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article imageFinancial markets reflect on one-year anniversary of crash

By Miriam Mannak     Oct 24, 2009 in Business
Exactly a year has passed since global economic markets crashed. On this day, mainly as a result of the financial meltdown in the US, most of the world's stock exchanges experienced the worst declines ever, with drops of around 10 percent in most indices.
Bloody Friday did not happen out of the blue -- not in the least. In the 1.5 months prior this day, there were some very strong signs something big and bad was going to happen to the stock exchanges.
It all started in September 2008 after various large American financial institutions failed due to the exposure of securities of packaged sub prime loans and credit default swaps issued to insure these loans and their issuers.
About 15 US banks failed, and several others were rescued through massive government bail-outs or or acquisitions by other banks. The situation in the US dragged with various European banks, of which some failed and other were rescued by their governments. In addition, the value of equities (stock), commodities and natural resources worldwide plummeted to all-time lows.
Iceland in the red
In Iceland, panic struck after the country's national bank failed after the devaluation of the Icelandic Krona. Being on the brink of bankruptcy, Iceland managed to obtain an emergency loan from the IMF.
Things did not seem to improve much during the first two weeks of October. In the week after October 6, the Dow Jones Industrial Average closed lower 5 out of 5 sessions, and fell over 1,874 points, or 18% - an historic low. Furthermore, the S&P 500 fell more than 20 percent.
Going down, down, down
The economic meltdown, which has often been compared to the crisis of 1987, forced some countries to temporarily close their markets. On the 8th day of October for instance, the Indonesian stock market halted operations after a 10 percent drop in one day.
Black Friday
The the inevitable happened. On Oct. 24 2008, exactly a year ago, many of the world's stock exchanges saw the greatest declines in history.
After Black Thursday 79 years ago, in 1929, the Japanese, Indian and South Korean indexes slumped more than 9.5 percent each. Benchmarks in Hong Kong, Australia, Singapore and Taiwan dropped to their lowest levels in at least three years.
The Dow Jones took a 400-point plunge minutes after the opening bell, and other stock exchanges in Europe followed the trend which was defined by the deputy governor of the Bank of England, Charles Bean, as "a once in a lifetime crisis, and possibly the largest financial crisis of its kind in human history."
What goes down, must go up
A year has passed since then, and the financial crisis is still gripping many parts of the world, from the rich north to the poor south and every region in between. One of the few countries that is still doing well, is China. In the third quarter of this year, the Chinese economy grew with almost 9 percent.
It unsure when things are going to improve, but at some point they will.
More about Black friday, Economic crisis, Financial crisis, Stock exchange
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