Great Poster – A Visual History of Financial Crises

Following on from the poster set, “Tracking the Credit Crisis” from the Museum of American Finance in New York, there is another which is well worth a look. I mentioned the book “This Time is Different” on a previous blog which maps the cyclical history of financial crisis from 1810 to 2010 for sixty-six countries representing 90% of world GDP. Click below to go to the site to order a poster or you can view it online by zooming in.

Cycles of Financial Crises 1810 to 2010

The giant wave in the top section of the graphic depicts the percentage of world GDP by region in crisis during the 200 year period. It includes the four major financial crisis types (sovereign default, banking, currency, and inflation) along with stock market crashes.

The bottom section provides a detailed chart of all sovereign defaults by country, region and year. It shows the repeating nature of sovereign default, a central theme of Reinhart and Rogoff’s book.

Created in partnership with the Princeton University Press, this graphic provides a comprehensive yet accessible view into the historical and current cycles of financial crises.

The Euro and Export Revenue

Here is a graphic from the Wall Street Journal. It shows a strong correlation between the exchange rate and the revenue from selling exports. Remember the following:

Effects of a declining €
Imports: Should in theory discourage imports. However if goods are inelastic(necessities) the end result is a much higher import bill.
Exports: Should lead to an increase in the value of exports sold. But it takes time for exporting firms to adjust their marketing and production schedules to take maximum advantage of falling currency values.
Inflation: Because of dearer imports this may lead to an increase in domestic inflation.

Effects of a rising €
Imports: Eurozone imports become cheaper. Will improve the B of P provided demand is inelastic. If demand is elastic, cheaper imports will lead to an increase in the volume of imports and a worsening of B of P position.
Exports: Eurozone exports become dearer. If demand is inelastic export earnings increase and B of P position improves. If demand is elastic their will be a fall in sales and a consequent worsening of the B of P position.
Inflation: Eurozone imports are cheaper therefore this helps to reduce inflationary pressures.

Tracking the Credit Crisis – Poster Set

Back in August last year I did a post on the Museum of American Finance which included a tour of the displays. I also mentioned a poster set which I have found extremely useful. Below is a photograph in my classroom of the 7 posters that form a detailed look at the events that happened from 2007 through to 2010. If interested you can go to their shop online and order a set – no, I am not getting a commission. Click here to go to their website. The colours on the chart represent events in the following areas:

Purple – Investment Companies, Rating Agencies and Bank
Blue – International Developments
Orange – Real Estate Market
Red – Government actions and statements
Green – Dow Jones Industrial Average (DIJA) and economic indicators

Brazil – the global farm

This grapic from The Economist shows how Brazil has transformed itself from an importer of food to one of the world’s biggest exporters. It is the largest exporter of five internationally traded crops, and number two in soybeans and maize. Furthermore, quite a diverse range of crops considering the climate.

Museum of American Finance – New York City

There is a cool tour of this museum which has had a major revamp in the last few years – see below. Also their website has a variety of educational materials that might be useful for the classroom. Click here to go to their website. I can recommend the ‘Tracking the Credit Crisis’ poster set from the museum shop – great value and I have bought some for the department. See a small part of the poster set below.

LUVW – Is the US going to go through a W

Great graphic that looks that the different economic cycles. L = once a recession bottoms out, a return to pre-recession output and activity will take a long time. U = the rebound will be a gradual process of expanding economic activity. V = a very rapid rebound. W = downturn followed by a sharpe recovery which then leads to a rapid downturn again – often referred to as a double-dip recession. Click here to download the image below.

A lot of media commentators think that the US is heading this way. Ben Bernanke (Chairman of the Federal Reserve Bank – equivalent to Alan Bollard at the RBNZ) is worried about this as bank credit is drying up, 10m jobs have been lost in the last 3 years, and there are a huge number of foreclosures on properties. Furthermore, it is usual that labour markets recover quickly when then is an upturn in the economy. Bernanke admitted that there wasn’t sufficient growth to rectify the labour market – unemployment is now 9.5%. Paul Krugman (Nobel prizewinning economist) said “we’ve been here before – 1937 when a return to growth in the US economy was stifled by premature increases in interest rates”. See the image below.