While the pandemic has become the hardest test for all countries of the world, it is not the first major blow to the global economy. We have compiled a selection of the three largest financial crises that hit the global economy the hardest.
1. The Credit Crisis of 1772
By the mid-1760s, the British Empire had amassed a huge fortune through its colonial possessions and trade. All this contributed to the rapid development of the country, pushing banks to more active lending.
Banking partners Neil, James, Fordyce & Down lost £300,000 on shares of the East India Company. On June 8, 1772, Fordyce fled to France, trying to hide from paying debts.
News of Fordyce’s escape quickly spread throughout England, causing panic among depositors, and the crisis quickly spread to other parts of Europe. Historians say the economic fallout from this crisis sparked the Boston Tea Party protest in 1773 and launched the American Revolution.
2. The Great Depression
The stock market crash in the USA in 1929 provoked one of the main financial and economic catastrophes of the twentieth century. The depression continued for nearly 10 years and resulted in massive losses of income, record unemployment, and a drop in manufacturing, especially in industrialized countries. In the United States, the unemployment rate reached nearly 24.9% at the peak of the depression in 1933.
Experts name overproduction and the lack of proper oversight of the actively developing exchange market among the reasons for the economic decline, since the purchasing power of the population did not match the number of goods on the market and there were too many fictitious companies and financial fraud present.
3. The Great Recession of 2007-2009
The largest financial crisis since the Great Depression was caused by the mortgage crisis in the United States and a sharp increase in the number of non-payments on mortgage loans with a high level of risk. It damaged the economies of countries around the world, led to the collapse of one of the leading investment banks, Lehman Brothers, and threatened many major financial institutions and businesses.
Even though the Great Recession officially ended in 2009, ordinary people have faced negative consequences for many years due to the slow recovery of the labor market and falling property prices. As a result, the crisis has left millions of people unemployed and caused billions of dollars in damage.
How to Be Prepared for Major Financial Crises?
Generally speaking, even the richest person is not prepared for a sudden fall of the economy. Of course, having substantial savings does help yet doesn’t guarantee complete financial safety. The latest example is the COVID-19 outbreak that caused a lot of individuals and businesses to lose their main sources of income. If you have found yourself in a difficult financial situation, keep in mind that you can always turn to Payday Depot for prompt loans.