Events that shaped the financial world in the past 20 years

The financial world has evolved a lot in the past 20 years. Here are some key events that changed it.

Sep 30, 2020 08:09 IST India Infoline News Service

There have been a host of financial events in the past 20 years making it tricky to restrict the shape of the current financial world to just three key events. For every country, the last two decades have been jam-packed with economic volatility and major political events- with some good, some bad, but all newsworthy. These important events have also shaped the financial world for small businesses entering the space. From corporate fraud and the mortgage crisis to the coronavirus pandemic, here are some key events that have shaped the financial world of today.

2000: Burst of the Dot.com Bubble

The year 2000 was the year when more entrepreneurs began to see the potential in online business and e-commerce saw its wake. Although e-commerce was yet to grow into the hugely successful mode of operation it is today, 2000 was the year everybody began seeing a new economy emerging — one where advertisements could be viewed from the comfort of homes instead of through posters on storefronts. The internet-driven economy has grown monstrously in the past 20 years.

Most of the dot.com shares in the stock market that grew to be hugely profitable in the years to come were listed on NASDAQ in the year 2000. Investors had already started getting rich from these unprofitable stocks as a result of high prices and even higher price/earnings ratios. This was from the massive influx in investors putting money into nascent software companies, or any business that was internet related and all things computers. Many of their companies traded about a hundred or more times greater in the year 2000 right before the dot.com bubble burst. In April of 2000, the speculative bubble burst and there were massive investment losses as a result of an inflation report that was brought to public notice.

2007–2009: The Global Recession and Collapse of Wall Street

A seemingly perfect storm of events precipitated the biggest economic downturn the U.S has ever seen in September of 2008. This wasn’t observed in just the U.S but all over the globe, and led to the biggest crash in the States since The Great Depression. The biggest investment banks that had stood on Wall Street started to collapse as a result of the combination of the subprime U.S. mortgage crisis as well as serious corporate fraud. During this time, the Bush administration was in its last few months. The federal government had to step in to bail out some crucial institutions from bankruptcy to keep the financial system of the United States afloat.

Around the time when the Obama Administration took hold of the White House in January 2009, the great recession had taken hold of the contracting economy. Although there were signs of recovery at the end of January 2009, the complete recovery from the recession would be slow, long, and painful. The U.S economy has yet to see a bubble that big explode.

2020- Coronavirus and its Economic Impact

Perhaps the biggest economic disruptor shaping the financial world in the past decade has been the spread of the novel coronavirus — the Sars COV-2 pandemic across the globe. From economic shutdowns in many countries to widespread unemployment, global stock markets are facing one of the biggest downturns in history. In India alone, this impact has been primarily disruptive on a massive scale. Rating agencies like the World Bank reported that India’s growth in FY2021 has seen its lowest figures ever in the last three decades since 1990.

With the announcement of the economic package in the middle of May, the estimates for India’s GDP in 2021 were downgraded even further. From the numbers alone, the country seems to be spiraling into a deep recession, along with at least 30 other countries whose numbers were downgraded like India’s. Country-wide unemployment grew from 6.7% as was seen at the beginning of lockdown on 15th March to a whopping 26% in around 30 days by 19th April. The 21-day lockdown has been extended by 6 months and is still ongoing. The country — like many others — is slowly recovering from the economic hit it received from COVID-19 at the beginning of 2020.

Conclusion

Even though these three events have been major, there are other financial events that have impacted today's financial world. While the current economy was in disarray in the first half of 2020, many countries seem to be reopening borders, trade channels, and businesses. The latter half of 2020 appears to be a phase of recovery for the global economy.


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