Whether you believe that the love of money is the root of all evil, agreewith Marx and Engels or support the free-market views of Milton Friedman, money iscurrently something we all need, all use and all seek a little more of, whether we care toadmit it or not.The rise of capitalism as the predominant economic systemaround the world has seen many (although certainly not all) people benefit from increasedliving standards and greater prosperity. But occasionally, it is a system that goes wrong.And when it does go wrong, it can be spectacular. Financial markets seem to possess apeculiar emotional element to them. They suffer from nerves, panic and irrationality. Andif too many people get swept up by these emotions, it can lead to a crisis. Here are 10 ofthe biggest financial crises of recent history.Number 10

Japan’s "Lost Decade," 1990-2000

The collapse of the Japanese asset bubble in 1991 led to a prolonged period of lowgrowth, which has since been extended to incorporate the decade since the year 2000. Theoriginal lost decade was caused by an unsustainable level of speculation, large amounts ofcredit and low interest rates (sound familiar?). When the government stepped in to controlthis, credit became much harder to obtain, and capital investment dropped significantly.It led to a virtual halt in economic expansion during the 1990s, hence the lost decade.Japan was fortunate in avoiding a depression, but the effects of 1991 are stillbeing felt, even today. It is a situation that some commentators feel could be repeated inWestern economies in the near future if care is not taken.Number 9

1907 Banker's Panic

The Panic of 1907 saw the Dow drop almost 50% from the high of the previous year. It wastriggered by the usual suspects: over-expansion and poor speculation. The stock marketcrashed in March, and a second crash in October led to a run on banks and every trust inNew York, notably causing the massive National Bank of North America to fail. The U.S. Treasury department, with exceptional help from J.P. Morgan and some selectexecutives, raced in with federal money and some creative financial“redirection.” Confidence in the market had been restored by February 1908,and, in May, Congress passed the Aldrich-Vreeland Act, which created the National MonetaryCommission that later recommended the Federal Reserve Act in an effort to squash anyfuture panics before they were able to do such tremendous damage to the economy.Number 8

Black Monday, 1987

No one is entirely certain about the causes of Black Monday, on October 19, 1987. Butwhat is certain is that billions of dollars were wiped from stock markets across theglobe. Hong Kong lost a massive 45.8% of its value, the United Kingdom lost 26.4%,Australia dropped 41.8%, and New Zealand dropped a full 60% from its peak.Somepeople suggested it was an accident waiting to happen, and theories such as programtrading, disputes about monetary policy and fears over inflation have all been proposed toexplain what happened. It could even simply have been a panic that spread with no rationalexplanation. What is certain is that it cost an awful lot of people an awful lot of money. Continue Reading



More...