The crash financial and economic crises have been frequent occurrences in the economic history of the West. Federico Rampini traces a long history that the stock market crash in Amsterdam in 1637 and finally to the current subprime crisis, through what remains the most economically critical moment in our century: the Black Tuesday of 1929. Since then, despite the advent of the Keynesian welfare state policies, financial crises have followed every time powered by the same mechanisms of speculation.
According Rampini, differences among the major financial meltdown of the past and the present ones are faster and in greater social impact due to the involvement of investment famiglie.Insolvenze, bubbles, financial crises. Tremble the foundations of the sanctuaries of capitalism. Speculation and mistrust between the West is uncertain about what should I do to avoid disaster .[...]
Just as natural disasters, financial crashes are commonplace, then horribly rates. They are part of the physiological functioning of capitalism. Indeed, their origins date back to the proto-capitalism, as one of the most famous crash in history was the great panic of the stock exchange in Amsterdam in February 1637, when after two years of frenzied speculation collapsed suddenly the prices of futures on the bulbs of tulips. History repeats itself with striking similarities.
What changes in the latest crash is the order of magnitude of wealth destruction, so the audience of the victims. It thickens the interconnection between all sectors of the economy, and between nations far away. Growing popular savings invested in financial instruments, and the privatized retirement entrusts his capital on the stock exchanges, banks, insurance companies. Potential social impact of the crash, then you deeper and deeper, but for the same reason it is more robust arsenal of economic policies to cushion the consequences.
Finally, thanks to technology, the collapse of today have more and more rapidly. The crises of the past developed their tremors over many months, can now learn extraordinary reversals in a few hours. An announcement in New York is reflected in thousandths of a second index of Shanghai and Tokyo, London and Moscow.
Since today the epicenter of a dramatic financial crisis in America, it must be remembered that the very existence of the United States was held in baptism by a crash. The first president, George Washington, was in his first term when he had to deal with the first financial panic. Source there was the reckless speculation in government bonds issued during the war of independence from the states of Massachusetts and South Carolina. In March 1792 the bubble burst, forcing the fledgling nation for emergency measures. Treasury Secretary Alexander Hamilton gave orders to banks to accept securities as collateral for bad loans and to support economic activity: something very similar to the various branches of the emergency created by the Federal Reserve Ben Bernanke in recent months to provide liquidity sistema.Se to more than two centuries in America hit the crash point such as hurricanes, including their international dimension is not entirely new.
One hundred years ago the great panic of 1907 was the first crisis of "global" of the twentieth century. In the month of October, the Wall Street stock index lost 37% of its value, throughout America crowds of investors gave the bank run banks including scenes of violence and despair, the credit system was paralyzed for weeks. The "perfect storm" of that year had as protagonists of the giants of history, President Theodore Roosevelt to the banker J. Pierpont Morgan. The repercussions were immediate and profound even in Europe, and England had come to the aid of former American subjects with a naval expedition of gold bullion. The echo of those events has never been extinguished.
The proverbial superstition of investors called into question the "curse of 1907" when Wall Street suffered another of the worst collapses in its history, October 19, 1987, with a fall of 23% in the Standard & Poor's 500. Already in 1908 the financier Henry Clews in his memoirs identified three main causes of the disaster last year that sound familiar: "The over-investment in the property market, easy credit, the manipulations of high finance."
The crash remains the most nefarious of 1929. Not just for violence of the fall by the Dow Jones had undergone, which lost 13% in one session of 28 October, followed by the sudden end in the next Black Tuesday, the 29th. In fact in history to establish the severity of that collapse were subsequent events. For mistakes in monetary policy and economic measures of President Herbert Hoover, the collapse of Wall Street helped to trigger a spiral of protectionism, the fall in international trade, then the Great Depression. In 1931, the American Stock Exchange had lost 89% of its value from the peaks of 1929 but were far more serious social consequences. The whole world was overwhelmed by deflation: farm prices fell by 40-60%, wages and production Industrial fell, the unemployment rate in America came to 25% in 1933. Four years after the crash on Wall Street, in 1933 an average of one thousand Americans a day suffered the seizure of their home to insolvency. The mass misery and social tensions contributed to the advent of Nazism in Germany. The severity of the crisis of historic proportions inspired innovations: the New Deal of Franklin Delano Roosevelt laid the foundations of the welfare state, Keynesian policies to support employment of large state investment programs in infrastructure. But it was only the increase of war production related to World War II to "cure" definitely the longest recession of the twentieth century. In postwar America in the crash was the most famous of the Savings and Loans. A prolonged banking crisis for years.
Between 1986 and 1995 almost half of the 3,234 savings banks had to close due to bankruptcy. In 1989 Congress created a separate federal agency, the Resolution Trust Corporation to take losses, repay depositors, to absorb the portfolio of failed institutions, and investigate the responsibility of the disaster. As filed for bankruptcy, the federal government found itself temporarily owner of disparate items that customers had provided as collateral to banks for trust: the Resolution Trust Corp. ended among other paintings by Picasso and Andy Warhol, a colonial-era distelleria of whiskey, and 800 bottles of chilled sperm of a Brahma bull for breeding.
The latest crash is still fresh in memory: the shocks caused by international shocks such as insolvency of Mexico (the crash of Tequila Bonds in 1995), the Asian financial crisis of dragoons in 1997, the bankruptcy of Russia in 1998. [...] The lessons that history teaches us of the crash are extraordinarily simple.
Three constants are repeated for centuries. Every financial disaster is invariably preceded by a "bubble", a period of speculative excesses. Each bubble is fueled by lax monetary conditions, easy credit, and the conviction of the masses of investors that a certain category of investment is intended to increase infinity. Whether it is real estate, stocks or oil, there will always be a "theory" to show the absolute rationality of prices and ever increasing absurd.
The second historical constant: for every self-respecting crash follows a period of reform, development of new rules, more restrictions and controls.
The third constant: the new laws enacted as soon as the race rages around them and prepare for the advent of the next bubble.
Federico Rampini, La Repubblica, 10/02/2008
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