Exchange was closed. Besides the
tragic loss of lives, the monetary loss that happened is very huge (Piketty, 2015, p. 47).
Some estimates show that approximately $ 59 billion was lost in indemnification alone.
About 18,000 minor trades were ruined in lower Manhattan, and it is also during this time when
the department of homeland security was then formed. The 9/11 attack caused huge financial
loss in the USA market.

FINANCIAL CRISIS 3
2001; the emergence of a corporate governance
Enron and Arthur Anderson industries in 2001 were involved in a business outrage that
linked the two industries with fraud. The lander led to the bankruptcy of Enron, and at the same
time, Arthur Andersen was dissolved. Enron hid huge amounts of money from its shareholder in
the failed projects (Charles Jr , et al., 2016, p. 143). The firm then overstretched its accountants
Arthur Andersen to overlook the issue, and this led to the loss of approximately $ 60 billion. The
latter led to the birth of the Sarbanes-Oxley Act in 2002. The act prolonged the forfeits for
bookkeeping, deception and also gave a mandate to book-keeping companies to stay self-
governing of their customers. Other businesses like Tyco also faced similar problems, and all this
led to the loss of confidence from investors hence affecting the security markets.
Stock market crash
After the 9/11 attack, the stock market started to slide in March 2002 and this made
markets to sink deeper. The fraud scandals were key contributors to this.
2003 war on the terror attack
Confrontation against terror attack was hurled in 2003, and its cost was ongoing. At
around 944 billion US dollars have been used overseas to carry out operations (Ilzetzki , et al.,
2016, p. 233). The latter has been a massive drain in the USA economy, and it is possible to
predict that the final cost will be much greater.