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Financial Planning > Behavioral Finance

Heroism and Resilience

By Kenneth Silber

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In the aftermath of the terrorist atrocities of September 11, 2001, many children drew pictures related to the day’s terrible events. One such drawing shows a jetliner speeding toward the World Trade Center — only to be blocked by Superman. Others show the towers saved by a kid grown to giant size, or by someone operating a time machine.

What makes such pictures so poignant is not just that they are so fanciful, but that they resonate with the real-life heroism widely evident that day — heroism that took forms ranging from the rescue efforts of firemen and police, to the resistance by passengers on United Flight 93, to the actions of Rick Rescorla, security chief of Morgan Stanley Dean Witter, who lost his life after escorting almost all of the financial institution’s 2,800 employees in the World Trade Center to safety.

Five years later, such heroism is still memorable and striking. It still serves as inspiration for dealing with future crises. However, heroism, by its very nature, is something that occurs in its fullest degree only when there is a crisis. When it comes to everyday life, heroism can be held in reserve but not really sustained on a moment-to-moment basis. Rather, there is a different quality that is related to heroism and is no less important, precisely because it is everyday and ongoing. This quality is resilience.

With the perspective of the past five years, one can see tremendous resilience on the part of those targeted and threatened by terrorists. One can see this in the financial industry, which suffered disproportionately on September 11 but which continues to operate and thrive within and beyond its traditional Manhattan environs. One can see resilience in the financial markets, particularly in the way the stock market recovered subsequent to the attack. Resilience is evident in the real-estate boom that has occurred in New York City and other cities, and in the overall growth of the economy. Resilience is manifest in the political consensus that endures, even among Americans who disagree on many other things, that the terrorist network behind 9/11 must be pursued and destroyed.

Wall Street Revival

In the immediate aftermath of the attacks, it was not clear whether lower Manhattan would be able to maintain its status as “the financial district” — the heart of the nation’s financial-services industry. Five years later, that status is unimpaired. Moody’s Investors Service recently signed on as a major tenant at 7 World Trade Center, the first skyscraper to arise from Ground Zero. Around the corner on West Street, Goldman Sachs is building a 43-story headquarters that will house over 9,000 employees in 2.1 million square feet of office space. Oppenheimer Funds, the offices of which were destroyed in the south tower of the World Trade Center, moved into the nearby World Financial Center in 2003, returning to downtown after a temporary stint in midtown Manhattan.

At the same time, the financial industry has learned some of the benefits of dispersion, the greater security that comes with spreading activities away from one geographic point. This is prudent. But there are also vast benefits to keeping a substantial presence in lower Manhattan, as large and small financial institutions are doing. These benefits include ready access to trading partners, clients, suppliers and a talent pool of employees. Another benefit of staying in lower Manhattan is less tangible but no less vital: demonstrating to friend and foe alike that America’s financial institutions are confident and unafraid.

Moreover, there has been an interesting and positive transformation of lower Manhattan in the past five years. Increasingly, it has become a place where people live as well as work. Currently, there are some 30,000 residents in Manhattan south of Chambers Street (a street that is a quick, five-block walk north from the World Trade Center site). By contrast, some 15,000 to 20,000 people were living in the area in the months prior to the 9/11 attacks.

Like many American downtowns, downtown Manhattan used to be rather empty and desolate at night, notwithstanding that many hardworking financial types would still be at work in the office buildings on a typical evening. Now, along with its boom of new residences, lower Manhattan features an attractive selection of restaurants, movie theaters, nightlife, shopping and more. This is in keeping with New York’s self-image as “the city that never sleeps.” It also means that a growing number of workers in the financial industry and other downtown businesses enjoy the convenience of walking to work, avoiding the daily grind of crowded trains and congested roads.

In the high-priced New York real estate market, lower Manhattan had already begun to get increased notice for its residential potential prior to September 11. The fact that this trend has continued and accelerated in the past five years is an unheralded but noteworthy marker of the resilience that Americans have shown in the face of terrorism.

Ground Zero itself, of course, for the most part has not yet been redeveloped. It remains a visible scar on lower Manhattan, and there is not much to be proud of in the political wrangling and delays that have swirled around plans for the site. But here we have a case where the people are ahead of their leaders. The public’s spirit and the economy’s vitality are visible in the blocks around Ground Zero, and it is only a matter of time before these elements take physical form in the site itself.

