If you were Osama bin Laden, what would you be doing today? Here�s my guess: you would be sunning yourself somewhere in the Hindu Kush, playing with some of your 15 children and watching your three wives skivvying away in the cave.

If you were Osama bin Laden, what would you be doing today? Here's my guess: you would be sunning yourself somewhere in the Hindu Kush, playing with some of your 15 children and watching your three wives skivvying away in the cave. Periodically, you would brandish your walking stick, grin like the proverbial Cheshire Cat and shout: "Mission accomplished!"

George Bush likes to boast that he has "kept Americans safe" because there have been no terrorist attacks on American soil since 9/11. He misses the point. Osama bin Laden never planned to send more planes into more buildings. Rather - evil genius that he is - he correctly anticipated that America's exaggerated response to this symbolic attack on American military might (the Pentagon), American democracy (the failed attempt to strike the US Capitol) and American capitalism (the World Trade Centre) would undermine all three more effectively than 1000 al Qaeda propaganda videos. It's the jihadi equivalent of leverage.

Let's take stock. On the military front, the initial reaction was surprisingly measured and nothing like the blitzkrieg many Americans called for. But seven years down the line the US and Britain are caught up in conflicts in Iraq and Afghanistan that our own military commanders are openly describing now as unwinnable. In Iraq alone some 100,000 civilians have died. Pakistan and Iran could be next. Thousands of Muslims have been martyred, exactly what bin Laden wanted in preparing the ground for a "clash of civilisations". And in the US alone, it's costing about $12bn a month. More of this anon.

As for democracy, a sickly, partial version may exist in both Iraq and Afghanistan, which is an improvement on what it replaced, and it certainly appears to be flourishing in the US, with its town hall caucuses and televised election debates. But in both the US and the UK the institutions that support democracy - free speech, civil and human rights - have been seriously weakened by our own governments. The undermining of habeas corpus, the fudging of the Geneva Conventions, changes to the definition of torture to include practices such as waterboarding, Guantanamo Bay, Abu Ghraib, extraordinary rendition, the surveillance society - all are deemed to be "a price worth paying" for "keeping us safe", even if they destroy the very principles we are meant to be fighting for. This, too, plays into bin Laden's hands. He had predicted that terrorist attacks on the West would force its governments into revealing their oppressive true nature. Bingo.

Bin Laden's third target, American (ie, global) capitalism, looked at first as if it had survived remarkably unscathed. Already weakened by the great bull run of the 1990s and the bursting of the dotcom bubble, he might have expected it to collapse as easily as the Twin Towers. (The World Trade Centre was not only a symbol of commercial greed but also technical hubris. Unlike the grid-like strength of the Empire State Building, the WTC was built at maximum speed for minimum cost, with poor fire insulation and trusses between each floor that doomed the entire structure if one failed.) Capitalism appeared more robust.

Two days after 9/11, Alf Young wrote in these pages of the imperative "to demonstrate the indomitable resilience of what George W Bush is already calling the forces of good' - those who live by the potent mix of western-style democracy, aspirant individualism and wealth-generating market capitalism". A year later, he noted that the US economy had weathered the aftershocks remarkably well: "Housing starts are up. So are consumer spending, real wages and manufacturing output."

Today we understand how this was done. Interest rates, already cut to 3.5% in the wake of the dotcom debacle, were slashed right down to 1.25% in November 2002, in a bid to persuade homebuyers and shoppers to do their patriotic duty and spend, spend, spend. Single parents on welfare were sold the dream of home ownership, and new houses sprouted on every gap site, creating 800,000 construction jobs. Bush and Cheney further deregulated the economy, allowing debt to equity ratios on Wall Street of as much as 30-1. Next down the chain, the investment banks found creative ways of repackaging sub-prime debt in glossy packages with big fancy ribbons. European banks looking to offset their risk snapped up the pretty and profitable-looking packages and sucked all of us into the vortex, while pension funds, insurance companies and investment trusts piled into dodgy hedge funds, under the illusion that they insured against risk.

In 2004 bin Laden released a video, announcing his intention to continue a "policy in bleeding America to the point of bankruptcy". We weren't listening. He popped up again with a new message: "The reeling of many of you under the burden of interest-related debts, insane taxes and real estate mortgages, global warming and its woes and the abject poverty and tragic hunger of Africa, all of this is but one side of the grim face of this global system." The syntax is a bit wonky but we get the message, Osama. His solution - that we should denounce capitalism and adopt fundamentalist Islam - may seem laughable but today nobody is smiling.

The "mighty dollar" looks like a bit of a misnomer after Bush and the Federal Reserve rammed the $840bn rescue package through Congress to prevent Wall Street going belly up. Meanwhile, Joseph Stieglitz, the Nobel-winning economist, reckons the real cost of the wars in Iraq and Afghanistan could reach three trillion dollars. At the same time, after a boom built on personal debt and ballooning house prices, Gordon Brown has had to commit £500bn of taxpayers' money - equivalent to more than one-third of our entire economic output - to propping up the banking system.

Even if these bail-outs work, the cost is going to be a long, dark recession with higher taxes, higher unemployment, fewer public services and cuts in living standards. But the alternative is worse.

The whingers and fundamentalists who say the banks should be allowed to fail are astonishingly naive. You don't need to imagine a country without banks. Go to Somalia, like I did. Without banks, the roads weren't mended and people lived in the bombed out remains of their homes for years. There was no post office or telephone system. I met women who, unable to borrow to start a business, were reduced to collecting plastic rubbish and weaving it into shopping bags while the men lived by the gun. In the absence of a modern state, the country was reduced to a chaotic, misogynist form of feudalism, awash with rumour and violence: just what bin Laden wants.

Last Friday al Qaeda released another video, proclaiming: "The enemies of Islam are facing a crushing defeat, which is beginning to manifest itself in the expanding crisis their economy is experiencing."

Nevertheless, a bin Laden "mission accomplished", like Bush's claim in 2003, would be premature. Capitalism may be on life support. It may need to shed lots of weight and adopt a simpler, more wholesome diet but it ain't dead yet.