For as long as there has been a market, there have been market failures.
Whether caused by the beginnings of wars, the ends of wars, bad loans, or just the natural progression of things, they have always found a way to occur, and show no sign of being eradicated anytime soon. Some recessions are brief and inconsequential enough that they can be struck from public memory within a matter of years, while others, like the Great Depression or the market crash of 2008, have left indelible, permanent marks on cultures and societies around the world.
Credit Crisis of 1772
This crisis originated in London and quickly spread to the rest of Europe.
In the mid-1760s the British Empire had accumulated an enormous amount of wealth through its colonial possessions and trade. This created an aura of overoptimism and a period of rapid credit expansion by many British banks. The hype came to an abrupt end on June 8, 1772, when Alexander Fordyce—one of the partners of the British banking house Neal, James, Fordyce, and Down—fled to France to escape his debt repayments.
The news quickly spread and triggered a banking panic in England, as creditors began to form long lines in front of British banks to demand instant cash withdrawals. The ensuing crisis rapidly spread to Scotland, the Netherlands, other parts of Europe, and the British American colonies. Historians have claimed that the economic repercussions of this crisis were one of the major contributing factors to the Boston Tea Party protests and the American Revolution.
The British credit crisis of 1772 has been described by scholars and economists
as the first modern banking crisis involving the Bank of England. The trouble began when banker Alexander Fordyce, who found himself in enormous debt, fled from his financial responsibilities to France. Also as word of the affluent banker’s flight spread throughout England, panic erupted, and as people scrambled to get their cash out of banks that didn’t have the liquid funds, nearly 30 banks in England and across continental Europe collapsed.
Copper Panic of 1789
The United States’ switch to a paper money economy was spurred by the Copper
Panic of 1789, during which massive quantities of fake copper coins made their way into circulation, destroying the value of real copper and causing the American public to lose faith in the copper coin.
The Recession of 1802
Wartime economic stimulation in the United States ceased after Napoleon won the
French Revolutionary War. This alone put the US economy in a precarious position, and with the added interference of Barbary pirates (Muslim pirates who operated from North Africa), the States slipped into a recession that led to the instigation of the First Barbary War.
Recession of 1812
In the months preceding the War of 1812, the United States experienced a brief but serious recession. Fortunately for the economy, the boost in production to feed the war machine quickly pulled the economy out of danger.
The Poyais Scheme of 1825
Scotsman Gregor MacGregor pulled off a spectacular scam in 1825 that worked so well it caused a minor recession. MacGregor made thousands by convincing people to invest in and buy land grants for an idyllic Central American country called Poyais that, in reality, never existed.
In a time when investors looked to the British stock market to invest in foreign debt, MacGregor had no problem putting his fake government bonds on the market. When his duplicity was exposed, it caused a huge panic in the financial sector of Great Britain and caused the public to second guess their investments after seeing so many of their neighbors lose their life’s savings to MacGregor ‘s scam.
Panic of 1837
The panic and following recession of 1837 was spurred on by a litany of
failures and mistakes within the American government and banking system.
In a time of rapid westward expansion and privatization of natural resources,
land speculations were going bust left and right; cotton prices plummeted.
Leaving the Southern slavery-driven economy in shambles; and the public was quickly losing confidence in the American banking system, causing droves of people to withdraw all of their savings.
The Panic of 1873 was caused by the closure of Jay Cooke & Co., the largest financial institution in the United States at the time, which had poured too much money
into the construction of the Northern Pacific Railway without seeing any returns.
What followed the panic was a six-year-long depression. Which at the time was labeled
the Great Depression. After the depression of the 1930s commandeered that title, the depression of 1873-79 became known as the Long Depression
Panic of 1884
A recession that began in 1882 caused by the decline of the railroad industry came to a head after the collapse of two of the United States’ primary banking institutions, Marine National Bank and the Grant & Ward firm. The New York Clearing House gave other banks on the brink of failure massive bailouts to avoid further financial catastrophe.
Panic of 1907
The Panic of 1907 was a brief but intense economic crisis that saw numerous institutions around the world close their doors in a matter of weeks. The recession that followed would last more than a year and was a main precursor to the formation of the Federal Reserve in 1913.
Depression of the 1920s
The end of World War I left the United States deeply in debt, and with a dramatic decrease in domestic production. Prices dropped 37% in 1920, while the GDP for that year dropped 38%, making it one of the worst financial years in United States history.
