Worst Market Incidents – Digital Magazine
Fifteen years ago, on September 15, 2008, the investment bank Lehman Brothers declared bankruptcy, a victim of the global financial crisis during which stock markets collapsed.
Here is a reminder of other major incidents in history:
– 1637: Tulip Mania –
The first speculative bubble in modern history involving exotic tulips. Prices of desirable varieties of the flower rose in the Netherlands at the beginning of the 17th century before the bubble burst in 1637.
The flowers have lost nine-tenths of their former value.
– 1720: South Sea Bubble –
In early 18th century England, people were scrambling to buy shares in the South Sea Company, which was set up to trade slaves with South America and restructure public debt.
When stocks collapse, many investors are ruined.
– 1882: The French Collapse –
The French economy was experiencing the worst crisis of the 19th century after the share price of the Union Generale Bank collapsed in January 1882, leading to the collapse of the Paris and Lyon stock exchanges.
– 1929: Wall Street Crash –
October 24, 1929 became known as “Black Thursday” on Wall Street after a bull market collapsed, causing the Dow Jones Index to lose more than 22 percent of its value at the start of trading.
Stocks recouped most of their losses during the day but the rot has begun: October 28 and 29 also see huge losses in the crisis that marks the beginning of the Great Depression in the United States and the global economic crisis.
– 1987: Black Monday –
Wall Street collapsed again on October 19, 1987, on the back of huge US trade and budget deficits and high interest rates.
The Dow Jones lost 22.6 percent, causing panic in markets around the world.
– 1998: Russian plane crash –
In August 1998, the ruble collapsed due to speculation linked to falling oil prices and the ripple effect of the 1997 Asian economic crisis.
Moscow declares a 90-day moratorium on repaying its foreign debts and cannot borrow again in international markets for more than a decade.
– 2000: The dot-com bubble –
The turn of the millennium sees the deflation of the tech bubble caused by venture capitalists throwing money at unproven companies.
From a record high of 5,048.62 points on March 10, 2000, the US tech-heavy Nasdaq index lost 39.3 percent of its value over the course of the year.
Many Internet startups go out of business.
– 2008: Subprime mortgage crisis –
The 2008 global financial crisis was caused by US bankers giving mortgages to people with fragile finances and then selling them as investments, leading to a housing boom.
When borrowers become unable to repay their mortgages, the stock market collapses and the banking system collapses, culminating in the dramatic bankruptcy of Lehman Brothers.
Millions of people are losing their homes.
– 2015: Chinese boom and bust –
The bursting of China’s stock market bubble in the summer of 2015 sent the benchmark Shanghai index falling more than 40% over several weeks, despite government intervention to try to stem the collapse.
– 2020: Pandemic –
Global stocks collapsed in March 2020 after the World Health Organization declared COVID-19 a pandemic that would put much of the world under lockdown.
The Dow lost 26% in four days, one of its biggest drops ever.
But the rapid response by national governments, which are making great efforts to keep their economies afloat, helps most markets recover within months.