There have been many devastating events in the United States and worldwide that caused economic destruction. Three significant events in particular were The Great Depression, The 1970’s Oil Crisis, and the 2008 Bank Crisis. Each had similarities and differences but all causes major economic chaos.
The Great Depression was a worldwide despair that originated with the crash in the stock market in October 29, 1929. Throughout 1929 to 1933 the economic activity decreased in drastic measures. “Indrustial production declined by 37 percent, prices by 33 percent, and real GNP by 30 percent. Unemployment rose to a peak of 25 percent and stayed above 15 percent of the rest of the 1930’s” (Temin pg. 1). For nearly ten years there were few steady economic capitals in the United States. Only with the emercement of World War II, showed any improvements in the labor force during this time.
Many ...view middle of the document...
“In October of 1973 Middles-eastern OPEC nations stopped exports to the US and other western nations. They intended to punish the western nations that supported Israel, their foe, in the Yom Kippur War, but they also realized the strong influence that they had on the world through oil” (Admin). This caused major inflation in the price of oil that increased 3 dollars per barrel to 12 dollars per barrel.
Due to the major increase of energy cost, labor cost and wages also increased for businesses. “The annual inflation rate spiked to over 10% in 1974 and again in each of the three years from 1979 to 1981. The annual unemployment rate topped 8% in 1975 and would reach nearly 10% in 1982” (Reuss ).
Many Economist believe that the 2008 Bank Crisis was the worse fall out since the Great Depression. The event was strongely correalcted to the morage business and how they lended loans to borrowers with poor credit history. These high risk morgages were passed by major banks labeling them as low-risk securities. Once passed, the loans were consolitated into pools. “The pooled mortgages were used to back securities known as collateralised debt obligations (CDOs), which were sliced into tranches by degree of exposure to default. Investors bought the safer tranches because they trusted the triple-A credit ratings assigned by agencies such as Moody’s and Standard & Poor’s” (The Orgins ). In response, a large amount of the borrows were not able to pay their mortage which cause the mortage business to crash which in return caused the banks to fincially fall.
In return this caused major economic decline in the United States, commonly knowned as The Great Recession. “In 2008 and 2009, the U.S. labor market lost 8.4 million jobs, or 6.1% of all payroll employment. This was the most dramatic employment contraction (by far) of any recession since the Great Depression. By comparison, in the deep recession that began in 1981, job loss was 3.1%, or only about half as severe” (The Great Recession).