The 7 Worst Financial Crashes & the Role of Government Shutdown

Markets and economies are always in a state of flux. Sometimes they’re up, and sometimes they’re down. But every now and then economies go low — way low. Here are 7 times economies couldn’t go any lower.

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Read More: Will There Be A Government Shutdown? Assessing the 2023 Q4 Economy

The South Sea Bubble (1720)

The early 18th century saw Britain dealing with the shock of the South Sea Bubble, which began as a speculative frenzy and ended with financial collapse. The collapse of this stock bubble reverberated through the economy, prompting early considerations of financial regulation. No government shutdown played a role in this particular crisis.

The Panic of 1837

In the early days of the United States, the Panic of 1837 came about as speculative excesses in land and commodities markets came crashing down. This economic reversal sparked heavy discussions around the need for financial stability, although the concept of a government shutdown was not directly implicated at the time.

The Great Depression (1929-1939)

The Great Depression is one of the most well known economic downturns in history, and was a global event. The 1929 stock market crash set off a decade of hardship, prompting introspection on economic policies. However, government shutdowns were not a notable factor during this period.

The Asian Financial Crisis (1997)

The late 20th century witnessed the Asian Financial Crisis, a region-wide economic meltdown triggered by currency devaluations and financial instability. This crisis led to a reassessment of financial systems and practices in affected countries, with governments taking measures to address the root causes.

The Dot-Com Bubble (2000)

The dawn of the millennium brought with it the dot-com bubble, a financial phenomenon characterized by exuberant speculation in technology stocks. When the bubble burst, the fallout prompted a reevaluation of investment strategies. A government shutdown was not a direct factor in this episode.

The Global Financial Crisis (2007-2008)

The 2008 financial crisis resulted from a combination of factors, resulting in significant government intervention. However, a government shutdown did not directly contribute to the crisis; rather, it prompted discussions on regulatory reforms and the role of central banks.

The COVID-19 Pandemic Recession (2020)

The most recent entry in the list is the COVID-19 pandemic recession. The global response to the pandemic, including lockdowns and restrictions, disrupted supply chains, and led to widespread economic contractions. Government shutdown played a direct role in this crisis, as authorities implemented measures to contain the spread of the virus, affecting businesses and employment.

Financial Crashes Don’t Always Correlate with Government Shutdown

These seven economic crashes, spanning centuries and continents, offer valuable insights into the dynamics of financial crises. While government shutdowns were not prominent factors in most of these historical downturns, its role has become more and more significant in the modern era, particularly notable during the COVID-19 pandemic.

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Jeff Sekinger

Founder & CEO, Nurp LLC

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