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A financial crisis is one of the most dreaded buzzwords which is heard or read around the world. Either an economy is facing a recession or even a financial crisis, or there is a fear that it may be headed towards one, depending on several macroeconomic indicators. These indicators are marked declines in the per capita consumption, GDP, trade, money flow, energy consumption, and employment rate. Even the most powerful and economically strong nations in the world have gone through some devastating recessions in the past. Let us look at some of the worst global financial crisis the world has faced so far: #1. The Tulip Mania of 1634 Event This is one of the first recorded market crises of the early times, which happened in Holland when the price of the tulip buds rose to six times that of an average man's salary. The flowers originally imported from Turkey were considered exotic in Europe and everyone. The affluent and the aspiring affluent, even middle-class citizens, wanted to have tulips which were one of the most delicate flowers that perished quickly and could take about 12 years to flower from a seed. The Tulip business became so crucial in Holland that traditional agriculture was impacted. The price of tulips rose to as much as 5500 florins which are approximately equal to $ 825000. Stages of a bubble Consequences The prices, however, began to decline irrevocably by 1637 steeply, and those who had loaned to grow tulips with the expectation to sell at a higher price became bankrupt. This led to a financial meltdown. Watch this video documentary about Tulip Mania - The first economic bubble. #2. The Panic of 1772  Event This was also known as the Panic of 1772 or the Credit crisis. It originated in London when one of the partners in a major bank Neale, James, Fordyce, and Down, escaped to France having forfeited £ 300000. Consequences The bank collapsed, and people lost faith in the banking institution, which was the economy's pivot. This crisis later spread across Europe after the bank collapsed in London, followed by 20 other banks. The total number of bankruptcies in London was 556 in 1773. Watch this video: #3. The Panic of 1797  Event This recession occurred in the US as the land speculation bubble burst after the American Revolution. The aftermath of the UK and France wars led to the insolvency of the Bank of England, and the impact swam itself to the shores of North America and the Caribbean. Consequences These events together led to this great financial panic. It lasted three years until 1800, and although the situation began to improve thereafter, it had a lasting impact on people's minds. #4. The Post Napoleonic depression of 1815 The Post Napoleonic depression of 1815 Event After the Napoleonic wars, in England and Wales, there was a steep cut in wages, and especially the weavers were greatly impacted due to this. Their wages fell to less than half of what they used to earn before this period. This percolated slowly to the entire textile industry and then to the economic situation across the countries. The condition was further aggravated due to the Corn Laws, which were passed at this time. The intent was to keep out foreign goods and promote English agriculture, which was already impacted due to depression. This resulted in people having to buy poor quality local products at high prices. Consequence A famine and unemployment followed, which also spread to Scotland. This depression led to the collapse of export markets and saw its effect on the Panic of 1819 in the United States. #5. The great depression 1929 The great depression 1929 Event This recession, considered one of the worst recessions in the world, provided a textbook case study on financial crises. It lasted from 1929 to 1939, and it occurred in two phases: 1929 to 1933 and then again from 1937 to 1939. The intervening years had seen some growth in production due to a change in leadership on the political front in the US. The recession had started with the fall of Wall Street. The over-optimistic loans by bankers led to a shortage of money supply when the lenders defaulted on payments. Loans were called in, and it affected the entire system. Lack of regulations, fiscal policies, deposit insurances led to this large-scale collapse. Consequences The Great Depression of America caused wide-scale unemployment, poverty, and emigration away from the USA. There was a massive price deflation (Willard W. Cochrane, Farm prices: myth and reality (U of Minnesota Press, 1958), and crop prices fell below 60%. The impact was seen worldwide, and unemployment rose to 25% in the US and up to 33% worldwide. #6. The weird 1945 recession The weird 1945 recession Event This recession started in February 1945 and lasted through the eight months to October 1945. The impact, however, lasted much longer. This recession was expected following World War II, and there was a much-seen drop in demand for wartime goods, including weapons. Consequence Other countries reeled under the impact of the war and were still recuperating from their losses while the US GDP fell to a negative figure of -11.6% in 1946. Government spending was also greatly reduced, and the effect was seen in the economy. #7. The oil