Key Crashes
Kipper und Wipper: Financial crisis during the start of
the Thirty Years' War (1621-1623): Starting around 1621, city-states in the Roman Empire began to heavily debase currency in order to raise revenue for the Thirty Years' War, as effective taxation did not exist. which contracts for bulbs of tulips reached extraordinarily high prices, and suddenly collapsed. At the peak of tulip mania, in March 1637, some single tulip bulbs sold for more than 10 times the annual income of a skilled craftsman. It is generally considered the first recorded speculative bubble (or economic bubble)
Tulip Mania: A bubble (163337) in Netherlands during
Missisipi Bubble:
Banque Royale by John Law stopped payments of its note in
exchange for Metal Coins and as result caused economic collapse in France. Law exaggerated the wealth of Louisiana with an effective marketing scheme, which led to wild speculation on the shares of the company in 1719. The scheme promised success for the Mississippi Company by combining investor fervor and the wealth of its Louisiana prospects into a sustainable jointtrading company. The popularity of company shares were such that they sparked a need for more paper bank-notes, and when shares generated profits the investors were paid out in paper bank notes The "bubble" burst at the end of 1720,[ when opponents of the financier attempted to convert their notes into metal coins en masse, forcing the bank to stop payment on its paper notes
South Sea Bubble
The South Sea Company (officially The Governor and Company of
the merchants of Great Britain, trading to the South Seas and other parts of America, and for the encouragement of fishing)[was a British joint-stock company founded in 1711, created as a public private partnership to consolidate and reduce the cost of national debt. The company was also granted a monopoly to trade with South America, hence its name. At the time it was created, Britain was involved in the War of the Spanish Succession and Spain controlled South America. There was no realistic prospect that trade would take place and the company never realised any significant profit from its monopoly. Company stock rose greatly in value as it expanded its operations dealing in government debt, peaking in 1720 before collapsing to little above its original flotation price; this became known as the South Sea Bubble
The Bengal Bubble
BB was caused by the increasing overvaluation of the East
India Company stock between 1757 and 1769, led to the Great East Indian Crash, a major financial crisis that occurred in 1769. The bubble and crash occurred in the wake of the conquest of Bengal by the East India Company in 1757 by Robert Clive. Following the battle, Clive and the company acquired increasing powers in Bengal, through the installation of the puppet regime of Mir Jafar, including control of the tax collection rights for the province from the weak and declining Mughal Empire. By 1769, the East India Company stock was trading at 284. By 1784, the stock had declined to 122, a fall of 55%, and a series of bailout measures and increasing control by the crown led to the demise of the company.
The Great Depression
The Roaring Twenties, the decade that followed World
War I and led to the Crash,[was a time of wealth and excess. Building on post-war optimism, rural Americans migrated to the cities in vast numbers throughout the decade with the hopes of finding a more prosperous life in the ever growing expansion of America's industrial sector. While the American cities prospered, the vast migration from rural areas and continued neglect of the US agriculture industry created widespread financial despair among American farmers throughout the decade and was regarded as one the key factors that led to the 1929 stock market crash.
The Collaps
Despite the dangers of speculation, many believed that the
stock market would continue to rise indefinitely. On March 25, 1929, a mini crash occurred after investors started to sell stocks at a rapid pace, exposing the market's shaky foundation. Two days later, banker Charles E. Mitchell announced his company the National City Bank would provide $25 million in credit to stop the markets slide. Mitchell's move brought a temporary halt to the financial crisis and call money declined from 20 to eight percent. However, the American economy was now showing ominous signs of trouble. Steel production was declining, construction was sluggish, car sales were down, and consumers were building up high debts because of easy credit.
The Japanese asset price bubble
An economic bubble in Japan from 1986 to 1991, in which real estate and
stock prices were greatly inflated.The bubble episode has been characterized by rapid acceleration of asset prices, overheated economic activity as well as uncontrolled money supply and credit expansion More specifically, over-confidence and speculation over the asset and stock prices has been closely associated with excessive monetary easing policy at that time. By August 1990, stock price has plummeted to half the peak by the time of fifth monetary tightening by Bank of Japan . The asset price began to fall by late 1991 and the asset price officially collapsed in the early 1992. Consequently, the bubble's subsequent collapse lasted for more than a decade with asset price plummeted resulting a huge accumulation of non-performing assets loan (NPL) and consequently difficulties to many financial institutions. Such Japanese asset price bubble contributed to what some refer to as the Lost Decade.
