{"id":190,"date":"2007-11-15T12:31:11","date_gmt":"2007-11-15T12:31:11","guid":{"rendered":"http:\/\/www.the-finance-zone.co.uk\/uncategorized\/financial-crises-lessons-from-history\/"},"modified":"2007-11-15T12:31:11","modified_gmt":"2007-11-15T12:31:11","slug":"financial-crises-lessons-from-history","status":"publish","type":"post","link":"https:\/\/the-finance-zone.co.uk\/index.php\/2007\/11\/15\/financial-crises-lessons-from-history\/","title":{"rendered":"Financial crises: Lessons from history"},"content":{"rendered":"

<\/p>\n\n\n
\n
\"Wall<\/div>\n<\/td>\n<\/tr>\n<\/table>\n

<\/p>\n

The current market jitters are centred on disturbances in the world’s credit markets. Worries about the viability of sub-prime mortgage lending have spread around the financial system, and the central banks have been forced to pump in billions of dollars to oil the wheels of lending.<\/strong><\/p>\n

But what happened in previous financial crises, and what are the lessons for today?<\/p>\n

There have been a growing number of financial crises in the world, according to the International Monetary Fund (IMF).<\/p>\n

Among the key lessons of previous major financial crises are:<\/p>\n

\u00c2\u00a0<\/p>\n

    \n
  • Globalisation has increased the frequency and spread of financial crises, but not necessarily their severity\u00c2\u00a0<\/li>\n
  • Early intervention by central banks is more effective in limiting their spread than later moves\u00c2\u00a0<\/li>\n
  • It is difficult to tell at the time whether a financial crisis will have broader economic consequences\u00c2\u00a0<\/li>\n
  • Regulators often cannot keep up with the pace of financial innovation that may trigger a crisis.<\/li>\n<\/ul>\n

    \u00c2\u00a0<\/p>\n

    THE DOT.COM CRASH, 2000<\/strong><\/div>\n

    During the late 1990s, stock markets became beguiled by the rise of internet companies such as Amazon and AOL, which seemed to be ushering in a new era for the economy.<\/p>\n

    <\/p>\n\n\n
    \n
    \"Steve<\/p>\n
    <\/div>\n<\/td>\n<\/tr>\n<\/table>\n

    <\/p>\n

    Their shares soared when they listed on the Nasdaq stock market, despite that fact that few of the firms actually made a profit.<\/p>\n

    The boom peaked when internet service provider AOL bought traditional media company Time Warner for nearly $200bn in January 2000.<\/p>\n

    But in March 2000, the bubble burst, and the technology-weighted Nasdaq index fell by 78% by October 2002.<\/p>\n

    The crash had wider repercussions, with business investment falling and the US economy slowing in the following year, a process exacerbated by the 9\/11 attacks, which led to the temporary closure of the financial markets.<\/p>\n

    But the Federal Reserve, the US central bank, cut interest rates throughout 2001, gradually lowering rates from 6.25% to 1% to stimulate economic growth.<\/p>\n","protected":false},"excerpt":{"rendered":"

    The current market jitters are centred on disturbances in the world’s credit markets. Worries about the viability of sub-prime mortgage<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"colormag_page_container_layout":"default_layout","colormag_page_sidebar_layout":"default_layout","footnotes":""},"categories":[32,48],"tags":[],"class_list":["post-190","post","type-post","status-publish","format-standard","hentry","category-markets","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/the-finance-zone.co.uk\/index.php\/wp-json\/wp\/v2\/posts\/190","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/the-finance-zone.co.uk\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/the-finance-zone.co.uk\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/the-finance-zone.co.uk\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/the-finance-zone.co.uk\/index.php\/wp-json\/wp\/v2\/comments?post=190"}],"version-history":[{"count":0,"href":"https:\/\/the-finance-zone.co.uk\/index.php\/wp-json\/wp\/v2\/posts\/190\/revisions"}],"wp:attachment":[{"href":"https:\/\/the-finance-zone.co.uk\/index.php\/wp-json\/wp\/v2\/media?parent=190"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/the-finance-zone.co.uk\/index.php\/wp-json\/wp\/v2\/categories?post=190"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/the-finance-zone.co.uk\/index.php\/wp-json\/wp\/v2\/tags?post=190"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}