crisis of 1973 The oil crisis of 1973 Event This was one of the most dangerous crises in the world that led to one of the top 10 recessions in the world. The OPEC members (Organization of the Petroleum Exporting Countries) revolted against the USA and the allied nations of the US. The United States of America had sent armed troops to Israel against the Arab countries. Consequence The majority of the OPEC members are constituted by the Gulf countries or the Arab nations. They joined hands to raise the price of oil. This, in turn, created a huge shortage of oil supply, and the energy industries were directly impacted. Also, the other businesses suffered, and huge inflation was caused, which proved to be drastic for the world's economy. The Asian Financial Crisis of 1997 The Asian Financial Crisis of 1997 Image source Event Overextension of financial credit in Thailand and all its trading economies led to this critical situation in Asia. It began in Thailand in 1997 when it had to give up the fixed exchange rate with American dollars owing to a lack of foreign currency supply. Consequence This had a domino effect on the South East Asian partners of Thailand - Malaysia, Singapore, Indonesia, South Korea, Hongkong, and soon, the word spread out about the sad plight of these economies. The situation continued for the next three years, and the International Monetary Fund (IMF) had to step in to bail them out of a financial meltdown. Watch this video #9. The Lost Decade (1990 - 2000) The Lost Decade (1990 - 2000) Event The fall of land and asset prices in Japan in the early 1990s is referred to as The Lost Decade, which made the prices stagnant for a decade, and several firms went insolvent. It lasted until 2001 and witnessed one of the major slowdowns of a rapidly growing economy. Consequence The four years before the decade saw dangerously inflated stock prices, and this precarious bubble was burst in 1991, and land prices dropped to more than 15.5% from their peak. (Land Economic and Construction and Engineering Industry Bureau, Ministry of Land, Infrastructure, Transport and Tourism (2004) Survey on average housing land prices by use and prefecture). Japan's GDP fell from $5.33 trillion to $4.36 trillion from 1995 until 2000. Watch this video: #10. Great Recession of 2007 - 2008 The Great Recession of 2008 in numbers Event This is the most recent financial recessions the world has seen and one of the fiercest since the Great Depression. The hallmark event that marked the onset of this depression was the collapse of one of the world's biggest investment companies - Lehman Brothers. The Housing Bubble in the USA was created due to the optimism of the banks and lending institutions that led to huge credit which created a huge void due to the defaulters. Consequence The entire financial system collapsed, and the government buyout was required to save face. This impacted several international businesses and led to the downfall of companies, loss of jobs. It took almost another five years to recover from the losses completely. Watch this video where Warren Buffett explains the 2008 financial crisis: VICE on HBO looks at factors that led to the 2008 financial crisis and the efforts made by then-Treasury Secretary Henry Paulson, Federal Reserve Bank of New York President Timothy Geithner, and Federal Reserve Chair Ben Bernanke to save the United States from an economic collapse. The feature-length documentary explores the challenges these men faced, as well as the consequences of their decisions. #11. The Mother of All Recessions - 2020 According to UniCredit specialists, the world is heading to a deep recession. So deep that they say in a report, you can check here that “The mother of all recessions has arrived.” They expect most containment measures in the US and Europe to last through June and the global GDP to fall by about 6%. In the US, the economy will likely shrink by 10-11% this year, and in the eurozone, GDP may contract by about 13% in 2020. Speaking about the UK, there is also a shrink of GDP by 10-11%. For comparison, the global GDP contracted by 4.2% between Q4 2007 and Q2 2009. We will update the article with further developments. Meanwhile, check our top of 18 businesses that are recession-proof and will thrive. Conclusion In almost all of the above cases, the recessions have been caused due to overvaluation of commodities, unjustified optimism on the stock increase, irregular banking systems, or political misguidedness. With time, better financial system regulations have been able to get a grip on the economy. It has helped prevent a steady economic downfall or a total collapse of the financial system. Organizations like the IMF (International Monetary Fund) exist to monitor global economic changes. But recessions are periodic, and completely avoiding one has not been possible. Uncontrollable situations like an epidemic, natural disasters, or calamity can throw an economy off balance, and an unpredictable financial crisis could arise. Sources: https://www.investopedia.com/terms/d/dutch_tulip_bulb_market_bubble.asp https://en.m.wikipedia.org/wiki/Crisis_of_1772 https://www.google.ae/publicdata/explore Frank, Robert H.; Bernanke, Ben S. (2007). Principles of Macroeconomics (3rd ed.). McGraw-Hill/Irwin.)