Each generation can point to a crisis that left its mark on consciousness, wallets, the functioning of banks, economies and entire societies. Over the centuries, there have been smaller and larger crisis events that left a lasting mark on the global economy, changing the approach to financial management, monetary policy and global economic relations. Here are the five most frequently cited crises in history.
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Credit crisis of 1772
In 1772, London became the scene of one of the first global financial crises. In the mid-18th century, British banks, taking advantage of huge colonial profits, extended excessive loans. The situation changed dramatically on June 8, when Alexander Fordyce, a partner in the Neal, James, Fordyce and Down bank, fled to France to avoid repaying his debts.
As Btannica recalls, this information caused a bank panic – crowds of creditors stormed banks, demanding payments. The crisis spread to Scotland, the Netherlands, continental Europe and the American colonies. Historians point out that this economic collapse contributed to the growing tensions that led to the Boston Tea Party and the American Revolution.
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The Great Depression of 1929–1939
The greatest economic disaster of the 20th century began with the stock market crash on Wall Street in 1929. In the following years, the crisis was deepened by erroneous decisions of the American government, which led to record unemployment and a decline in industrial production.
In the United States, unemployment has reached 25 percent. in 1933, and the effects of the crisis were felt by almost every developed economy in the world. Bread lines and mass bankruptcies became the symbol of this decadewhich changed the approach to economic and social policy.
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The OPEC oil shock of 1973
In 1973, the Arab-dominated OPEC countries imposed an embargo on oil exports to the US and its allies. This was a reaction to the military support provided to Israel during the Fourth Arab-Israeli War. The embargo caused a sharp increase in oil prices, shortages of the raw material and economic stagnation in many developed countries.
As Britannica explains, high inflation combined with recession, known as “stagflation”, became one of the greatest challenges for the global economy in the 1970s. It took several years to bring the crisis under control, and its effects were felt long after the embargo ended.
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Asian crisis of 1997
In 1997, Thailand became the epicenter of a crisis that quickly spread to eastern Asia. Excessive capital inflow from developed countries to Asian economies such as Thailand, Indonesia, Malaysia and South Korea has led to overheating of markets.
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As Britannica mentions, in July 1997, the Thai government abandoned the baht's fixed exchange rate against the dollar, which caused panic in the region. Investors withdrew capital en masse, and the International Monetary Fund had to intervene by offering rescue packages. This crisis highlighted how quickly local problems can turn into a global financial collapse.
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The financial crisis of 2007–2008
The financial crisis of 2007–2008 that began in the USA was the result of the bursting of the real estate bubble. The collapse of Lehman Brothers, one of the largest investment banks, was a climax that shook markets around the world.
This crisis led to the Great Recession – the most severe recession since the Great Depression. As a result, millions of jobs disappeared and the governments of many countries had to introduce unprecedented rescue packages to protect their economies from complete collapse. It took almost a decade to return to stability.