Then there is the stock market. The terrorists wanted to force a collapse in equity prices that would do severe and lasting damage to the U.S. economy. Osama bin Laden himself emphasized as much in comments made in the months after the attacks. In a videotape released in April 2002 and evidently made in late 2001, the terrorist leader noted that there had been a 16 percent drop in U.S. equities, and offered the following calculations: “The capital in circulation in this market amounts to $4 trillion. If we multiply 16 percent by $4 trillion to find out the losses that their shares suffered, we find that it is $640 billion. This is their loss in shares, and credit goes to God Almighty. This number is equivalent to the budget of Sudan, for instance, for 640 years.”

From the perspective of five years, bin Laden’s remarks are notable for their fatuousness as well as their malevolence. The Dow Jones Industrial Average, which closed at 9,605 on September 10, 2001, closed above that level less than two months later, on November 9. The Nasdaq Composite, which closed at 1,695 the day before the attacks, took just one month to recover, closing at 1,701 on October 11. Similarly, the Standard & Poor’s 500, which closed at 1,092 on September 10, ended at 1,097 a month later. True, the market fell back in 2002, but this was followed by a steady recovery in 2003. As of mid-2006, the Dow was above 11,000, the Nasdaq was above 2,000, and the S&P 500 was over 1,200. Moreover, all these indices have long been hovering comfortably above their pre-9/11 levels. Meanwhile, the economy continues to grow, and unemployment remains low.

Strong Horse vs. Weak Horse

In short, the economic damage done on September 11 was more transient than might have seemed possible in the days after the attacks. The overriding theme, in both the stock market and the economy overall, has been resilience.

Consider, by contrast, the evident economic circumstances of Al Qaeda. In an audio tape released last April, bin Laden angrily voiced a familiar litany of terrorist threats. What was more interesting about the tape, however, is that it also contained what Newsweek columnist Fareed Zakaria called “a parochial appeal for foreign aid, to help those Qaeda supporters in Waziristan who have been rendered homeless by Pakistani Army attacks.” Osama, that is, was looking for handouts to help his organization build some mud huts. In more recent communications, the mass murderer has mourned the death of his Iraq-based affiliate Abu Mussab al-Zarqawi, the latest in an ongoing series of Al Qaeda operatives eliminated from the field by the United States and its allies.

Five years ago, Al Qaeda had free rein in Afghanistan, operating terrorist camps and strongly influencing the Taliban government. Today, the organization is a cave-based phantom, a shadow of its former self. Undeniably, Al Qaeda remains dangerous, and it remains possible that the group will pull off some substantial attack against the U.S. as a follow-up to 9/11. There have been, of course, attacks in England, Spain, Indonesia and elsewhere in the past five years, conducted by Al Qaeda or by groups it has inspired. But in the sweep of five years, the most salient feature of the movement led by bin Laden is its weakness. This is bad news for someone who once notoriously proclaimed that people will prefer a strong horse over a weak one.

A powerful sign of American resilience is that there remains a deep and broad consensus among the public that Al Qaeda must be hunted to the ends of the earth and destroyed. This fact has been obscured to some degree by the political debates underway on issues ranging from National Security Agency wiretapping, to how prisoners should be treated at Guantanamo Bay, to the justification and prospects for the Iraq War. Yet despite all this contentiousness, there is a bedrock agreement about confronting the people behind 9/11. Nobody of any significance argues for negotiating a peace with Al Qaeda, nor does anyone worth listening to claim that the terrorist group has anything of value to offer the world. There are few calls for a withdrawal of U.S. forces from Afghanistan. In the debate over Iraq, both proponents and opponents of the war argue that their respective positions are more suitable for the cause of defeating Al Qaeda.

Of course, there remains on the negative side of the balance sheet in the War on Terror the fact that bin Laden is evidently still alive, as is his deputy Ayman al-Zawahiri. Yet the propaganda of Al Qaeda notwithstanding, one doubts that its leaders feel triumphant on the fifth anniversary of the barbaric attacks they instigated. Bin Laden’s words are shrugged off, his reach is limited, and the organization he built is in disarray. He may well be a man living his own nightmare.

Meanwhile, there is plenty to see and do in lower Manhattan. New buildings are going up. The New York Stock Exchange continues to be a thriving place of business and a tourist attraction, famous for it bustle of traders and the ringing of the opening bell. And when bin Laden is killed or captured, that will be just one more reason for stocks to rise. Ask not for whom the bell tolls, Osama. It tolls for you.

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KENNETH SILBER is a writer and editor who focuses on science, technology and economics. With Research columnist Alexei Bayer, he is a co-author of a chapter in the book Condensed Knowledge (HarperCollins).

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