If we look into history of different countries we will find that different countries faced the financial crises at different times. As the world is facing now financial crisis now also, the question comes in mind that who are those who run this finance horse, what are the reasons which leads to financial crises? Or is there is someone who is holding all the strings and keep them pulling? So many questions come in mind when mind starts thinking about it.

Well I had searched about this and compiled these ten nasty crises. Check out these ten dramatic crises.

1 – Argentine economic crisis (1999 – 2002)

Argentinean economy was destabilized in 1980s when Latin American Crisis struck it. Argentine was an import dependent country where people usually convert their peso into dollars to feel secure. The high inflation rate leads its currency to lose the confidence and adding oil to fire the government that time spent generously on itself while ignoring the country’s crumbling industrial infrastructure.

Mexico and Brazil were the major trade partners of the Argentine in 1980s both countries suffered the economic crises which spread out in Latin America. Brazil’s currency was devalued in 1999 that damaged a lot Argentinean exports and adding fuel to fire the dollar was revalued giving a harsh blow to Argentinean Peso.

Till 1999 the country was having 3^rd consistent year of economic decline but the government haven’t devalued the peso, which made the crisis worse. In such conditions the investors ran on banks for dollars to send abroad for safety. Meanwhile the government freezes everyone’s bank accounts. This step of the government raised violence amongst citizens and protests through out country were started. The government was collapsed in 2001. While in crisis the people were bartering for goods because lack of cash, many people eked out a living by scavenging cardboard for recycling plants.

The new government 1^st tried to setup a third currency between dollar and peso but that failed. Then it instructed the banks to convert all dollars into pesos. That step worked and peso was lead to diminish in value. Because of that exports got higher and in meanwhile the government tightened its tax policies, improves social welfare, encourages business growth and put the reserve dollars up for sale in market. The country got the surplus trade because of its agricultural products anyhow its still struggling with inflation.

Lesson

Freezing bank accounts leads the crises to get worst. It can’t be a smart step to tackle the crisis.

2 – Russian Financial Crisis (1998)

The Russian government in 1993 introduced inflation-free short-term treasury bills known as GKOs to finance the country’s deficit. GKOs were traded on currency exchanges. Most of it was state owning while only 1/3 of funding came from foreign speculators who were attracted by high interest rates. Like a classic Ponzi scheme the government used proceeds from sales of new GKOs to payoff interest on matured bills.

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The prices of oil have tripped below $60 a barrel right after the traders observed the economic weakness signs, though it is forecasted by the International Energy Agency that global oil demand would turn into normal stage.

Traders are more concerned and focusing on situation that the rising global recession and the increased unemployment would keep restraining demand, where as stocks in US have been overloaded. “Crude Oil prices have been decreased with sentiment concerning the rapidity of the global economic recovery” Deutsche Bank said in a commodities market report released on Friday. At midday, the oil futures in New York trading were dropped $1.07, to $59.34In the monthly Oil Market report released by the Agency, the agency claimed that global demand would increase in 2010 by 1.7 % a year earlier or by 1.4 million barrels a day to 85.2 million barrels. Where in 2009 the global demand remain constant, rather decreasing 2.5 million barrels a day or 2.5%

The Agency believed that the global demand would run by economic recovery in the developing countries where it is expected to increase by 3.5 percent or 3.9 million barrels a day in 2010, and by a humble increase in demand from O.E.C.D countries for travel or winter fuel consumption.

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Early Monday morning a mixed outlook on the global economy from the International Monetary Fund had Wall Street in flux, but the sign that encourages is that the U.S. government is still able to find buyers for its bond offerings. This kept the session’s losses from growing Wednesday afternoon.

The worldwide economic growth forecast has been raised for 2010 from 1.9% to 2.5% by the IMF, but the IMF also warned that as the recession ends recovery will be slow. It is expected by IMF that the global economy will contract by 1.4% in 2009, it is worse than the previous estimate of 1.3%.

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