History Of The Financial Crisis

Documenting a Financial Crisis

Australia and the rest of the world have experienced a number of financial crises. While we may think they have only occurred within the context of the contemporary financial systems, financial crises were recorded in the 1800s.

Some of the more significant events being reflected on now included the 1918-19 Spanish influenza pandemic, the 1929 stock market crash and the worldwide depression that followed, the economic impacts of World War II, OPEC oil issues in the early 1970s, the 1987 stock market crash, fallout from 9/11 in 2001 and the global GFC of 2008, from which many sectors never recovered.

Now in 2020, the world faces a financial crisis seemingly brought about by a health crisis. But before COVID-19 emerged into every sector of our lives in one way or another, events were already playing out in some sectors which were having an impact on the share market and influencing financial markets and economic conditions:-

  • BREXIT: It seems like decades ago that the world was transfixed on if, when, how Britain would leave the EU but it was only January 2020 that it was finalised. The uncertainty over that decision was already having an impact on some financial sectors.
  • China – US Trade ‘Issues”: call it a trade war, trade tariffs, whatever, the quite long-running dispute between China and the US on trade was causing serious ruffles throughout financial markets.
  • In September 2019, a drone attack occurred on Saudi oil refineries, which caused a spike in oil prices which always causes a flow-on effect throughout the economy.
  • Huge wildfires in the Amazon in 2019 had far-reaching impacts on both the climate and economy.
  • The 2020 US election and in fact, every tweet from the White House, seems to have an impact on financial markets.
  • Australia has been in the longest running drought in its history which has had devastating effects on many areas of our economy.
  • The late 2019/2020 bush fire season caused devastation across just about every state and territory of Australia with widespread economic impacts. Governments had already stretched their budgets and individuals their back pockets to support those affected by the bush fires.
  • While COVID-19 was only just starting its ghastly creep across the world, the Saudis and Russians started an oil price war which was being felt through financial markets.

With the cumulative effect of all that had happened over the past few years, the world economy was likely already feeling jaded before coronavirus came into the equation.

The financial impacts of coronavirus will be huge, that is a given. To what extent individual countries will recover faster and better than others will also vary.

With the Australian government stimulus measures announced, there is no question that we will face years to recover back to pre-COVID 19 surplus budget levels. Some businesses and individuals may never recover which will impact their children into the future.

This financial crisis, borne from a health crisis and through no fault of our own, will be defining event in world history and likely it won’t be known for some time how different our world will look, post-crises.