The U.S. economy remains ugly and many Americans are struggling with some of the toughest challenges seen in over a generation.
As a result, a recent poll from a firm called StrategyOne found that seven out of 10 people believe that the American system is fundamentally broken. Half believe that America’s best days are behind us.
Still, history offers a glimmer of hope.
If you look around the world and even within America’s past, nations have seen far uglier crises than we’re experiencing now, only to emerge better than ever in the long-run. How? Well, read on.
The crisis: The collapse of the Southern economy after the Civil War.
How ugly it was: War casualties - including about 350,000 dead in the South alone - decreased the labour force by about a third; the printing of hundreds of millions of dollars during the war caused massive inflation; the Confederate currency was worthless, bartering grew for goods; the banking system had collapsed; railroads and transportation infrastructure had been obliterated; the stock of farm animals was a fraction of pre-war numbers. With the end of slave labour, large-scale farming was impossible to sustain.
How it eventually ended: The recovery was slow, but world demand for cotton helped to regenerate the Southern economy, as did an oil boom.
Where the South is today: There has been a boom in the South's service economy, technology industry, manufacturing and the finance sector. Tourism has surged; it has the two largest research parks in the U.S; several auto production plants for companies including Mercedes, Nissan, GM and BMW among others;and is also home to the headquarters of banks including Bank of America, Wachovia and AmSouth, and cable networks including CNN, TBS, TNT and Turner South.The South is obviously struggling with the current crisis like most of the U.S., but it's a far larger economy with a far higher standard of living than even imaginable pre-Civil war.
The crisis: Triggered by the 1929 stock market crash, a severe worldwide depression that lasted until the 30s and 40s for most countries.
How ugly it was: In the U.S, 9,096 - or 50% - of the nation's banks failed; unemployment was at 25% (in other countries it was as high as 30%); growth declined by about 30%; the stock market lost almost 90% of its value. World trade ground to a halt.
How it eventually ended: Accelerated by Roosevelt's New Deal policies, the American economy began a slow recovery that, with onset of World War II and the resulting demand for war materials, saw the beginning of an economic golden age for the U.S.
Where the country is today: Though the country is in recession, current unemployment, deflationary pressure, stock market declines and bank closures pale in comparison to what happened in the 1930s. The national economy is still the worlds largest, and accounts for approximately a fifth of global GDP (at PPP). The American standard of living is also far higher than then and America still boasts 139 of the world's 500 largest companies - twice that of any other nation.
The crisis: Complete collapse of the German economy and its industry after WWII.
How ugly it was: 11% of the population had died; whole cities were rubble; agricultural production was 35% of what it was before the war; hoarding was rabid; inflation was rampant - 'at the official exchange rate, a carton of Lucky Strikes cost $2,300'; adult and child death rates had risen to 4 and 10 times the pre-war levels respectively.
How it eventually ended: The U.S implemented the Marshall Plan, amounting to what today would be $130 billion in loans, aid and technical assistance, allowing Germany to increase food production, restart exporting, and reduce the staggering unemployment. The introduction of the Deutsche Mark curbed the hyper-inflation.
Where the country is today: Germany has the largest national economy in Europe, the fourth-largest by nominal GDP in the world, is second largest exporter globally, and its economy 'grew at its fastest pace since the country was reunified in the second quarter' of 2010. Germany is actually far ahead of many nations that appeared better off right after the war.
The crisis: Mao's program of economic collectivization, the Great Leap Forward, resulted in mass starvation due to a Chinese food crisis.
How ugly it was: Estimates for how many died due to famine are between 16 and 40 million. Private ownership was abolished and farmers were forced to work in collectives and many were tortured or killed for not reaching grain targets. National debt surged due to increased spending on industry and rural militias roamed the countryside, stealing grain and attacking farmers.
How it eventually ended: The failure of food supply due to the policies of the Great Leap saw gradual de-collectivization of the land, eventually paving the way for Deng Xiaoping to implement a far reaching economic liberalization program which set the stage for China's current prosperity. Some would say that China learned how to succeed the hard way.
Where the country is today: China has the second largest economy in the world, recently winning the title away from Japan, and is the world's fastest-growing major economy (it has an average growth rate of 10% for the past 30 years). Its future looks even brighter, with many predicting it will exceed the American economy by 2050.
The crisis: Complete economic collapse caused by the war and collectivization of agriculture and industry.
How ugly it was: Infrastructure was non-existent; farmland was ravaged by toxic chemicals; mass collectivization of farms and factories caused triple-digit inflation and eventually complete economic collapse. There were multiple famine outbreaks, and at one point the average food per capita was only 300 kg per year. Millions fled, triggering an international humanitarian crisis.
How it eventually ended: In the late 1980s reformers in the government implemented a series of economic reforms called Đổi Mới that transformed the economy, and saw it become one of the fastest growing economies in the world by the 1990s.
Where the country is today: The UN found income poverty fell from 60% in 1990 to 32% in 2000; child mortality rates fell enormously over same period. Goldman Sachs predicted the economy will become 17th largest in the world in 2025, and PricewaterhouseCoopers said it might the fastest growing emerging economy by 2025.
The crisis: A severe currency and debt crisis, exacerbated by the Asian Financial Flu, with Russia defaulting on $40 billion of domestic bonds.
How ugly it was: 'Between March and August the Moscow stock exchange, which was the world's best-performing market in 1997, lost more than 80 per cent of its value'. International credit rating services downgraded debt to junk and inflation surged to 84%. Numerous banks closed. The government was forced to pay out $4 billion to settle miners' strikes; coal miners blockaded railroad tracks; food prices surged; imports quadrupled in price; food hoarding resulted in mass food shortages; hundreds of thousands protested; cash reserves slumped to $14 billion; and millions of workers went without wages for months.
