Yesterday economics were the primary focus of the international crisis following the atrocities in the United States last week, as markets reopened and interest rates were cut by a half point on both sides of the Atlantic. This welcome co-ordinated action is intended to bolster confidence. It was reinforced by the decision to call a special European Union summit on Friday, with an agenda covering political, economic and security issues in response to the crisis.
President Bush insisted yesterday US fundamentals remain sound, even though most agree that its economy seems bound to register a recession this year. It could hardly be otherwise given the scale of the physical destruction and the huge injection of uncertainty into the marketplace. Yesterday's return to work at the New York stock exchange was a moving and heroic affair, despite the sharp falls in values. The markets will probably take days and weeks to adjust - and it was heartening that European ones were not so volatile yesterday.
But the shocks to such sectors as air transport, banking, insurance and tourism look likely to be there well into next year, postponing recovery and potentially depressing the US consumer confidence that everyone agrees is a key factor in avoiding a deeper downturn. Such uncertainty is more likely to drive them to save than consume. If that pattern is prolonged such macro-economic realities as the large US trade deficit with the rest of the world would come into play, affecting the dollar's relative value against the euro.
A huge responsibility rests now on European leaders in relation to the effects of this disaster on the European economy. Growth in Germany, France, Italy and the UK has been increasingly sluggish - hardly a hopeful sign that they can take up the slack arising from the US slowdown and now of this body blow. Japan is also in deep trouble. At their summit meeting EU leaders must consider whether it is possible to stimulate their economies by further joint action, after the unexpectedly rapid decision of the European Central Bank to follow the Federal Reserve's interest rate cut yesterday.