Category: Historically Significant Topics

Black Wednesday: Why Britain never used the Euro

In recent days we hear a lot about “Brexit” i.e. the exit of Britain from the European Union (EU). But, Britain was never really a complete member of the EU. Unlike the rest of the members, Britain was/is not under the European Central Bank (ECB) and did/does not use the Euro as its currency unit. more »

Irish Real Estate Bubble

The Irish economy earned the distinction of being called the “Celtic Tiger” due to its phenomenal performance between the years 1994 and 2006. A huge driver of growth for the country was the construction industry, which accounted for nearly 24% of GDP in 2006. The Great recession of 2008 dealt the Irish construction industry a more »

CDS and Synthetic CDO: 2008, the other side of the bet

The global economic boom of the early 2000’s saw the explosion of the use of various financial products, these products were utilised by investors to profit from the high growth and optimism characterising the global economy in the early 2000’s. On the back of this positive sentiment in the global economy, products such as Collateralized more »

Panic of 1873

On 18th September 1873, Jay Cooke & Co. suspended deposit withdrawals, this led to the onset of what is now know as the “Panic of 1873.” The panic was also the beginning of the original “Great Depression” which is more formally known as the “Long Depression.” The panic was primarily due to the over expansion of more »

1979: FOMC and Bond Trading

On October 6, 1979, the FOMC or Federal Open Market Committee led by Paul Volcker announced a slew of anti recessionary measures, the most significant measure being, the Federal Reserve would target the quantity of money rather than the price of money, more specifically the amount of bank reserves in the system. The price of money more »

U.S. Housing Bubble:Cheap Credit

The US housing bubble was one of the major contributors to the 2008 recession. The bubble had been developing since 1996 and reached its peak in 2006. The bubble burst and pushed the world into recession. “The Greater Recession,” was the worst recession to hit the world since “The Great Depression.” In this article I will more »

Panic of 1907

On October 16, 1907, Fritz Augustus Heinze, who had attempted to corner the stock of United Copper Company failed. This led to what is now know as the “Panic of 1907.” The panic of 1907 was characterised by a run on Trusts (financial institutions). This run lead to the freezing up of credit markets and more »

Chartalism

Chartalism is a concept that was proposed by George Friedrich Knapp, a German economist. He coined this term in his book, State Theory of Money, which was published in 1905. Chartalism goes against the conventional wisdom that money was created by private individuals to facilitate trade, the theory proposes that money was created by the more »

Fiscal Cliff of 2012

At 12a.m on January 1st of 2013 the United States went over something called the Fiscal Cliff. This situation was short lived and at 2a.m the Senate in the United States came up with a solution. The solution came in the form of the American Taxpayer Relief Act of 2012. The CBO (central budget office) more »

The Classical Gold Standard

The “Gold standard” was a monetary system used by the world in some form or the other till the year 1971. In 1971 Richarch Nixion the American President finally brought the curtains down on the relation between gold and the monetary system. Under this system, every country would tie its currency to a fixed value more »