How it eventually ended: Energy prices rose, leading to a Russian trade surplus in 1999 and 2000.
Where the country is today: Russia has benefited from a commodities-led boom and soaring energy prices. It is the word's largest exporter of natural gas, second biggest oil exporter, and the third largest steel and primary aluminium exporter. 'The economy had averaged 7% growth since the... crisis, resulting in a doubling of real disposable incomes and the emergence of a middle class.' Though the country was 'was one of the hardest hit by the 2008-09 global economic crisis', the economic decline appears to have bottomed out. Russia remains one of the famous 'BRICs' economies (Brazil, Russia, India, China), which makes it one of the most important growth stories in the world.
The crisis: Triggered by the Russian bond default and Asian financial crisis, mass capital flight erased half Brazil's market value.
How ugly it was: Investors were drawing out over '$2 billion a day despite an interest rate rise to 50% by the Central Bank,' currency devaluation exacerbated capital flight instead of halting it; the head of the central bank resigned.
How it eventually ended: The IMF, World Bank and other countries implemented a $41.5 billion rescue package. The government floated the real, leading to global market rallies as investors scooped up Brazilian stocks at discount prices.
Where the country is today: Brazil's economy is the 8th largest in the world by nominal GDP (9th by PPP) and one of the fastest growing major economies in the world. 'It did not avoid the downturn, but was among the last in and the first out,' says the Economist, and growth is at 5%. Goldman Sachs predicted it will overtake France and Britain to become the world's fifth-largest economy in the next five years, as one of the famous BRICs (Brazil, Russia, India, China) economies of the future.
The crisis: India declares bankruptcy and has to be bailed out by the IMF.
How ugly it was: Inflation hit 12.1 per cent. Foreign exchange reserves shrunk to 1.1 billion with less than 15 days cover for imports' currency needs. They had to airlift gold to raise funds to pay debtors, and pledged the country's entire gold reserves as collateral against an IMF loan.
How it eventually ended: India received a $2.5 billion IMF bailout and the government implemented a series of significant economic reforms implemented by the Indian government.
Where the country is today: The Indian economy has averaged 7% growth since '97, with the country capitalising 'on its large educated English-speaking population to become a major exporter of information technology services and software workers.' While annual GDP growth slowed to 6.5% in '09, it was still the second highest growth in the world among major economies, and it 'probably grew at the fastest pace in 2 1/2 years' in the last quarter. In 2006, Bain & Company predicted that country's private equity market would total $7 billion in 2010 - now, the firm says that number is more like $17 billion.
The crisis: The 1997 Asian Financial Crisis stirred fears of a global economic meltdown, and even the Dow plummeted 554 points at the crisis' peak. 'Never before had the world seen capital flight on such a scale and speed.'
How ugly it was: The Thai baht collapsed and Thailand had to ask 'people to hand over their gold jewellery to be melted down to boost the central banks' reserves.' Most of Southeast Asia saw currencies plunge 40-60%; private debt surged; foreign debt-to-GDP ratios in the four large ASEAN economies shot past 180%; and the IMF staged a $40 billion bailout to stabilise the currencies of South Korea, Thailand, and Indonesia. After 30 years in power, Indonesia's President Suharto had to step down. Thai P.M Chavalit Yongchaiyudh resigned. Rioting was rampant in many nations and the Thai, Korean, Indonesian, Philippine and Malaysian economies shrunk by an average of 7.7%. These contractions makes the recent U.S. recession look like a cakewalk.
How it eventually ended: IMF loans restored investor confidence, and each country enacted reforms to restructure and strengthen their banking sectors. Many governments and domestic companies became highly cautious about using debt to finance their budgets going forward, and still are.
Where the countries are today: From 1999 to 2005, the affected countries averaged 'per capita income growth of 8.2 per cent and investment growth averaging nearly 9 per cent,' with foreign direct investment thriving at an average annual rate of 17.5%, All the IMF loans associated with the crisis have been paid back. 'Emerging Asia has grown by an annual average of 8% over the past three years,' as fast as before the current fiscal crisis, spurred by growth in India and China. Southeast Asia feels like it is at the top of its economic game right now.
The crisis: Three year recession ending in economic collapse and the fall of the government.
How ugly it was: Unemployment hit over 20%; 60% of Argentines were under the poverty line; a massive run on the banks saw the government freeze all bank accounts for 12 months, permitting only small sums of cash to be withdrawn; the freeze triggered violent protests across the country, including some fatal; businesses were forced to install metal barriers due to the extent of destruction wreaked by rioters; billboards of companies like Coca Cola were brought down by enraged demonstrators; President Fernando de la Rua resigned; government defaulted on $132 billion of public debt.
How it eventually ended: The Government implemented policies which focused on import substitution, tax collection, and trading reserve dollars in the public market. It also provided easy access to credit for businesses and allowed the peso to revalue.
Where the country is today: After the crisis, the nation's GDP grew by an average 8.5% annually over the next six years; poverty and unemployment is declining; the country is rich in natural resources and the central bank 'estimates growth in South America's second-largest economy after Brazil will accelerate to 9.5 per cent this year, the fastest pace since 1992.'
The most important take-away from the crises we've shown is that hard times are generally followed by reform, hard work, and human innovation.
Countries, including the U.S., have been able to recover from far worse circumstances than we see today, sometimes within the course of just a few years.
This doesn't mean we should play down the plight of those in trouble, but it shows that the game is never over, there's always a solution, and history will likely prove recent negative American sentiment as massively overdone.
So can this possibly end well? Here are13 signs we're in a depression right now >
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