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Here you will learn about financial crisis with the help of videos websites and images. Financial crisis is state/situation in which the economy is declined and difference between demand and supply is broadened and assets value is decreased that can create havoc. It also implicate the down fall in the stock market.

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This website shares the information about the history of economic crisis like stock market crash,The great depression of 1929, 1989 savings and loan crisis, etc.

I have learnt different strategies to protect yourself from crisis that would be paying off all credit card debt, doing some savings, finding a trustable financial adviser to work with.

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A U.S. economic crisis is a severe and sudden upset in any part of the economy. It could be a stock market crash, a spike in inflation or unemployment, or a series of bank failures. They have severe effects even though they don't always lead to a recession.

The United States seems to have an economic crisis every 10 years or so. They are difficult to eradicate because their causes are different. But the results are always the same. They include high unemployment, near-bank collapse, and an economic contraction. These are all symptoms of a recession. But a financial crisis doesn't have to lead to a recession if it's addressed in time.

These six crises help you recognize the warning signs of the next one. You'll see when government action prevents complete economic collapse and when it makes things worse.

1970s Stagflation. The 1973 OPEC oil embargo signaled the start of this crisis. The government's reaction turned it into a full-fledged crisis of double-digit inflation AND recession. The economy contracted 4.8 percent by the first quarter of 1974, according to the BEA. In 1975, unemployment peaked at 9 percent. Prices sky-rocketed after President Nixon untied the dollar from the gold standard. To curb inflation, he froze wages and prices. That made businesses lay off workers who couldn't lower wages or increase prices.

1981 Recession. High-interest rates to curb inflation created the worst recession since the Great Depression. The economy shrank for six of the crisis' 12 quarters. The worst was Q2 1980 at 8 percent. Unemployment was above 10 percent for 10 months. It rose to 10.8 percent in November and December 1982, the highest level in any modern recession.

President Ronald Reagan cut taxes and increased spending to end it. That doubled the national debt during his eight years in office.

1989 Savings and Loan Crisis. Charles Keating and other unethical bankers created this crisis. They raised capital by using federally insured deposits for risky real estate investments. Five Senators accepted campaign contributions in return for decimating the bank regulator so it couldn't investigate the criminal activities. There was no warning to the general public since the banks lied about their business dealings. The S&L Crisis resulted in 1,000 bank closures.

The crisis created a recession in July 1990. By the fourth quarter, the economy shrank 3.6 percent. Unemployment peaked at 7.8 percent in June 1992. The subsequent bailout added $126 billion to the national debt. It's one of the 10 worst booms and busts since 1980.

9/11 Attacks. Four terrorist attacks occurred on September 11, 2001. They stopped air traffic. The two attacks that destroyed the World Trade Towers closed the New York Stock Exchange until September 17. When it reopened, the Dow dropped 617.70 points. There was no warning for the general public.

The crisis threw the United States back into the 2001 recession, extending it until 2003. The economy shrank 1.1 percent in the first quarter and 1.7 percent in the third quarter. Unemployment peaked at 6.3 percent in June 2003. Some of this was not because of the attacks themselves. It was due to uncertainty about whether the United States would go to war. The resultant War on Terror added $2 trillion to the national debt.

2008 Financial Crisis. The financial crisis was worse than any other crisis except the Depression. The first warning came in 2006 when housing prices started falling and mortgage defaults began rising. The Fed and most analysts ignored it. They welcomed a slowdown in the over-heated housing market.

In 2008, the Fed stepped in to keep Bear Stearns and AIG afloat. The U.S. Treasury nationalized mortgage guarantors Fannie Mae and Freddie Mac to keep the housing market afloat. But they could not help investment bank Lehman Brothers. Its bankruptcy caused a global banking panic. The Dow fell 770 points, its worst one-day drop ever. Frightened companies withdrew a record $140 billion from their money market accounts. If the money markets had crashed, companies would have lost access to the cash they need to operate.

The economy shrank 2.3 percent in the first quarter, 2.1 percent in the third quarter, and 8.4 percent in the fourth quarter. It went on to contract 4.4 percent in Q1 2009, and 0.6 percent in Q2.

Modern U.S. economic history predicts the next crisis will occur between 2019 and 2021. That doesn't tell you where it will come from, what the result will be, and how to defend yourself. What would have protected you in previous crises might be the worst thing to do in the next one.

You must watch for the warning signals. The first sign is an asset bubble. In 2008, it was housing prices. In 2001, it was high-tech stock market prices. In 1929, it was the stock market. It's usually accompanied by a feeling that "everyone" is getting rich beyond their wildest dreams by investing in this asset class.

