Aftermath of the economic crisis: House prices fell 35.5% on average, and stocks fell 55.9%
How many economic crises have happened in human history, because of the lack of data, no one can really count.But it is certain that each economic crisis has brought huge losses to mankind, especially to those countries and regions at the epicenter of the crisis.As a man-made disaster, the economic crisis, like many natural disasters, has a negative impact not only in the time period in which it occurs, but also in the aftermath of a lasting impact on the economy.The side effects of these sequelae will also seep into all areas of the economy, showing up in major economic indicators.This paper presents the extent of the damage caused by the sequelae of the recent nine major financial crises by integrating the subsequent economic performance of the major “affected” countries/regions.The nine economic crises are:Norwegian financial crisis in 1899, Great Depression in 1929, Spanish financial crisis in 1977, Norwegian banking crisis in 1987, Nordic financial crisis in 1991, Japanese economic bubble in 1992, Asian financial crisis in 1997, Argentine financial crisis in 2001 and US subprime mortgage crisis in 2007.From the chart, we can see that the average duration of the impact of the nine economic crises was 6 years, during which the average decline in housing prices was 35.5%.It is worth mentioning that the subprime crisis in 2007, which was directly triggered by the bursting of housing bubble, ranked first in terms of both impact time and decline magnitude.The longest period was the Japanese economic bubble in 1992, which lasted 18 years. One of the main causes of that economic bubble was also the housing bubble.The biggest impact was the Asian financial crisis, when prices in Hong Kong and the Philippines both fell by more than 50%.The average period of the impact of the nine economic crises on the stock market was 3.4 years, resulting in an average decline in stock prices of 55.9%.The longest period of impact was the 1997 Asian financial crisis, which compounded the complexity of the rescue and weakened the market’s ability to repair itself due to sustained pressure from short-sellers.The biggest hit was Iceland in the subprime crisis in 2007. Not only did they have a debt crisis, but the stock market also lost 90% of their wealth, which is why Iceland became the first country in human history to actually declare bankruptcy.The impact of the economic crisis on the unemployment rate and the cycle Of rising unemployment are harbingers and symptoms of economic malaise. In turn, the battered economy of the financial crisis pushes up unemployment further.Any financial crisis will cause unemployment to rise, just by different amounts.In the Great Depression of 1929, annual growth averaged more than 20% from trough to peak, much higher than the average of 7%.Japan’s unemployment rate was slightly affected by the 1992 bubble, but the cycle was 12 years long, 2.5 times longer than the average 4.8 years.After excluding the Norwegian financial crisis in 1899 and the subprime mortgage crisis in 2007, the other seven economic crises will lead to a 9.3% decline in GDP per capita on average, with an impact period of 1.9 years.Both the worst and longest were in the United States in 1929.Interestingly, during the financial crisis in 1997, Spain’s GDP per capita did not fall, but rose, which was an economic miracle. I wonder how they did it.Sequelae 5: Increase in Fiscal deficit Impact of economic crisis On Fiscal Deficit Increase in government debt due to economic crisis It is perfectly normal market logic that an economic crisis will lead to an increase in fiscal deficit.On the one hand, government departments need to spend money to help enterprises and individuals;On the other hand, tax cuts are needed to stimulate production.In addition, the economic crisis led to an increase in business closures and unemployment, also greatly reduced the source of revenue.Most affected were Finland and Sweden, two of the main victims of the 1991 Nordic financial crisis, both of which had surpluses before the crisis and deficits that soared to 10% two or three years later.Spain has done the magic again, shrinking its budget deficit.In terms of the increase in government debt, the main victims of the six economic crises increased their government debt by an average of $18.63 billion, an average increase of 86 percent.Spain’s budget deficit has narrowed, but its government debt has risen.Sequela of six: government credit rating by the economic crisis on the impact of government credit rating this belongs to the indirect influence, but plays as the side effects of the direct impact, because once a country or a region’s credit evaluation, cause of international capital flows into flight even carefully, very easy to cause the collapse of the debt and a vicious cycle.Chile, Argentina and Indonesia, all of which were judged by institutional investors to need restructuring and default during their respective crises, were also below -30%, double the average of 15.1%.It should be noted that the duration of this rating effect is not short. The shortest was the Mexican crisis of 1994, which lasted two years, and the longest was the Japanese bubble of 1992, which lasted more than 12 years, with an average duration of 5.1 years.This article will share with you here, welcome to click to follow!””Original works, without permission, shall not be reproduced!