The following is a review of the most prominent financial crises that global stock markets have experienced over the past centuries:
1637: Dutch Flowers
The “Tulipmania” crisis (known as “tulip mania” or “tulip mania”) in the Netherlands is the first economic and financial speculative bubble in modern history.
It was based on the trade in bulbs of these flowers, whose prices reached their peak before its collapse in 1637. Five years later, the price of tulips had lost ninety percent of its value.
1720: Speculation in Britain
At the beginning of the eighteenth century, people in Britain began to invest in the South Sea Company, which was created for the purpose of trading slaves in South America and restructuring public debt.
The collapse of the company and the Lao Bank caused disaster for many investors.
1882: Collapse in France
The failure of the French Catholic bank “Union Generale” led to the bankruptcy of many money changers, and the collapse of stock markets in the cities of Paris and Lyon, which plunged France into a severe economic crisis.
1929: Wall Street Crash
On October 24, the Dow Jones Index lost more than 22 percent of its value at the start of trading, before reducing losses to 2.1 percent at the close. The losses were repeated in subsequent days, with 13 percent on the 28th of the same month, and 12 percent the next day. This crisis marked the beginning of the “Great Depression” era in the United States and one of the worst economic crises in history in the world.
1987: Black Monday
The Wall Street Stock Exchange collapsed again on October 19 against the backdrop of large US budget and trade deficits and rising interest rates.
Dow Jones lost 22.6 percent of its value, which sparked panic in global markets.
1998: Russian collapse
In August, the ruble lost 60 percent of its value within 11 days, including 17.13 percent in just one day. Russia entered into an economic and financial crisis partly linked to the consequences of the 1997 Asian financial crisis. Moscow announced a suspension of repayment of its foreign debts for a period of 90 days, and was unable to borrow again from global markets for a decade.
The US LTCM fund, which was conducting operations on maturing bonds, avoided default thanks to the intervention of the US Federal Reserve (the central bank).
2000: Internet bubble
The beginning of the twenty-first century witnessed the collapse of the Internet companies’ bubble and their value on the stock market. After reaching a record level on March 10, the Nasdaq index, which focuses on Internet and technology companies, collapsed, losing about 27 percent of its value in the first two weeks of April, and 39.3 percent within a year. This decline was reflected in all markets associated with the “new economy” based on information technology and the Internet.
2008: Subprime mortgage crisis
The financial crisis of 2008 was primarily based on banks in the United States granting people whose financial health was questionable, high-risk real estate loans and then selling them in the form of investments to financial institutions, which fueled a boom in the real estate market.
As borrowers defaulted and were unable to repay, financial markets collapsed and the banking sector entered into a crisis that culminated in the bankruptcy of Lehman Brothers. Millions of Americans lost their homes as a result of the crisis.
2015: Chinese collapse
After a performance driven by soft loans, the Shanghai Stock Exchange lost more than 40 percent within a few weeks, despite the government’s attempt to intervene to stop a collapse that reverberated throughout various global markets.
2020: Corona epidemic
Global stock markets collapsed in March 2020 after the World Health Organization announced that Covid-19 had become a pandemic that would require placing a large part of the world under strict lockdown and health restrictions.
The day after the announcement, issued on March 11, global stock markets recorded massive losses in what was known as “Black Thursday,” as Paris lost 12 percent of its value, Madrid 14 percent, and Milan 17 percent. As for the losses in London (11 percent) and New York (10 percent), they were the largest since 1987.
This suffering continued for days, especially in the United States, where the stock market lost more than 12 percent on March 16.
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