Depressions like this are to be expected when shifting from the heightened production of wartime to the scaled-down, less profitable production of peacetime, but the end of World War I struck particularly hard. Thankfully, consumerism quickly reached new heights following the 1920 depression, and the Roaring Twenties were soon in full swing.
Considered the worst financial crisis in modern history, the Great Depression that practically destroyed a generation of Americans began with the Wall Street market crash of 1929. The total failure of the federal government to provide relief or a plan of action perpetuated this decade of starvation, homelessness, economic stagnation, and the worst period of unemployment in American history. At the depression’s peak, unemployment reached almost 25%. In 1933 alone, 4,000 banks were forced to close their doors.
Will Rogers in the 1930s – Search Videos (bing.com)
Roosevelt Recession
One of the worst recessions of the 1900s, the Recession of 1937 is commonly referred to
as the Roosevelt Recession, as it was caused in part by Franklin D. Roosevelt’s New Deal policies. While the New Deal itself pulled the United States out of its previous recession, it left gaps in the federal budget that displeased Congress and led them to introduce wide-reaching austerity measures that sent the public and the trading markets into a panic.
The Fabulous 50s Full Album (youtube.com)
The American economy experienced a shift during the 1950s that created more income for more Americans than ever before. Though during the early 1950s the American economy was negatively affected by inflation—prices were rising, currency was losing its value, and a recession was at hand—these problems were relatively short-lived. By the mid-1950s, the nation began to enjoy the fruits of economic boom and prosperity. The robust economy gave rise to the American middle class.
The masses of Americans who grew up during Depression-era poverty and sacrificed for their country during World War II were now marrying, starting families, and entering the workforce. Furthermore, the GI Bill, which offered government funding for veterans attending college, allowed those who otherwise could not afford to continue their education to earn college degrees and win better-paying jobs.
During the decade, small businesses started and grew, while major corporations were merging, thus becoming larger, more profitable, and more powerful. Companies big and small needed workers, both skilled and unskilled, to manage their assets, work their assembly lines, or sell their products to the public. Jobs were readily available, and they were filled by a generation of eager-to-work veterans.
Additionally, more and more workers joined labor unions. These unions negotiated with management for pay raises, better working conditions, and health and retirement benefits. The presence and influence of unions was a key factor in allowing America’s blue-collar workers to enter the middle class.
A man who toiled on a factory assembly line or drove a bus or a truck for a living now had sufficient income to purchase his own home and car, not to mention the latest household appliances for his wife (who, during this pre feminist era, usually remained home and raised the children). He could take his family on vacations and save some of his weekly paychecks. However, some of the unions that represented the working man—most notoriously the International Brotherhood of Teamsters—were corrupt.
The Eisenhower Highway System is a 41,000-mile system of interstate highways that
was created by the Federal-Aid Highway Act of 1956 12 . The act was signed into law by President Dwight Eisenhower on June 29, 1956, and was designed to eliminate unsafe roads, inefficient routes, and traffic jams 1. Eisenhower is often called “the Father of the Interstate System” because he spent years guiding the execution of law 2. Search Videos (bing.com)
Travel became an increasingly popular pastime for many. More and more Americans drove by car long distances or boarded airplanes to fly cross-country or across the ocean. The United States was becoming a nation on wheels with a new roadside culture, and federal funds were allocated to improve the then-inadequate national highway system.
Television sets were fast becoming the centerpieces of American living rooms. With a nudge from TV advertising and its ceaseless pitches to purchase everything from beer to bathroom tissue, Americans increasingly became consumers. Of course, Americans also had purchased things in previous decades.
But during the 1950s, more people had enough money to buy nonessential items,
and those who didn’t were making their major purchases on credit.
At the same time, the commercial banking industry expanded, with insurance, trust, and holding companies also entering the money business. With the ready availability of jobs and credit, the 1950s offered most people the ability to purchase all sorts of goods and services for their material comfort.
Gas Crisis of 1973
The gas crisis that coincided with the Fourth Arab-Israeli War was caused by a game of warmongering and embargoes between Western countries who supported Israel financially and militarily, and the oil-producing Arab states who sanctioned these Western nations as a show of solidarity with the Arab coalition headed by Syria and Egypt.
Arab nations cut oil supplies to Israel’s Western allies, causing an immediate and catastrophic oil shortage and a massive spike in gas prices across the Global West.
