Short history of long world crises

Economy crises that took place before the 20th century were mostly of local character while some time later they began spreading worldwide. Despite all the mechanisms created in recent decades by the world community to prevent global crises (strengthening the governmental control over the household processes, creation of the international financial institutions, monitoring and etc.) the world history proves that worldwide economy collapses are difficult to foresee and even more difficult to evade. In Eurasia and America economy downturns within the two centuries occurred 20 times!

In 1914 the world economy plunged into the crisis as a result of the World War I. the main reason was that the government of the USA, Great Britain, France and Germany were selling huge amounts of stocks in order to finance the hostility. This crisis started in different countries worldwide almost simultaneously as soon as waging parties started terminating foreign assets. This resulted in the collapse that occurred in both commodities and money markets. The bank panic in the US, Great Britain and some other countries was cushioned by the timely intervention of the central banks.

On October 24, 1949 known as Black Thursday, stocks at the NYSE dropped drastically which marked the beginning of one of the heaviest downturns in the history of world crises. The price of shares fell 60-70%, business activity decreased dramatically, the gold standard was cancelled for main currencies. After the World War I the US economy developed dynamically as millions of share holders were increasing their fortunes and consumers’ demand was growing rapidly. Everything crashed down in a moment! The most prestigious stocks of American Telephone and Telegraph Co, General Electric Co. and General Motors Corp. fell in just a few weeks about 200 points. By the end of the month shareholders lost over $15 billion. By the end of 1929 the drop of securities rates achieved incredible figure of $40 billion! Companies and factories were closing, banks were going broke, millions of unemployed were roaming in search of any job. The crisis was raging till 1933 while its aftermaths were in effect till the end of 1930s.

The industrial production during the period of the crisis in the USA reduced 46%, in the UK – 24%, in Germany – 41% and in France – 32%. Industrial equities quotations in the US fell 87%, in the Uk – 48%, in Germany – 64% and in France – 60%. Unemployment achieved huge levels. The official statistics shows that in 1933 in 32 developed countries there were 30 million of unemployed including 14 million in the US.

The first postwar crisis burst out at the end of 1957 and lasted till the middle of 1958. It affected the US, the UK, Canada, Belgium, the Netherlands and several other developed economies. Industrial production in developed countries decreased 4% while the crowds of unemployed reached the figure of 10 million.

A worldwide coverage, the duration, depth and destructive effect of the crisis that broke out in the US at the end of 1973 exceeded those of 1957-1958 and in some aspects this crisis was similar to that of 1929-1933. During that period industrial production in the US reduced 13%, in Japan – 20%, in the FRG – 22%, in the UK – 10%, in France – 13% and in Italy – 14%. Equities rates within a period of December 1973 to December 1974 in the US fell 33%, in Japan – 17%, in the FRG – 10%, in the UK – 56%, in France – 33% and in Italy – 28%. The number of bankruptcies in 1974 in the US increased 6% as compared with 1973, in Japan – 43%, in the FRG – 40%, in the UK – 47% and in France – 27%. By the middle of 1975 the number of unemployed in developed countries reached 15 million. More than 10 million people were temporary fired or put on half-time. As a result the real income of the working people dropped significantly. 

There were lots of crises however the most significant ones were Black Monday in 1987. On October 19, 1987 the Dow Jones plummeted by 22,6%. The crash of American market was followed by the meltdowns in the markets of Australia, Canada and Hong Kong. Japanese recession - 1990 to 2003, collapse of a real estate bubble and more fundamental problems halts Japan's once astronomical growth. United Kingdom crisis of 1992. Mexican Crisis in 1994?1995s which took place after opening of local stock exchange. In 1995 more than $19b were withdrawn from the country. SE Asia Crisis in 1997, Russia crisis of 1998 which were resulted by USA - Long term capital management - hedge fund meltdown. Brazil crisis of 1999. Argentina 2001 -2002. Urugvay crisis of 2002. The USA credit crunch of 2007.