The next warning is the "get rich quick" ads everywhere. You feel like you're being left out. And, this is true for some time leading up to the crash. That's the nature of an asset bubble.

The third symptom occurs when self-proclaimed experts write books predicting prosperity beyond imagination. They say "this time it's different." It's called irrational exuberance. It could last for months or even a year or two. But it never lasts forever.

The Fed blamed the growth in fossil fuels on the lack of a carbon tax. Businesses and households are not accurately charged for using these fuels. The Fed calls this "a fundamental market failure." It said that failure could lead to a financial crisis.

Think this sounds far-fetched? Wildfires have already forced utility giant Pacific Gas & Electric into bankruptcy. It faced $30 billion in fire-related liability costs. Munich Re, the world's largest reinsurance firm, blamed global warming for $24 billion of losses in the California wildfires. It warned that insurance firms will have to raise premiums to cover rising costs from extreme weather. That could make insurance too expensive for most people.

Prepare now by immediately taking the following five steps:

1. Pay off all credit card debt.

2. Save three to six months' worth of living expenses. That will cushion you if you lose your job.

3. Find a financial adviser you would trust with the key to your house.

4. Work with your adviser to create a customized financial plan that meets your specific needs. That will determine your asset allocation. Make sure you have a diversified portfolio.

5. Rebalance the allocation once or twice a year. Regularly skim off profits from the investments that have grown the most. Plunge these into an asset class that's weak. That automatically ensure you "buy low and sell high." It also protects you from losing too much when the crisis hits.

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Protect Yourself from the Next U.S. Economic Crisis

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A U.S. economic crisis is a severe and sudden upset in any part of the economy. It could be a stock market crash, a spike in inflation or unemployment, or a series of bank failures. They have severe effects even though they don't always lead to a recession.

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Website 2 ( causes of economic recession)

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Website 2 ( causes of economic recession)

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This website focuses on the main causes of the economic recession.

The main causes that i have learnt are:
Fall in price and sale, Loss in investing, poor management, credit crunch.

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Here are the top 12 causes of a recession. A decline in the gross domestic product growth is often listed as a cause, but it more of a warning signal that a recession is already underway. GDP is only reported after the quarter is over. By the time GDP has turned negative, the recession may already be underway.

High-interest rates. When rates rise, they limit liquidity. It's the amount of money available to invest. The biggest culprit was the Federal Reserve, which often raised interest rates to protect the value of the dollar. The Fed raised rates to battle stagflation, causing the 1980 recession. It did the same thing to protect the dollar/gold relationship, worsening the Great Depression.

Falling housing prices and sales. As homeowners lose equity, it forces a cutback in spending as they can no longer take out second mortgages. Over time, it will cause foreclosures. It was the initial trigger that set off the Great Recession, but for different reasons. Banks lost money on the complicated derivatives that were based on underlying home values.

Deregulation. Lawmakers can trigger a recession by removing important safeguards. The seeds of the S&L crisis were planted in 1982 when the Garn-St. Germain Depository Institutions Act was passed. This removed restrictions on loan-to-value ratios for these banks.

Poor management. Bad business practices often cause a recession. The Savings and Loans Crisis caused the 1990 recession. More than 1,000 banks, with total assets of $500 billion, failed as a result of land flips, questionable loans, and illegal activities.

Wage-price controls. Fortunately, this only happened once. In 1971, President Richard Nixon froze wages and prices to stop inflation. But employers laid-off workers because they weren't allowed to lower wages. Demand fell since families had lower incomes. Companies couldn't lower prices so they laid off more workers, causing the 1973 recession.

Post-war slowdowns. The economy slowed down after the Korean War. This caused the 1953 recession. Similar reductions after World War II caused the 1945 recession.

When asset bubbles burst. Bubbles occur when the price of an item such as gold, stocks, or housing is over-inflated. This is when the prices of internet companies, stocks, or houses become inflated beyond their sustainable value. The bubble itself sets the stage for a recession to occur when it bursts.

When prices fall over time, it has a worse effect than inflation. Deflation reduces the value of goods and services being sold on the market. That encourages people to wait until prices are lower. Demand falls, causing a recession. Deflation caused by trade wars aggravated the Great Depression.

Irrational exuberance in the housing market led many people to buy houses they couldn't afford. Everyone thought housing prices could only go up. The Fed should have raised interest rates in 2004. Low-interest rates in 2004 and 2005 helped create the housing bubble. Irrational exuberance set in again as many investors took advantage of low rates to buy homes to resell. Others bought homes they couldn't afford thanks to interest-only loans.

