Author: Varban Boev
Date of publication: 18/07/2023
Throughout history, the world has witnessed various financial and economic crises that have left a lasting impact on societies and economies. These crises have tested the resilience of nations and their ability to navigate through tumultuous times. From the credit crisis of 1772 to the inflation last year , each crisis has had its unique origins and consequences.
The credit crisis of 1772
The credit crisis of 1772 began in London and quickly spread across Europe. At that time, the British Empire had amassed considerable wealth through its colonies and foreign endeavors. Optimism about the economy was high, leading to the expansion of currency. However, panic ensued when one of London's major banks, Alexander Fopdic, fled to France to settle his debts. This caused widespread panic among the British population, leading to a rush to withdraw savings from banks. These processes eventually affected other European countries.
The Great Depression
The Great Depression, which occurred between 1929 and 1939, is considered one of the most severe economic crises of the 20th century. Actually, it began with the collapse of Wall Street in 1929, followed by ill-advised decisions by the American government. This led to a drastic decline in income, widespread unemployment, and a collapse in production, particularly in industrialized nations.
The 1973 oil price
The 1973 oil price shock originated from OPEC members, predominantly from the Persian Gulf. These countries took measures to increase oil prices due to geopolitical tensions, resulting in a significant shortage of global oil reserves. At the same time, the Western world experienced high inflation, depletion of energy resources, and economic stagnation. As a result, this led to the emergence of stagflation.
The Asian financial crisis
The Asian financial crisis from 1997 primarily affected countries in East Asia, such as Thailand and others known as the "Asian Tigers." A substantial influx of capital into these economies initially generated optimism among investors. However, it also led to inflation and a significant accumulation of debt within these nations. The crisis began in early 1997, causing a decline in currency values and capital reserves. During this time, asset prices in Southeast Asia experienced a sharp increase.
The world has accumulated an unprecedented amount of debt, which will pose greater challenges in any future financial crises. In particular, the total debt exceeds the combined two-year domestic product of all countries, raising concerns about the ability to repay these loans.
The financial year 2007-2008
The financial year 2007-2008, often referred to as the Global Financial Crisis, was one of the most severe economic downturns since the Great Depression. In fact, it originated from the bursting of the property bubble in the United States and resulted in the collapse of Lehman Brothers. This was one of the world's largest investment banks. The crisis had a global impact, freezing financial reserves and necessitating government interventions to stabilize the financial system.
By incorporating lessons learned from history, we can work towards building more resilient economies .These economies are better equipped to withstand and navigate through future financial crises. Therefore, the ultimate goal is to ensure stability, protect livelihoods, and foster sustainable economic development. This development should benefit individuals, communities, and nations as a whole.