5 Financial Crises That Shook The World

Brief Introduction

For those of us in the Western world, the global financial crisis of 2007-2008 and ensuing recession came as a shock. Most of us had never seen anything like it before—at least not in our lifetimes. But throughout history there have been many financial crises just as big or even bigger than the one we experienced in the late 2000s. Here are five financial crises that shook the world and how they’re similar to our own recent experience.

1) Tulipmania

In 1637, the Dutch Republic was in a financial crisis. At this time, tulip bulbs were exotic and became an affordable luxury for the Dutch people. The price of these bulbs began to rise and people started trading them like stocks, which led to mass speculation on the prices. This lead to a financial collapse as people started defaulting on their contracts because they did not have any money left to pay back what they had borrowed.

2) South Sea Bubble

The South Sea Bubble was a financial crisis that occurred in 1720. It is often credited with beginning the first worldwide economic recession, known as the General Crisis. The South Sea Company was a British company that had been granted trading monopolies in Spanish America by Queen Anne of Great Britain, who had authorized it to form an alliance with France. In 1719, it was reported that the company would shortly have control over trade from Spain's colonies in Central and South America.

3) Mississippi Scheme

In 1720, a London-based scheme named the Mississippi Scheme was created to trade shares of stock in France's Louisiana Territory. This scheme quickly collapsed and caused financial collapse for many countries including the United States and France. It led to an uproar against future schemes and has since been studied as one of the first modern bubbles.
In 2008, the U.S economy experienced its worst recession since it ended in 1941 with unemployment at 10%. The housing market crash happened when people realized that there were no more homebuyers which then led to banks being taken over by governments. Iceland went bankrupt when their three major banks collapsed due to bad investments made with foreign currencies.

4) French Credit Anstalt Crisis

In May 1931, France, Austria and Germany were poised on the edge of a financial collapse that would have shaken the world. It began with a relatively small bank in Vienna called Credit Anstalt. The Austrian government tried to prop up the bank by providing emergency funding and guarantees for all deposits, but this only made matters worse. Austrians panicked and started withdrawing their money from other banks in a chain reaction across Europe.

5) Recession of 2007–2010

The United States experienced the worst financial crisis since the Great Depression and many other countries around the world were also significantly impacted. In this blog post, we highlight five major financial crises that shook the world. 1. 2008-2009 US Recession: From 2007 to 2009, US home prices fell more than 20% from their peak levels of 2007 and hundreds of thousands of homeowners saw their homes go into foreclosure or even worse, as foreclosures reached a rate not seen in decades. Unemployment surged to 10%, an all-time high for the postwar period.

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