The document discusses various economic crises throughout history including the Tulip Mania crisis of 1637, the South Sea Bubble crisis of 1720, the Wall Street Crash of 1929 that led to the Great Depression, and more recent crises like the Asian Financial Crisis of 1997 and the Eurozone Crisis. It notes that economic crises are typically caused by factors like speculation, risky behavior, unstable macroeconomic conditions, and can result in falling GDP, unemployment, and deflation. The document also lists some solutions to economic crises such as fiscal and monetary policy interventions, bank bailouts, and regulatory reforms.

1. Harikrishnan
PGP-13-109

2. Crisis Reasons Solutions
• A situation in which the economy of a country
or the world experiences a sudden downturn
brought on by a financial crisis.
• An economy facing an economic crisis will
most likely experience:
• A falling GDP,
• A drying up of liquidity
• Rising/falling prices due to
inflation/deflation.
• Unemployment
• An economic crisis can take the form of a
recession or a depression

3. Crisis Reasons Solutions
• Happened in 1637 in The
Netherlands due to the collapse in
prices of tulips.
• Some single tulip bulbs sold for
more than 10 times the annual
income of a skilled craftsman.
• It is generally considered the first
recorded speculative bubble
• First recorded crisis with
Global economic
implications
• Caused due to the failure of
the South Sea trading
company in 1720
• First evidence of practices
such as insider trading
leading to a crisis
• Also known as Black
Tuesday and the Stock
Market Crash of 1929,
began in late October 1929
• The crash signaled the
beginning of the 10-year
Great Depression that
affected all Western
industrialized countries

4. Crisis Reasons Solutions
• The Great Depression was a severe
worldwide economic depression in the
decade preceding World War II.
• Went on until the late 1930s or middle
1940s.
• It was the longest, most widespread, and
deepest depression of the 20th century.
• Triggered by the US housing bubble
burst
• Resulted in the threat of total
collapse of large financial institutions,
the bailout of banks by national
governments, and downturns in stock
markets around the world

5. Crisis Reasons Solutions
• Oil Shock of 1973
• Black Monday of 1987
• Asian Financial crisis of 1997
• Dotcom bubble
• Eurozone crisis

6. Crisis Reasons Solutions
• Risk-taking behavior
• Housing speculation
• Corporate risk-taking and leverage
• Financial market factors
• Financial product innovation
• Inaccurate credit ratings
• Lack of transparency
• Regulatory avoidance
• Macroeconomic conditions
• Inefficient economic production
• Globalization and Trade deficit
• Unstable currency
• Oil price fluctuation

7. Crisis Reasons Solutions
• Environmental Factors
• Famines
• Droughts
• Natural Disasters
• Political Factors
• Government instability
• Political unrest
• Fluctuating public sentiment
• Run on banks causing bank failures
• Reduction in spending leading to
deeper recession

8. Crisis Reasons Solutions
• Government Policies
• Fiscal & Monetary Policy
• Deficit Reduction
• Capital injection through public
spending
• Bank bailouts
• Financial policies
• Stricter regulation
• Stabilization of currency
• Foreign Policy
• Encouraging foreign Investment
• IMF & World Bank Funding