In 2006, the bubble burst as housing prices started to decline. It caught many homeowners off guard, who had taken loans with little money down. As they realized they would lose money by selling the house for less than their mortgage, they foreclosed. An escalating foreclosure rate panicked many banks and hedge funds. They had bought mortgage-backed securities on the secondary market, and now we're facing huge losses.

By August 2007, banks became afraid to lend to each other because they didn't want these toxic loans as collateral. It led to the $700 billion bailout, bankruptcies, and government nationalization of Bear Stearns, the American International Group Inc, Fannie Mae, Freddie Mac, IndyMac Bank, and Washington Mutual. By December 2008, employment was declining faster than in the 2001 recession.

In 2009, the government launched an economic stimulus plan. It was designed to spend $185 billion in 2009. And in fact, it halted a four-quarter decline in GDP by the third quarter of 2009, thus ending the recession. But, unemployment continued to rise to 10 percent, and many business leaders still expected a W-shaped recession by the end of 2010. High unemployment rates still persisted into 2011.

Irrational exuberance in high tech caused the 2001 recession. In 1999, there was an economic boom in computer and software sales caused by the Y2K scare. Many companies and individuals bought new computer systems to make sure their software was Y2K compliant. It meant that the operating code would be able to understand the difference between 2000 and 1900. Many fields within that code only had two spaces, not the four needed to differentiate the two dates fully. As a result, the stock price of many high-tech companies started to increase. It led to a lot of investors' money going to any high tech company, whether they were showing profits or not. The exuberance for dot-com companies became irrational.

It became apparent in January 2000 that computer orders were going to decline. The shelf life of most computers is about two years. Companies had just bought all the equipment they would need. It led to a stock market sell-off in March 2000. As stock prices declined, so did the value of the dot-com companies and many went bankrupt.

In spite of the stock market decline in March 2000, the Federal Reserve continued raising interest rates to a high of 6.25% in May 2000. The Fed didn't start lowering rates until January 2001. It lowered them a half a point each month, resting at 1.75% in December 2001. It kept the interest rates high when the economy needed low rates for cheap business loans and mortgages.

It's hard to say exactly where the next recession would occur. But you can bet it will be some combination of low-interest rates that creates irrational exuberance on the part of investors. If the Fed raises rates too soon or too fast, it will pop the bubble, leading to panic and causing a recession.

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Here are the top 12 causes of a recession. A decline in the gross domestic product growth is often listed as a cause, but it more of a warning signal that a recession is already underway. GDP is only reported after the quarter is over.

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This website helps to learn more about impact of financial crisis that can be economical, social and long term.

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The main financial assets are property, pensions, equities, unit trusts and cash.

Emerging markets - The financial markets of developing countries.

Number of loans delinquent 30 days or more as percentage of mortgage loans serviced in survey. Annual average of quarterly figures. Delinquency rate does not include loans in the process of foreclosure.

This statistic shows the foreclosure rates of subprime conventional loans in the United States from 2005 to 2012. In 2008, 13.7 percent of subprime conventional loans were in foreclosure.

The statistic shows the loans given out by the Federal Reserve the U.S. to banks worldwide from August 2007 to April 2010. The Federal Reserve System is the central bank system in the United States. The U.S. investment bank Morgan Stanley received loans worth 77.2 billion U.S. dollars during that time.

The main financial assets are property, pensions, equities, unit trusts and cash.

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The main financial assets are property, pensions, equities, unit trusts and cash. Emerging markets - The financial markets of developing countries. Number of loans delinquent 30 days or more as percentage of mortgage loans serviced in survey. Annual average of quarterly figures. Delinquency rate does not include loans in the process of foreclosure.

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This website gives me insights of examples of financial crisis that were: Tulip mania, credit crisis of 1772, Stock crash of 1929, The asian crisis 1997-1998.

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What Is a Financial Crisis?

In a financial crisis, asset prices see a steep decline in value, businesses and consumers are unable to pay their debts, and financial institutions experience liquidity shortages. A financial crisis is often associated with a panic or a bank run during which investors sell off assets or withdraw money from savings accounts because they fear that the value of those assets will drop if they remain in a financial institution.

Other situations that may be labeled a financial crisis include the bursting of a speculative financial bubble, a stock market crash, a sovereign default, or a currency crisis. A financial crisis may be limited to banks or spread throughout a single economy, the economy of a region, or economies worldwide.

What Causes a Financial Crisis?

