Was 9/11 a landmark event or a watershed event? I started posing this question to friends and students soon after the attacks on the World Trade Center and the Pentagon and urged them to keep it in mind as they watched the fallout over the passing years.

My definition of a landmark event is something that stands out on any historical chronology in the way a church steeple standing out on a physical horizon is said to orient riders in a steeplechase. It’s highly visible but, in the broad sweep of history, perhaps not truly consequential. Pearl Harbor is an example. Given the ongoing war in Europe and America’s commitment to supporting Hitler’s enemies, it is highly likely that the United States would have entered World War II at some point even without the Japanese attack on its Pacific fleet. Pearl Harbor sparked a declaration of war, but the powder keg was primed and ready to blow.

My definition of a watershed event is something that fundamentally changes the direction of things, just as a physical watershed marks the point where river waters divide, draining toward the Mississippi River, say, on one side and toward the Atlantic Ocean on the other. The Bolshevik October Revolution fits this definition. Before it occurred, Russia’s revolution was following a pattern of anti-monarchical movements that had broken out here and there in Europe ever since the French Revolution. After it, every government action flowed toward the establishment of an unprecedented socialist state and empire.

Up until 2008, most people I posed my question to preferred watershed to landmark. Then came the collapse of the housing bubble and the resulting economic crisis. When I ask people now which is historically more important, 9/11 or the 2008 economic crisis, I find no consensus. If the flow of history changed in 2001, as the term watershed implies, is it comprehensible to think of it changing direction again just seven years later? The question calls to mind a dilemma of the first half of the twentieth century. Some sensitive artistic souls maintained that the horrors of World War I had made art philosophically impossible. Thirty years later some of the same souls maintained that the horrors of the Holocaust made art philosophically impossible . . . again. How often can everything completely change?

Only seven years separate 9/11 and the collapse of the housing bubble in 2008. Today’s college freshmen were ten or eleven when the twin towers fell, but many of them are living today in homes with mortgages that are underwater and are aware of the anguish of their parents. When the twentieth anniversary of 9/11 comes, college freshmen will know about the terrorist attacks only through history books and old videos, but they may still be living in desperate economic times.

One way to answer my question would be to say that the passage of time turns all watersheds into mere landmarks, but that will not do. The Emancipation Proclamation has retained its watershed quality. So has the dropping of atomic bombs on Hiroshima and Nagasaki. So has the 1914 assassination of Archduke Ferdinand.

My own answer to the question is that 9/11 was indeed a watershed event and the economic collapse of 2008 is in large part a consequence of the new direction in which history has flowed in its aftermath.

In the years leading up to 9/11, the United States was in an optimistic frame of mind. Bill Clinton had been reelected and was enjoying the luxury of a major budgetary surplus. The Dayton Accords had started to defuse the turmoil of post-Soviet Yugoslavia. Iran had a liberal president, and cautious feelers that might eventually lead to reconciliation with the United States had been exchanged. The Dow Jones Industrial Average was hitting historic highs and home sales were booming as Americans optimistically took on more and more debt. In popular culture, good guys, like Kurt Russell in the movie Executive Decision (1996) and Arnold Schwarzenegger in True Lies (1994), still acted just in time to prevent the nuclear incineration of an American city.

Then came 9/11, and the water started to flow in a different direction. Any president would have responded with military action. And given the fact that both the Bush and the Gore presidential campaigns had deep concerns about Saddam Hussein still being in power in Iraq a decade after Desert Storm, there is no way to be sure that a Gore administration would not have targeted Iraq, either sooner or later. It also seems likely that any president, observing the country’s immediate economic nosedive, would have urged Americans to carry on as if they had not received a powerful blow to the solar plexus. The cliché of the time was: “If we don’t do ‘X,’ the terrorists win.” If you were planning to buy a house, go ahead. Don’t let a bearded freak in a cave in Afghanistan bring us to our knees.