1979 Energy Crisis
Just six years after the gas crisis of 1973, another energy crisis hit in the months following the end of the Iranian Revolution. The new Iranian government in place was swift to change their oil export policies. Similar to the crisis of 1973, the United States’ dependency on foreign oil became its downfall. The new Iranian government drastically cut the volume and frequency of its oil exports, causing price hikes and shortages in the United States as well as other Western countries.
The “Lost Decade” of the 1980s – Search (bing.com)
Was an international debt crisis that plagued numerous Latin American countries. Inflation and extortionate interest rates on debt borrowed from international creditors and investors led countries such as Brazil and Mexico to find themselves in a massive deficit year after year, with their annual debt payments totaling more than their GDP.
Black Monday 1987 – Search Videos (bing.com)
Black Monday (also known as Black Tuesday in some parts of the world due to time zone differences) was the global, severe and largely unexpected[1] stock market crash on Monday, October 19, 1987. Worldwide losses were estimated at US$1.71 trillion.[2]
The severity of the crash sparked fears of extended economic instability[3]
or even a reprise of the Great Depression.[4]
Possible explanations for the initial fall in stock prices include a nervous fear that stocks were significantly overvalued and were certain to undergo a correction, persistent US trade and budget deficits, and rising interest rates. Another explanation for Black Monday comes from the decline of the dollar, followed by a lack of faith in governmental attempts to stop that decline.
In February 1987, leading industrial countries had signed the Louvre Accord, hoping that monetary policy coordination would stabilize international money markets, but doubts about the viability of the accord created a crisis of confidence. The fall may have been accelerated by portfolio insurance hedging (using computer-based models to buy or sell index futures in various stock market conditions) or a self-reinforcing contagion of fear.
The degree to which the stock market crashes spread to the wider (or “real”) economy was directly related to the monetary policy each nation pursued in response. The central banks of the United States, West Germany, and Japan provided market liquidity to prevent debt defaults among financial institutions, and the impact on the real economy was relatively limited and short-lived. However, refusal to loosen monetary policy by the Reserve Bank of New Zealand had sharply negative and relatively long-term consequences for both its financial markets and real economy.[5]
Argentine Great Depression of 1998
An already shaky Argentine economy was pushed over the edge after the economic collapses in Brazil, Mexico, and Russia, all important trading partners for Argentina. The collapse of the Argentine economy led to some of the worst years of poverty the country had ever seen. At the height of the depression, the Argentine unemployment rate was nearly 20%, and some estimates suggest more than 50% of Argentinians were pushed below the poverty line.
The Housing Market Crash of 2008
Was the worst financial crisis of the 21st century thus far and sent devastating ripples throughout the global economy for years afterward. Caused by the collapse of the United States’ housing market, some of the largest and strongest financial institutions in the world, who had been profiting for years off of loans they knew to be fragile, found themselves on the brink of collapse, and nearly 10 million Americans lost their homes along with billions of dollars of income.
Greek 2009 Debt Crisis
In the wake of the 2008 global market crash, Greece continued to suffer more than other European nations. By 2009, Greece was buried in debt borrowed from other European countries, causing an economic and social crisis the effects of which can still be felt.
WASHINGTON, DC – SEPTEMBER 17, 2023:
U.S. President Joe Biden walks out of the White House as he prepares to board Marine One on the south lawn on in Washington, DC. President Biden… TASOS KATOPODIS/GETTY IMAGES
THE RESULTS ARE IN: BIDENOMICS IS A COMPLETE FAILURE | OPINION
BIDENOMICS IS FAILING – SEARCH VIDEOS (BING.COM)Over the last several months, President Joe Biden has desperately traversed the country trying to resuscitate his plummeting poll numbers and reassure American families that his economic agenda is working. He claims that multi-trillion-dollar investments in green energy and excessive government spending will propel our economy into unprecedented heights of American prosperity.
In other words, he is intentionally misleading Americans with the message that his fiscal policies—which he has coined “Bidenomics”—are beneficial. Fortunately, in poll after poll, the American people resoundingly reject Bidenomics because they see everywhere—from the gas station to the grocery store to their credit-card statements—that the Biden admin. economic agenda has failed. Injecting trillions of dollars into our economy didn’t deliver financial relief; it fueled the worst inflation crisis in more than 40 years.
Naturally, President Biden ignores the reality of his economic policies.
Thanks to Bidenomics, American families’ credit card debt has reached a record $1 trillion as people struggle to pay their bills and feed their families under the weight of inflation. The dream of home ownership has slipped out of reach for countless Americans as mortgage rates approach 8 percent and banks tighten their lending requirements.
