I would like to quote here one very unusual example which does not have any direct relation with economy/stock market. But still gives a convincing reply to why and how the world will come out of the financial trouble it is facing today.
The example is of Spanish flu which hit the world sometime in 1918. This influenza pandemic spread to nearly every part of the world. It was caused by an unusually severe and deadly Influenza A virus strain of subtype H1N1. Historical and epidemiological data are inadequate to identify the geographic origin of the virus. Many of its victims were healthy young adults, in contrast to most influenza outbreaks which predominantly affect juvenile, elderly, or otherwise weakened patients. The Spanish flu lasted from March 1918 to June 1920, spreading even to the Arctic and remote Pacific islands. It is estimated that anywhere from 20 to 100 million people were killed worldwide, or the approximate equivalent of one third of the population of Europe, more than double the number killed in World War I. So in short it was a very grave situation which took life of 20-100 million people between 1918-20.
We had another unprecedented turmoil that hit the world in 1929. It's better known as The Great Depression. It was a worldwide economic downturn starting in most places in 1929 and ending at different times in the 1930s or early 1940s for different countries. It was the largest and most important economic depression in modern history, and is used in the 21st century as a benchmark in how far the world's economy can fall. The Great Depression originated in the United States; historians most often use as a starting date the stock market crash on October 29, 1929, known as Black Tuesday. The depression had devastating effects both in the developed and developing world. International trade was deeply affected, as were personal incomes, tax revenues, prices, and profits. Cities all around the world were hit hard, especially those dependent on heavy industry. Construction was virtually halted in many countries. Farming and rural areas suffered as crop prices fell by 40 to 60 percent. Facing plummeting demand with few alternate sources of jobs, areas dependent on primary sector industries such as farming, mining and logging suffered the most.
Now, I have a parallel to Spanish flu. Avian influenza, sometimes Avian flu, and commonly Bird flu refers to "influenza caused by viruses adapted to birds." Recent influenza research into the genes of the Spanish Flu virus shows it to have genes adapted to both birds and humans; with more of its genes from birds than less deadly later pandemic strains. Between year 2003 to 2008, 385 cases of Bird flu were reported in the world which took 243 human lives. It is not even 0.001215% of the total human lives lost by Spanish Flu (here I took total 20 Mn casualties and not higher number of 10 Mn by Spanish Flu). This is even more important considering the fact that genetic analysis of the H5N1 virus (bird flu) shows that influenza pandemic from its genetic offspring can easily be far more lethal than the Spanish Flu pandemic.
So why the number of casualties were far less than Spanish flu? The reason is only one. The world is much better connected than it was in 1918. Today the globally connected economy responds and communicates much faster, better and effectively. The coordinated efforts of various governments, health groups, NGOs, WHO etc have helped to successfully face this challenge posed by Bird flu.
In the similar way, the world is in a much better position to face the unprecedented financial situation today than it was in 1929. I believe that the world market is going to come out of this situation within 6-9 months period with the coordinated efforts of all the governments world over. The media is going to blow things out of proportion and a panic like situation is going to get created which will benefit only those who control their nerves.
These were my two pence worth. You may share your thoughts/opinion directly on the blog or write to me at firstname.lastname@example.org
Niteen S Dharmawat
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