As it turned out, the “Y2K bug” was not what cost big money, launched a slew of conspiracy theories or spawned visions of the apocalypse as the new century approached.
Instead, America and the world were sailing heedlessly into dangerous, disorienting seas that had nothing to do with computers mistaking the clock’s turn to 2000 for 1900. The attack on the World Trade Center and Pentagon on Sept. 11, 2001 was only the most powerful early sign.
Before that, the new millennium began unsettled. George W. Bush was installed as victor of the 2000 presidential election by the U.S. Supreme Court, a historic first and of dubious constitutionality. On Feb. 28, 2001, an earthquake registering a 6.8 magnitude hit the Puget Sound region, causing at least $2 billion in damage. A different quake came on Sept. 4, when Boeing, born and bred in Seattle, moved its corporate headquarters to Chicago.
After 9/11, Bush led the United States into two wars of choice, in Afghanistan to avenge an attack of which he was warned and Iraq.
Neither war succeeded in most of its aims. Brown University’s Watson Institute estimates direct costs from the “war on terror” to be 929,000 deaths and a federal price tag of $8 trillion. With no military draft or tax increases (indeed, Bush cut taxes), the home front was oddly insulated.
After a brief 2001 recession, the economy appeared to be shifting back into the performance that powered the long boom of the 1990s. Growth was relatively strong, inflation was low and recessions short. Economists called it the Great Moderation.
This, like the seemingly easy early victories in Afghanistan and Iraq, proved to be a ruse. Twentieth-century eyes were misreading a 21st-century situation.
On the surface, the economy was being led by a historic housing boom. Subprime loans soared, with one of the biggest players, Washington Mutual, growing from a modest local thrift into a giant financial services company.
WaMu became a big driver of downtown’s reinvention, which had begun in the late 1990s with Nordstrom taking over the iconic Frederick & Nelson building and the opening of the Pacific Place urban mall. In 2004, the Rem Koolhaas-designed Seattle Central Library opened to national acclaim. WaMu opened a second downtown tower. This one, at 42 stories, allowed expansion of the Seattle Art Museum.
In fact, subprime was part of a massive house of cards built on bundling mortgages and reselling them as complex derivatives on Wall Street. This was allowed by banking deregulation in the late 1990s, including the repeal of the Glass-Steagall Act in 1999. That New Deal legislation kept banking safe for decades. But deregulation proponents said it was outmoded; the banks could essentially regulate themselves.
They were wrong.
It crashed in the Panic of 2008 when the banking system came close to meltdown. Institutions didn’t trust each other’s solvency. Regulators finally stepped in with a massive bailout. Without friends in Washington, D.C., or on Wall Street, WaMu’s assets were sold to JPMorgan Chase. It was the biggest banking failure in history and cost thousands of jobs here.
The Great Recession followed, where unemployment nationally peaked at 9.9% in December 2009 and, for Seattle-Tacoma-Bellevue, 9.1% early in 2010. Microsoft instituted the first major layoffs in company history. Construction cratered. Across the country, millions of homeowners were left “underwater,” owing more on their mortgages than the house was worth.
At the same time, Boeing was having trouble with its new Dreamliner, behind on delivery and over budget. The airliner was highly advanced. But old-timers blamed the replacement of old Boeing’s engineering culture with Chicago Boeing’s anti-union, bean-counter emphasis. Top executives were acolytes of Jack Welch.
Despite all of this, Seattle emerged from the recession stronger than ever.
First, Paul Allen’s Vulcan Real Estate built South Lake Union into an urban innovation district anchored by Amazon, which would grow to more than 50,000 well-paid employees and remake the skyline.
By the 2010s, the one-time online bookstore had become a retail and cloud computing powerhouse, including bidding for Defense Department contracts as the “forever wars” ground on.
The district would house other tech companies and life-science labs. Nearby, the Bill & Melinda Gates Foundation built its new headquarters.
Second, was Seattle’s cost advantage over the Bay Area, offering amenities that appealed to top tech talent but cheaper than Silicon Valley or San Francisco. This lured high-end outposts of virtually every major tech outfit, including Apple, whose iPhone, introduced in 2007, transformed cellphones.
Third, was the “back to the city” movement, where talented millennials and empty-nest boomers flocked to quality cities — and companies followed. For example, Weyerhaeuser left its suburban Federal Way campus for Pioneer Square and Expedia moved from Bellevue to Seattle.
A big advantage was downtown as the hub of a growing light-rail system, as well as access to commuter trains at a restored King Street Station.
Between 2008 and 2017, Seattle grew by more than 100,000 people. Consistently the construction crane capital of America, Seattle by 2018 was dramatically transformed.
Yet all was not well. The city’s politics moved far left as the country elected Donald Trump president in 2016. Trump initiated a trade war with China and both parties are bellicose toward Washington state’s largest export market. Paul Allen died in 2018, just when Seattle most needed civic stewards.
Seattle’s political position locked left even as centrist Democrat Joe Biden was elected president in 2020 and ended the Afghanistan war this summer. The country is more polarized than ever.
Now America is in the midst of a historic pandemic, coming out of yet another severe recession — even getting vaccinated has been politicized.
Y2K bug? It seems like something from a different century, a different millennium.