Sixty-one percent of Americans are living paycheck to paycheck, gas prices are once again spiking nationwide due to the Biden administration’s anti-American energy policies, and American households have lost, on average, $33,000 in real wealth this year alone. No wonder almost two-thirds of Americans disapprove of the president’s economic initiatives.
To make matters worse, the federal deficit—which was originally projected to return to pre-COVID levels—is now expected to double this year to $2 trillion, accelerating the catastrophic consequences of our $33 trillion national debt on our economic vitality and national security. This is one of many reasons why Fitch Ratings—one of the largest credit rating agencies in the country—recently downgraded our creditworthiness, pointing to our deteriorating fiscal stability and ballooning national debt.
While House Republicans didn’t create this mess, we are working hard to clean it up. Since the beginning of the 118th Congress, we have passed strong legislation to rebuild our economy, rein in the power of the executive branch, restore the congressional power of the purse, end wasteful spending, and reduce costs for American families.
To date, President Biden’s overreaching regulations and burdensome red tape have cost American workers nearly $10,000 per household. His 122 executive orders have saddled our families, farmers, and businesses with $1.5 trillion in additional and unforeseen expenses.
Republicans passed both the REIN IN Inflation Act and the Regulations from the Executive in Need of Scrutiny Act to curb record-high inflation sparked by President Biden’s wasteful spending policies and costly executive orders. These two pieces of legislation would require federal bureaucrats to report to Congress the estimated inflationary impact of any executive order before an official vote and ensure that every new “major rule”—that is, any rule with an annual effect on the American economy of $100 million or more—be approved by both the U.S. House of Representatives and the U.S. Senate before taking effect.
We also took aim at President Biden’s attempts, through the Federal Housing Finance Agency, to increase mortgage payments for homeowners with higher credit scores and redistribute those funds to individuals with low credit scores at a time when home mortgages are increasingly unaffordable. It is estimated that this policy could swell mortgage payments for responsible taxpayers from anywhere between $400 to $1,200 per year. Our Free Market Mortgage Act—which passed the House—repeals this unfair rule. On top of higher costs and unrelenting inflation, we should never stick our families with more taxes and more fees.
READ MORE
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CNN’s Erin Burnett speaks with Independent presidential candidate Robert F. Kennedy, Jr. about his criticisms of former President Donald Trump and President Joe Biden.
As much as it might sadden and enrage Americans who care about things like
the rule of law, personal integrity, and basic competence, it’s unlikely that revelations about Joe Biden‘s corruption or the Democrats persecution of Donald Trump and his supporters are going to change anyone’s mind about who to vote for next year. While it’s still important to seek justice in these matters, it’s also important to recognize what truly matters most for voters: the economy.
Nothing else can explain the desperate push to keep an increasingly senile, corrupt,
and creepy Joe Biden in office. Other Democratic contenders, like Gavin Newsom,
Bernie Sanders, Gretchen Whitmer, and Kamala Harris may be more cogent and
slightly less creepy and corrupt than Biden, but all have abysmal economic records.
Newsom and Harris hail from the failed state of California, which is hemorrhaging population and degenerating into a feudal state; Sanders is a committed socialist who dreams of the U.S. becoming like Cuba; and Whitmer crashed the already weak economy of Michigan with insane COVID restrictions.
By contrast, Biden’s economic performance looks somewhat strong. He hasn’t (yet) ushered in a Great Depression. He has overseen the (slow and painful) reopening of the country after COVID. He can boast about high employment numbers (consisting mainly of low-wage jobs). And he can take credit for investing in domestic (and Chinese) manufacturing (by spending like there’s no tomorrow).
Of course, compared to Trump before COVID, Biden looks quite weak.
Gas is much more expensive, inflation is devastating, and the housing shortage
is reaching crisis levels. In a typically bumbling defense of abortion, Kamala Harris actually admitted that most Americans have no savings and are living precariously: “most Americans are a $400 unexpected expense away from bankruptcy.” Perhaps the wealthiest Americans who donate to Democratic political campaigns are sufficiently insulated, but everyone else is feeling the pinch.
In response, Biden is campaigning on “Bidenomics,” a name his administration gives
to its supposedly pro-working class economic policies. Judging from the latest polls, the message doesn’t seem to be resonating. But this is all Biden has, so he and his surrogates continue to push it.
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