Financial crises in the world

The concept of crisis refers to the moment in which a break occurs within the
evolution of a capitalist cycle (the transition from expansion to depression, one of
the crises most recognized is the crisis of 1929, when the financial collapse Of that
year, provoked the great depression of the thirties of the twentieth century. Next we
will talk about the crisis of 1792 and the crisis of 1825. The panic of 1792 was a
financial credit crisis that occurred by the expansion of credit by the newly formed
bank of the United States. The first crisis of emerging markets occurred in 1825.

1792: The Basics of Modern Finance

In 1792 the first modern financial crisis took place in the United States, a man named
Alexander Hamilton wanted to create a state-of-the-art financial system. He collected
all the informal debit documents of the states and began issuing new bonds,
Borrowed at a low price. Being the first bank legally constituted in the United States.

Alexander Hamilton had 2 main problems that were, the first was the appearance of
an old friend (William Duer), who realized that people needed other loans to cover
the bank loan, then with the help of his accomplices lent money and the whole
system.

A short time later it was begun to speculate that Duer was lending money to be able
to pay the old debts and together with the tightening of the credits of the BUS caused
that the prices of the public debt, the actions of the BUS and the actions of a small
handful Trading companies dropped 25% in two weeks. Duer was imprisoned the 23
of March of 1792 but this did not stop the decline in which the companies were falling,
generating failures in his work.

Alexander Hamilton knew he had to do something fast and strong to overcome this
crisis, and he did, attacked several fronts, first used public money to buy federal
bonds and raise prices, helping to protect the bank and the speculators who had
bought At inflated prices, and I also use cash to repay troubled lenders.

In April 1792, after all the crisis, lawmakers trying to protect naive investors, banned
future public trade. In response to this ban a group of 24 traders met under a tree at
Buttonwood to create their own private trading group, this group being the forerunner
of the New York Stock Exchange.

1825: The First Crisis of Emerging Markets

In the 1820s the emotion was upon Latin American countries newly independent that
it had freed itself from Spain. Investors were particularly interested in Britain, which
was at a time at the time, with the exports of a particular force. Wales was a source
of raw materials, cutting 3 million tonnes of coal a year, and shipping pig iron all over
the world. Manchester became the world's first industrial city, refining raw inputs into
value mayor goods like chemicals and machinery. Industrial production grew 34%
between 1820 and 1825.

The collapse of the Spanish empire had left the former colonies free to establish
themselves as independent nations. Between 1822 and 1825, Colombia, Chile,
Peru, Mexico and Guatemala successfully sold bonds valued at 21 million pounds
($ 2.8 million in today's prices) in London. And other ways of charging: the actions
of British mining companies planning to explore the new world were popular. The
stock price of one of them, the Mexican Anglo, went from £ 33 to £ 158 in a month.

Investors are not carrying out the proper controls. Much of the information about the
new countries of the province of journalists paid for by promoters, so negotiations
were made on the basis of information that was the time at best. The most
demanding savers of the toughest questions: Mexico and Colombia were truly real
countries, but only rudimentary fiscal systems, so they had little chance of raising
money to pay the interest on their new debt.

What was most remarkable about the crisis of 1825 was the great divergence of
opinions about what should be done in this regard. Some blamed investor oversight:
it had invested in debt from unknown countries and in mining equipment set up to
explore countries that do not contain minerals. A natural reaction to this emerging
market crisis could have been to require investors to conduct adequate controls
before putting money at risk.

For a long time man has experienced economic power, mismanagement of financial
resources is what leads to the different crises experienced throughout history. As
every great beginning must have an end the crises are the proof of this.