So the unique circumstances of 9/11, a devastating attack on the world’s greatest and only remaining superpower by a secretive gang of fanatics, reversed the flow of American, and thus world, history. The United States declared war on an enemy it could not locate and fought that war on the soil of an enemy that had not been involved in the attack. Even though the war was radically asymmetrical, its cost was comparable to other major conflicts in American history. Yet if the president, any president, had asked his fellow Americans to hunker down, put their shoulders to the wheel, donate their children’s lunch money to the national war chest, and show in their day-to-day living just how badly they felt they had been hurt, the terrorists would have won, at least by the logic of the day. It was terribly important that the war should be fought at the level of skill and armament that the United States alone, of all the world’s nations, was capable of, but it was equally important that the war effort should not be allowed to erode, or to further erode, the American sense of well-being.

Whatever one believes about the roots of America’s current obsession with the national debt, there can be no doubt that extraordinary military expenditures with no counterbalancing revenue streams contributed mightily to the problem. Nor can it be assumed that Albert A. Gore, if he had been elected president, would have either confined the war expenditures or persuaded Congress to raise the tax revenues required to see the effort through to a successful conclusion. If the United States had not gone after the terrorists wherever they were (or weren’t, as was so often the case), the terrorists would have won. If the administration had imposed a war tax and instilled a sense of wartime self-denial in the minds of the public, the terrorists would have won.

Did the desire to keep the good times rolling contribute to the country’s financial crescendo and collapse? I believe it did. If public and private expenditures had been held in check, after all, the terrorists would have won. For surely the selection of the World Trade Center proved that the ultimate objective of Al-Qaeda was to bring the United States to its knees financially. Spending money and taking on debt proved that Osama Bin Laden could not succeed in his fiendish plan.

While all this was going on in the world of politics and finance, the national mood soured. To be sure, the housing crisis and the tanking of almost everyone’s retirement dreams played a role, but the change in mood began before 2008. In popular culture, it now became commonplace to begin a movie or television show with a murderously successful terrorist (or supposed terrorist) attack. In the television series Jericho (2006–2009), twenty-three American cities suffer nuclear annihilation in the first ten minutes, leaving a small town in Kansas to fend for itself. The series Battlestar Galactica (2004–2009) not only begins after the near annihilation of the human race but integrates terrorist suicide bombing, carried out by the good guys, into its narrative. In Terminator 3: Rise of the Machines (2003), no amount of heroism can stave off the nuclear holocaust that was held in abeyance in the first two Terminator movies. The list is nearly endless.

Less entertainingly, despite the president’s urging—after a few miscues, like the use of the word “crusade”—of Americans not to take their anger out on innocent Muslims, the tide of Islamophobia has grown stronger every year since 9/11. And with it have come powerful reaffirmations of Christian righteousness, and repudiations of anything Islamic, on the part of major political contenders. Some historians were aware of the potency of Islamic political reassertion at the end of the twentieth century, but no one predicted that the twenty-first century would be born in such an atmosphere of born-again Christianity and interfaith tensions, as opposed to Samuel Huntington’s faith-free inter-civilizational nastiness.

Obviously, American reactions to 9/11 did not cause the 2008 financial crisis. But it is hard to imagine that absent 9/11 and the ensuing “War on Terror,” or whatever it is now proper to call it, a continuation of the Clinton boom era would have turned into an equivalent train wreck. And it is hard to imagine that the negativity that is so evident in almost all areas of American life today would have become so pronounced if 2008 had produced a run-of-the-mill recession unsalted by the sour and gloomy attitudes that took root in the devastation of the World Trade Center.

The financial crisis certainly brought more ruin upon the country than the 9/11 attacks. But 9/11 jarred a happy land out of its complacency, and history has flowed in a different direction ever since. So the terrorists won.

Richard W. Bulliet is a professor of history at Columbia University, specializing in Middle Eastern history, the social and institutional history of Islamic countries, and the history of technology; and author of the novel The One-Donkey Solution, a satirical exploration of Ahmadinejad’s messianism in confrontation with evangelical Protestant messianism.