Back to the Future: Present-Day Lessons from the Financial Panic of 1890
30 Pages Posted: 23 Apr 2010
Date Written: April 22, 2010
Abstract
The main goal of this paper is to debunk a series of myths regarding the proximate causes of the so-called Great Recession of 2008-09. I focus on the Baring crisis of 1890, that involved Great Britain and Argentina. The factors behind the 1890 crisis were virtually identical to those surrounding the recent financial crisis. These included low interest rates; mortgage-backed securities; collateralized debt obligations; counter-party risk; bad regulation; and government guarantees. I therefore draw on this historical experience to examine whether some of the proposed explanations of the recent financial crisis hold any water.
Keywords: Great Recession, Baring Crisis, Argentina
JEL Classification: F30, G14, N23, N26
Suggested Citation: Suggested Citation
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