History repeats itself

Before the recent COVID-19 collapse, I began writing a book. Whilst I am still toying with the name, it will be released later this year and I am hoping that it may help some who are going through what I had to during the GFC, the loss of a job .Changing careers is never easy. I have done this a few times now, and yet I find that though to some it can cause a great deal of anxiety, to others, it will be a new opportunity.The first chapter in my book is based on research on the Economic collapses over the centuries. You can read it here and gives insight into the fact that history repeats itself. We will go on. We will survive. It will just look different.

The uncertainty of the COVID-19 health pandemic has brought with it, yet another global economic crisis. And yet this hasn’t been the first, nor will it be the last we see in world history. Throughout the centuries, the world has experienced economic downturn bringing worry and chaos, beginning with the Financial Panic of 33 AD. Through a political uncertainty, Tiberius sent a letter to the Senate, suddenly denouncing him as a traitor and having his arrested. It resulted in a set of trials denouncing the corrupt wealthy, targeting money lending and confiscating property. Limitations were imposed on credit and a decree was made where two thirds of all loans had to be repaid, deleveraging the economy, collapsing real estate and collapsing banks along the Via Sacra (the equivalent of Wall Street).

Economic falls can be counted throughout most centuries after this first recording. The Third Century is known as Military Anarchy or the Imperial Crisis. It was a period where the Romans nearly collapsed under invasions, civil war, political instability, the plague and economic depression. It began when Severas Alexander was assassinated by his own troops and resulted in a splitting of the Empire into three states which had a profound change on institutions, society, economic life and religion. (Crisis of the third century, n.d.).

By the 4th century, the Paruzzi family of Florence were the second largest bankers in the whole of Europe and had amassed their capital through sales of wool and grain. Extension of trade into other countries meant trading and unsecured loans to popes, nobles, bourgeois, towns and abbeys. War eventually led to the buying of mercenaries and by 1343 the Peruzzi consortium collapsed and was bankrupt.

The 17th century saw three crises, starting with the Thirty Years War where metal coins were so worthless that children played with them in the street (Kipper and Wupper, n.d.), ending with the General Crisis between 1618 and 1648 where war, secession, rebellion and political insurgency shook the world and eventually led to the collapse of European, Asian and the Ming China Dynasty. Interestingly demographic decline and climate change appeared to also be partly to blame as the Little Ice Age term was created by climatologists.

The 18th Century began with the Great Tobacco Depression in 1703 in the United States continued with the South Sea Company of Great Britain trading monopolized trade and led to share price collapse in 1720 and so it goes on. The same year saw the collapse of the Mississippi company in France, then went on to the failure of a firm– almost half as large as the Bank of Amsterdam, collapsing. The War of Independence in 1776 continued the downfall, finally leading to the Panics over several years where Duer, Macomb, and their colleagues attempted to drive up prices of US debt securities and bank stocks. It was when they defaulted on loans, that prices fell, causing a bank run. (Panic of 1792, n.d.)

Panic runs continued into the 19th Century where there were several activities which caused economic instability, beginning with the Danish State bankruptcy in 1813, the Great Depression of British Agriculture between 1873 and 1896 and ending with a US recession. Even Australia was brought into the banking crisis in 1893 involving the collapse of several commercial banks and general economic depression. (Australian Banking Crisis, n.d.)

We hit the 1900’s and we find there are more panics, the great depression during the Second World War, the 1970’s Energy Crisis, the recession in the 1980's and ending with most of the world having some kind of crises.

Then we finally come to the 21st Century where the early 2000 recession in the US began and lead us all to the 2020 Stock Market Crash as a result of the COVID-19. Panic buying has affected supplies, disrupting factories and logistics worldwide. A widespread shortage of pharmaceuticals has lead to shortages in food and essential grocery items and the technology industry collapsing under pressure.

The most economic impacts to the market have been felt in Australia, China and Hong Kong where Australia’s GDP fell, whilst China’s economy grew. Analysts predict the economic fallout will surpass any they have seen in years and the Washington University estimates it will take up to two years to recover.

March 9, 2020 will be known as Black Monday and March 12 as Black Thursday. The collapse of the stock market will have a ripple effect the whole world over where not only will society be affected by the death of thousands as a result of the virus which began in Wuhan, China, but will affect the future of those who thought they might be ready to retire this year. I am one.

Sources

Wikepedia: (Crisis of the third century, n.d.). (Australian Banking Crisis, n.d.); (Kipper and Wupper, n.d.) (Socio-economic_impact_of_the_2019–20_coronavirus_pandemic) (2020)

Armstrong Economics: Financial Panic of 33 AD (2020)