A financial crisis may have multiple causes. Generally, a crisis can occur if institutions or assets are overvalued, and can be exacerbated by irrational or herd-like investor behavior. For example, a rapid string of selloffs can result in lower asset prices, prompting individuals to dump assets or make huge savings withdrawals when a bank failure is rumored.

Contributing factors to a financial crisis include systemic failures, unanticipated or uncontrollable human behavior, incentives to take too much risk, regulatory absence or failures, or contagions that amount to a virus-like spread of problems from one institution or country to the next. If left unchecked, a crisis can cause an economy to go into a recession or depression. Even when measures are taken to avert a financial crisis, they can still happen, accelerate, or deepen.

Financial Crisis Examples

Financial crises are not uncommon; they have happened for as long as the world has had currency. Some well-known financial crises include:

Tulip Mania (1637). Though some historians argue that this mania did not have so much impact on the Dutch economy, and therefore shouldn't be considered a financial crisis, it did coincide with an outbreak of bubonic plague which had a significant impact on the country. With this in mind, it is difficult to tell if the crisis was precipitated by over-speculation or by the pandemic.

Credit Crisis of 1772. After a period of rapidly expanding credit, this crisis started in March/April in London. Alexander Fordyce, a partner in a large bank, lost a huge sum shorting shares of the East India Company and fled to France to avoid repayment. Panic led to a run on English banks that left more than 20 large banking houses either bankrupt or stopping payments to depositors and creditors. The crisis quickly spread to much of Europe. Historians draw a line from this crisis to the cause of the Boston Tea Party-unpopular tax legislation in the 13 colonies-and the resulting unrest that gave birth to the American Revolution.

Stock Crash of 1929. This crash, starting on Oct. 24, 1929, saw share prices collapse after a period of wild speculation and borrowing to buy shares. It led to the Great Depression, which was felt worldwide for over a dozen years. Its social impact lasted far longer. One trigger of the crash was a drastic oversupply of commodity crops, which led to a steep decline in prices. A wide range of regulations and market-managing tools were introduced as a result of the crash.

1973 OPEC Oil Crisis. OPEC members started an oil embargo in October 1973 targeting countries that backed Israel in the Yom Kippur War. By the end of the embargo, a barrel of oil stood at $12, up from $3. Given that modern economies depend on oil, the higher prices and uncertainty led to the stock market crash of 1973-74, when a bear market persisted from January 1973 to December 1974 and the Dow Jones Industrial Average lost 45% of its value.

Asian Crisis of 1997-1998. This crisis started in July 1997 with the collapse of the Thai baht. Lacking foreign currency, the Thai government was forced to abandon its U.S. dollar peg and let the baht float. The result was a huge devaluation that spread to much of East Asia, also hitting Japan, as well as a huge rise in debt-to-GDP ratios. In its wake, the crisis led to better financial regulation and supervision.

The 2007-2008 Global Financial Crisis. This financial crisis was the worst economic disaster since the Stock Market Crash of 1929. It started with a subprime mortgage lending crisis in 2007 and expanded into a global banking crisis with the failure of investment bank Lehman Brothers in September 2008. Huge bailouts and other measures meant to limit the spread of the damage failed and the global economy fell into recession.

The Global Financial Crisis

As the most recent and most damaging financial crisis event, the Global Financial Crisis, deserves special attention, as its causes, effects, response, and lessons are most applicable to the current financial system.

Loosened Lending Standards

The crisis was the result of a sequence of events, each with its own trigger and culminating in the near-collapse of the banking system. It has been argued that the seeds of the crisis were sown as far back as the 1970s with the Community Development Act, which required banks to loosen their credit requirements for lower-income consumers, creating a market for subprime mortgages.

The amount of subprime mortgage debt, which was guaranteed by Freddie Mac and Fannie Mae, continued to expand into the early 2000s when the Federal Reserve Board began to cut interest rates drastically to avoid a recession. The combination of loose credit requirements and cheap money spurred a housing boom, which drove speculation, pushing up housing prices and creating a real estate bubble.

Complex Financial Instruments

In the meantime, the investment banks, looking for easy profits in the wake of the dot-com bust and 2001 recession, created collateralized debt obligations (CDOs) from the mortgages purchased on the secondary market. Because subprime mortgages were bundled with prime mortgages, there was no way for investors to understand the risks associated with the product. When the market for CDOs began to heat up, the housing bubble that had been building for several years had finally burst. As housing prices fell, subprime borrowers began to default on loans that were worth more than their homes, accelerating the decline in prices.

