What were the biggest financial meltdowns in modern history?

The Great Depression, caused by a severe stock market crash in 1929 — and exacerbated by the U.S. decision to erect onerous barriers to world trade — is perhaps the most famous financial meltdown in modern economic history. But many others have occurred since the beginning of the global economy, dating back to the heyday of the British Empire. Everything from war to weather to political turmoil has brought financial markets to their knees. In addition, cyclical forces — overproduction, speculation, and market euphoria being followed by stock market crashes, massive layoffs, and closed factories — are most often the major cause of financial crises. Many meltdowns are caused and resolved by global forces, often outside the control of any one country. The falling prices following the U.S. Civil War, for example, rebounded only at the end of the 19th century, when increased gold production in southern Africa led to a worldwide revival of economic activity. The outbreak of the Second World War in Europe and Asia brought American industry back to life, ending the Great Depression well before the United States entered the war at the end of 1941. And the recession in most of the industrial world in the 1970s was a direct result of the decision by oil-producing nations to impose an embargo. Most of the recent financial meltdowns, from the stock market crash of 1987 to the bursting of the dot-com bubble in the late 1990s to the severe market collapse following the terrorist attacks of September 11, 2001, have been quickly turned around by rapid central-bank intervention — mainly through massive injections of funds into the financial system. The catastrophic financial meltdown that ravaged the world economy in 2008, however, was another matter. What began as a U.S.-based housing crisis soon took on global proportions and no central bank was able to unilaterally stop the downward economic spiral.

Major Financial Crises Since the Late 20th Century:

1971: U.S. Dollar Crisis. Collapse of the Bretton Woods Agreement to fix currency prices. 1973: First Oil Shock. Oil-producing nations raise price of petroleum sharply, leading to economic downturn in most of the industrialized world.

1979: Second Oil Shock. Rampant stagflation — persistent inflation along with stagnating economic growth.

1982: Sovereign Debt Crisis. Many Third World countries default on loans.

1984: Failure of Continental Illinois Bank.

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