Global Recession: Causes, Consequences, Fixes, Part 7

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This is what we find common in almost all market crashes since 1720:
1) Economic boom preceding the crash.
2) A recession going on for a while. Mostly top gurus and players in business and government were aware of it. General public did not realize it for a while and remained in the mood of boom. By the time the recession and economic slow down becomes known in general public it is too late. Large proportion of small investors and general public looses every thing they had and owned.
3) During the boom, before crash, under the influence of corporations and their lobbies, government ventures out in the world, mostly in the form of war or wars, to claim more influence and control in international affairs and in the national affairs of other countries, resulting into huge debts and deficits.
4) Bad business practices getting more and more common in corporations and banks, right before crash.
5) Growing unemployment, under-employment, and seriously compromised buying power of average consumer.
Please, read this table of market crashes since 1720 from Wikipedia article “List of stock market crashes“. It is as follows:
“Table

Name Dates Bear Market Duration Comments References
The Mississippi Bubble 1720 Banque Royale by John Law stopped payments of its note in exchange for specie and as result caused economic collapse in France.
South Sea Bubble of 1720 1720 Affected early European stock markets, during early days of chartered joint stock companies
Bengal Bubble of 1769 1769 Primarily caused by the British East India Company, whose shares fell from £276 in December 1768 to £122 in 1784
Panic of 1796–1797
Panic of 1819
Panic of 1837 May 10, 1837
Panic of 1847
Panic of 1857
Black Friday September 24, 1869
Panic of 1873 May 9, 1873 Initiated the Long Depression in the United States and much of Europe
Paris Bourse crash of 1882 January 19, 1882
Panic of 1884
Panic of 1893
Panic of 1896
Panic of 1901 (U.S.) May 17, 1901 3 years The market was spooked by the assassination of President McKinley in 1901, coupled with a severe drought later the same year.
Panic of 1907 October 1907 1 year Markets took fright after U.S. President Theodore Roosevelt had threatened to rein in the monopolies that flourished in various industrial sectors, notably railways.
Wall Street Crash of 1929
Black Thursday – October 24, 1929
Black Monday – October 28, 1929
Black Tuesday – October 29, 1929
4 years The bursting of the speculative bubble in shares led to further selling as people who had borrowed money to buy shares had to cash them in, when their loans were called in. Also called the Great Crash or the Wall Street Crash, leading to the Great Depression.
Recession of 1937–1938 (U.S.) mid-1937 to mid-1938 1 year This share price fall was triggered by an economic recession within the Great Depression and doubts about the effectiveness of Franklin D. Roosevelt’s New Deal policy.
1973–1974 stock market crash (U.K.) January 1973–December 1974 23 months Dramatic rise in oil prices, the miners’ strike and the downfall of the Heath government.
Silver Thursday March 27, 1980 Silver price crash
Souk Al-Manakh stock market crash August 1982
Black Monday October 19, 1987
Friday the 13th mini-crash October 13, 1989 Failed leveraged buyout of United Airlines causes crash
Japanese asset price bubble 1991–2003 13 years Share and property price bubble bursts and turns into a long deflationary recession.
Black Wednesday September 16, 1992 The Conservative government was forced to withdraw the pound sterling from the European Exchange Rate Mechanism (ERM) after they were unable to keep sterling above its agreed lower limit.
1997 Asian financial crisis July 2, 1997 Investors deserted emerging Asian shares, including an overheated Hong Kong stock market. Crashes occur in Thailand, Indonesia, South Korea, Philippines, and elsewhere, reaching a climax in the October 27, 1997 mini-crash.
October 27, 1997 mini-crash October 27, 1997 Global stock market crash that was caused by an economic crisis in Asia. The points loss that the Dow Jones Industrial Average suffered on this day still ranks as the seventh biggest point loss in its 114-year existence.
1998 Russian financial crisis August 17, 1998 The Russian government devalues the ruble, defaults on domestic debt, and declares a moratorium on payment to foreign creditors.
Dot-com bubble March 10, 2000 3 years Collapse of a technology bubble, world economic effects arising from the September 11 attacks and the stock market downturn of 2002.
Economic effects arising from the September 11 attacks September 11, 2001 The September 11 attacks caused global stock markets to drop sharply. The attacks themselves caused approximately $40 billion in insurance losses, making it one of the largest insured events ever.
Stock market downturn of 2002 October 9, 2002 Downturn in stock prices during 2002 in stock exchanges across the United States, Canada, Asia, and Europe. After recovering from lows reached following the September 11 attacks, indices slid steadily starting in March 2002, with dramatic declines in July and September leading to lows last reached in 1997 and 1998.
Chinese stock bubble of 2007 February 27, 2007 The SSE Composite Index of the Shanghai Stock Exchange tumbles 9% from unexpected selloffs, the largest drop in 10 years, triggering major drops in worldwide stock markets.
United States bear market of 2007–2009 October 11, 2007 – June 2009 2 years The Dow Jones Industrial Average, Nasdaq Composite and S&P 500 all experienced declines of greater than 20% from their peaks in late 2007.
Late-2000s financial crisis September 16, 2008 On September 16, 2008, failures of large financial institutions in the United States, due primarily to exposure of securities of packaged subprime loans and credit default swaps issued to insure these loans and their issuers, rapidly devolved into a global crisis resulting in a number of bank failures in Europe and sharp reductions in the value of equities (stock) and commodities worldwide. The failure of banks in Iceland resulted in a devaluation of the Icelandic króna and threatened the government with bankruptcy. Iceland was able to secure an emergency loan from the IMF in November. Later on, U.S. President George W. Bush signs the Emergency Economic Stabilization Act into law, creating a Troubled Asset Relief Program (TARP) to purchase failing bank assets.
2009 Dubai debt standstill November 27, 2009 Dubai requests a debt deferment following its massive renovation and development projects, as well as the late-2000s recession. The announcement causes global stock markets to drop.
European sovereign debt crisis April 27, 2010 Standard & Poor’s downgrades Greece’s sovereign credit rating to junk four days after the activation of a €45-billion EU–IMF bailout, triggering the decline of stock markets worldwide and of the Euro’s value, and furthering a European sovereign debt crisis.
2010 Flash Crash May 6, 2010 The Dow Jones Industrial Average suffers its worst intra-day point loss, dropping nearly 1,000 points before partially recovering.
August 2011 stock markets fall August 2011 Stock markets around the world plummet during early August, and are volatile into September.”

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Read our articles Global Recession: Causes, Consequences, Fixes, Part 6 and Global Recession: Causes, Consequences, Fixes, Part 8

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