Failures Begin, Contagion Spreads

When investors realized the CDOs were worthless due to the toxic debt they represented, they attempted to unload the obligations. However, there was no market for the CDOs. The subsequent cascade of subprime lender failures created liquidity contagion that reached the upper tiers of the banking system. Two major investment banks, Lehman Brothers and Bear Stearns, collapsed under the weight of their exposure to subprime debt, and more than 450 banks failed over the next five years. Several of the major banks were on the brink of failure and were rescued by a taxpayer-funded bailout.

The U.S. Government responded to the Financial Crisis by lowering interest rates to nearly zero, buying back mortgage and government debt, and bailing out some struggling financial institutions. With rates so low, bond yields became far less attractive to investors when compared to stocks. The government response ignited the stock market, which went on a 10-year bull run with the S&P 500 returning 250% over that time. The U.S. housing market recovered in most major cities, and the unemployment rate fell as businesses began to hire and make more investments.

New Regulations

One big upshot of the crisis was the adoption of the Dodd-Frank Wall Street Reform and Consumer Protection Act, a massive piece of financial reform legislation passed by the Obama administration in 2010. Dodd-Frank brought wholesale changes to every aspect of the U.S. financial regulatory environment, which touched every regulatory body and every financial services business. Notably, Dodd-Frank had the following effects:

More comprehensive regulation of financial markets, including more oversight of derivatives, which were brought into exchanges.

Regulatory agencies, which had been numerous and sometimes redundant, were consolidated.

A new body, the Financial Stability Oversight Council, was devised to monitor systemic risk.

Greater investor protections were introduced, including a new consumer protection agency (the Consumer Financial Protection Bureau) and standards for "plain-vanilla" products.

The introduction of processes and tools (such as cash infusions) is meant to help with the winding down of failed financial institutions.

Measures meant to improve standards, accounting, and regulation of credit rating agencies.

Financial Crisis FAQs

What Is a Financial Crisis?

A financial crisis is when financial instruments and assets decrease significantly in value. As a result, businesses have trouble meeting their financial obligations, and financial institutions lack sufficient cash or convertible assets to fund projects and meet immediate needs. Investors lose confidence in the value of their assets and consumers' incomes and assets are compromised, making it difficult for them to pay their debts.

What Causes a Financial Crisis?

A financial crisis can be caused by many factors, maybe too many to name. However, often a financial crisis is caused by overvalued assets, systemic and regulatory failures, and resulting consumer panic, such as a large number of customers withdrawing funds from a bank after learning of the institution's financial troubles.

What Are the Stages of a Financial Crisis?

The financial crisis can be segmented into three stages, beginning with the launch of the crisis. Financial systems fail, generally caused by system and regulatory failures, institutional mismanagement of finances, and more. The next stage involves the breakdown of the financial system, with financial institutions, businesses, and consumers unable to meet obligations. Finally, assets decrease in value, and the overall level of debt increases.

What Was the Cause of the 2008 Financial Crisis?

Although the crisis was attributed to many breakdowns, it was largely due to the bountiful issuance of sub-prime mortgages, which were frequently sold to investors on the secondary market. Bad debt increased as sub-prime mortgagors defaulted on their loans, leaving secondary market investors scrambling. Investment firms, insurance companies, and financial institutions slaughtered by their involvement with these mortgages required government bailouts as they neared insolvency. The bailouts adversely affected the market, sending stocks plummeting. Other markets responded in tow, creating global panic and an unstable market.

What Was the Worst Financial Crisis Ever?

Arguably, the worst financial crisis in the last 90 years was the 2008 Global Financial Crisis, which sent stock markets crashing, financial institutions into ruin, and consumers scrambling.

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In a financial crisis, asset prices see a steep decline in value, businesses and consumers are unable to pay their debts, and financial institutions experience liquidity shortages. A financial crisis is often associated with a panic or a bank run during which investors sell off assets or withdraw money from savings accounts because they fear that the value of those assets will drop if they remain in a financial institution.

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2008 Financial crisis

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How it Happened - The 2008 Financial Crisis: Crash Course Economics #12

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This video shares the information on types of financial crisis.

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Global financial crisis.

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Global Financial Crisis explained in 96 seconds.

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Preparing ourselves for 2020 recession.

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The thing that I was surprised to learn about financial crisis is that how this can impact the economy at a global level.

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I can relate this topic to my real-life experience as I am an international student and managing my finance is a big task for me. A lot of students under go financial crisis during their life and this assignment gives me picture of how one can prepare ourselves to avoid ill effect these crisis.

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The most important point of information that I would like to share about financial crisis to my friends and family would be various strategies to overcome oneself from after effects of financial crisis or preparing oneself from financial crisis.